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6* Before you listen to Dialogue No 1 use Glossary to match the words below with their definitions.

1. demand curve

2. inelastic demand

3. discount

4. factory gate price

5. penetration strategy

6. price war

7. retail margin

8. selling costs

9. break even

10. unit price

a. the price wholesalers and distributors pay to the producer for goods

b. the difference in price bet ween what retailers pay for a product and what they sell the product at

c. a situation when sales are not affected much by price rises

d. a period during which sever­al competitors aggressively lower their prices in an effort to build up market share

e. reduction of price in return for bulk sales or to a favored customer

f. to balance costs and receipts and reach level of produc­tion when sales begin to exceed the investment

g. a pricing strategy based on low pricing and low unit profits h.the line on a graph which shows the relationship between prices and consumer demand i. the price for one item j. the costs involved in distrib­uting, promoting and sell­ing a product

  1. Dialogue No 1 (222 words)

MarkBrown, the Marketing Director of SWACorporation, is speak­ing with Jennifer Harvey, a Sales Manager of Eckener Verlag Ltd.

MARK: I have told you something about our new product -now does anyone have any questions?

JENNIFER: Could you give us some indication of cost?

MARK: Are you interested in factory gate price or unit price?

JENNIFER: Well, to tell the truth we are interested both in factory gate price and in unit price.

MARK: You know, I must admit that the selling costs for this equipment proved to be very high and that is why we had to fix the factory gate price as high as $1500.

JENNIFER: In this case the retail margin would be very low. As a matter of fact, we wanted to place a contract to pur­chase two thousand items.

MARK: Oh, I appreciate your interest and my company is always willing to offer a generous discount, what do you say to a 5% discount?

JENNIFER: That's not encouraging, I'm afraid. I believe the demand curve for your equipment will come down if you don't reconsider your pricing policy.

MARK: Frankly speaking, I was sure that there exists an inelas­tic demand for our production. We have been in the market for so long that we don't need any penetration strategy.

JENNIFER: OK, let's wait for the Leipzig Fair to reveal the state of affairs and show who is going to win in this price war. MARK: That's right, let's wait and see.

7 Listen to Dialogue No 1 between two speakers and answer the questions below. Then listen again and check your answers.

1. What is the main topic of the conversation?

2. Why did the company fix such a high factory gate price?

3. What is the relation between retail margin and factory gate price?

4. How many items does the distributor intend to pur­chase?

5. What discount was offered by the producer?