GLOBAL BUSINESS WEEK 13 PRICE

1. GLOBAL BUSINESSWEEK 13PRICE

2. 1. How important is price to you? 2. When you want to buy something, which do you do? • Make sure you get a good deal? • Spend time looking for the lowest possible price? • Not worry about price, just buy what you want?

3. A general direction in which something is developing or changing. b. refers to method companies use to price their products or services. c. The amount by which revenue from sales exceeds costs in a business(Net Income/Sales). d. The process of coming up with a cost to consumers of a good or service produced by a business Match the words and phrases 1-3 with the definitions a-c. Set the price 2. Profit Margin 3. Trends Pricing Strategy Revenue (called Turnover in the UK) B C A D

4. Graphs Pricing Strategy Set the Price Trends Cut costs Increase Reduces Profit Margin SET THE PRICE INCREASE It is difficult for companies to _________ of a product. A lower price may help to _________ sales, but it also _________ the _________. As a result, the company may have to _________ to keep prices down. We often use ________ to show _________ in prices over months or years. Studying trends can help companies to choose the right _________ for their products. REDUCES PROFIT MARGIN CUT COSTS GRAPHS TRENDS PRICING STRATEGY

5. PRICE TRENDS • What kinds of products or services are increasing in price at the moment? • What things are getting cheaper?

6. Look at the graph and complete each sentence with a different item from the key. Spending on ___________ increased up to 1991 and then fell sharply.

7. Look at the graph and complete each sentence with a different item from the key. Spending on ________ increased the most.

8. Look at the graph and complete each sentence with a different item from the key. Spending on ________ rose by nearly 20 percent.

9. Look at the graph and complete each sentence with a different item from the key. Spending on ________ decreased slightly after 1996.

10. ARTICLE: MAKE IT CHEAPER AND CHEAPER Match the headings 1-4 with the paragraphs in the article a-d. • Big supermarkets are more efficient. • Drinks come cheaper in large cans. • Technology improves food production. • Supermarkets force producers to cut costs. B D A C

11. ARTICLE: MAKE IT CHEAPER AND CHEAPER T Are the Following Statements True or False? • It costs less to produce large quantities of food than ever before. • Big supermarkets can offer food at lower prices because they can buy in large quantities. • Some food producers have reduced their range of products. • To meet supermarket demands, Cadbury employs more workers than before. • Shoppers will buy larger quantities when there is a special price. 6. For food companies, larger portions are not much more expensive to produce. 7. The writer thinks companies will be happy to reduce the sizes of portions. T T F T T F

12. VERBS THAT TAKE AN OBJECT Verb+ Object • The company has decided not to raise salaries this year. • The supermarket raised the price of milk. Verb – No Object • Costs are rising all the time. • The price of milk rose last month.

13. Economic Trends: Choose the correct verb in italics. Object: raise / raised No Object: rising / rose Earn less, spend more? Growth slows, but consumers still spending Consumer spending in the US rose / raised last year, mainly because the oil companies pushed up / rose the price of oil to the highest level for several years. Higher oil prices meant that spending on petrol for cars, as well as home heating, raised / increased. However, salaries did not put up / go up to match the rise in spending. Many companies cut / fell jobsat the start of the year in order to reduce / rocket their costs. These companies are still not increasing / rising their workforce. Economic growth remains slow and current trends seem set to continue. ROSE PUSHED UP INCREASED GO UP CUT REDUCE INCREASING

14. PRICING STRATEGY Which do you think is the best strategy? • Reduce costs by one per cent. • Increase the volume of sales by one per cent. • Increase all its prices by one per cent.

15. LISTENING Callum Taylor, a marketing expert, talks about pricing strategy on a radio program about business. How much can a company expect to increase its profit using each of the above strategies? Listen to part one and complete the table.

16. Listen to part two and complete the following sentences. • The cost-plus method of pricing: ‘You calculate what it costs to _______ an item and then you add the _______ _______ you’d like to have.’ • Another method: ‘Find out what your ________ are ready to _______ on that product. • A third way: ‘Look at the _______.’ • Before setting a price, companies should ask two questions: Who are the _________ _________? What kind of _________ or _________ are we _________? 5. You shouldn’t develop a product and then say: ‘OK, now let’s ________ _________ __________ __________.

17. JCPenney, Inc. • JCPenney, Inc. is a chain of American, moderately priced department stores founded in 1902.Former Apple executive, Ron Johnson, took over as CEO November, 2011 when JCPenney was struggling financially. • Johnson drastically changed JCPenney’s pricing strategy by: • eliminating coupons and sales; and • dropping prices (sometimes as much as 40%!); and • Rounding merchandise prices up.

18. BEFORE AFTER

19. Consumers are used to promotions, sales, and discounts in the department store world, and… JCPenney’s customers are price-sensitive, budget-constrained consumers who are always on the lookout for a better deal. What effect do you think the new pricing strategy had on JCPenney?

20. Effects of JCPenney’s Drastic Pricing Strategy • Revenue tumbled almost 23%! • The stock price plunged by more than 50%! • Employee Moral within the company plummeted

21. HOMEWORK 1. There will be a vocabulary quiz next Friday, June 7th at 9:35am. This will count as 5% of your total grade. The quiz will cover vocabulary from the following units: • Making Predictions • Job Seeking • Price • Don’t Forget! Please print out a copy of your completed presentation (one copy per team) and turn it in at the beginning of our June 7th class. Presentations are scheduled for Friday, June 14th.

22. **The following vocabulary may be on the quiz. Please study them. • Man is constantly exploring new possibilities and making new discoveries. New technology will shape our future and open up new opportunities for business. But developing a new technology takes time and needs a huge amount of funding. People who want to finance new ventures need to borrow a lot of capital. But it may be difficult to persuade people to invest in a project that is very risky or doesn’t have the potential to make much profit. Finance for Space Ventures It is very difficult for companies in the private space industry to find the necessary ___________ for new space projects. Private investors don’t like investing in space because the ___________ is high, and because the ____________ can be as much as 20 years or more. Investors want to be sure that they will get a good _______________. However, some millionaire space enthusiasts will support projects even if there is not much __________ for making a profit. Even government projects are often short of money. Most space ventures have to run on ____________. Apprenticeship 2. Internship 3. Work placement 4. Postdoc Program (postdoctoral fellowship) Set the price 2. Profit Margin 3. Trends Pricing Strategy Revenue (called Turnover in the UK) It is difficult for companies to _________ of a product. A lower price may help to _________ sales, but it also _________ the _________. As a result, the company may have to _________ to keep prices down. We often use ________ to show _________ in prices over months or years. Studying trends can help companies to choose the right _________ for their products.