XIV. Assignment.

Go to the area of your town that has a number of fast food outlets. Compare the product mix of McDonald’s to Bistro. Are there differences in width or depth? How could they stretch their lines upward or downward?

Unit 5

Pricing

TEXT A

Price

Price is the amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service.

Price is all around us. You pay rent for your apartment, tuition for your education, and a fee to your physician or dentist. The airline, railway, taxi, and bus companies charge you a fare; the local utilities call their price a rate; and the local bank charges you interest for the money you borrow. The price for driving your car on Florida’s Sunshine Parkway is a toll, and the company that insures your car charges you a premium. The guest lecturer charges an honorarium to tell you about a government official who took a bribe to help a shady character steal dues collected by a trade association. Clubs or societies to which you belong may make a special assessment to pay unusual expenses. Your regular lawyer may ask for a retainer to cover her services. The «price» of an executive is a salary, the price of a salesperson may be a commission, and the price of a worker is a wage. Finally, although economists would disagree, many of us feel that income taxes are the price we pay for the privilege of making money.

How are prices set? Historically, prices usually were set by buyers and sellers bargaining with each other. Sellers would ask for a higher price than they expected to get, and buyers would offer less than they expected to pay. Through bargaining, they would arrive at an acceptable price. Individual buyers paid different prices for the same products, depending on their needs and bargaining skills.

Historically, price has been the major factor affecting buyer choice. This is still true in poorer nations, among poorer groups, and with commodity products. However, nonprice factors have become more important in buyer-choice behavior in recent decades.

Price is the only element in the marketing mix that produces revenue; all other elements represent costs. Price is also one of the most flexible elements of the marketing mix. Unlike product features and channel commitments, price can be changed quickly. At the same time, pricing and price competition is the number-one problem facing many marketing executives. Yet, many companies do not handle pricing well. The most common mistakes are: pricing that is too cost oriented; prices that are not revised often enough to reflect market changes; pricing that does not take the rest of the marketing mix into account; and prices that are not varied enough for different products, market segments, and purchase occasions.

I. Key terms:

Price — ціна — the amount of money charged for a product or service.

Bargaining — торгуватися, вести переговори, домовлятися — discussion of prices, terms of trade.

Cost — ціна, вартість — price (to be) paid for a thing. Cost usually relates to services or processes.

Charge — ціна, плата за послуги — is the amount of money asked, usually for a service.

Market segment — сегмент маркетингу — a group of consumers who respond in a similar way to a given set of marketing stimuli.