A price that is hard to refuse

1. Introduction:

One of the most powerful marketing ideas of the
present day is making luxury quality goods available to customers at reasonable
prices. Have you ever preferred a really quality item to a cheaper one, hoping
it would serve longer and cover its cost? Or you do you belong to those who
would prefer to buy a cheaper product seeing no difference in quality? That is
the choice customers make nearly every day.

2. Useful Vocabulary:

relevant          closely connected with
something

to
launch         to make a new product publicly
available

to
intend         to have a particular purpose or plan in
mind

executive        relating to the management
of an organization

jet        a kind of an aircraft

breakthrough an important development or
discovery

roughly           in a quick manner, not paying
attention to details

time-share      a part divided among several
people based on time

ownership       a state or right of being an
owner

convenience   freedom from trouble or
difficulty

3. The text:

The relevant
questions when launching a new product are: what products are
alternatives to the product a company intends to launch? What is their
price and how many customers do they win?

Consider,
for example, air travel for corporate executives. There are two main
alternatives: one is business- and first-class tickets, priced at several
thousand pounds; the other is corporate jets, which cost tens of
millions of pounds.

Executive
Jet came up with a breakthrough pricing model: instead of selling jets,
it sold shares of time in using a jet. This allowed them to price jets per year
at roughly the amount a company would spend on business- and first-class
tickets. It won orders both from business-class customers and from executives
who preferred a relatively cheap time-share in Executive Jet to full ownership
of a Gulfstream or Learjet that would spend much of its time sitting on the
ground.

Executive
Jet created a pricing model in which companies got the convenience of
private air travel at the price of the annual business-class travel budget.

By W. Chan and
Renee Mauborgne

The Financial Times

4. Provocative thinking:

1. How do
you think, is it possible for top-managers to fly third, tourist class, buying
the cheapest tickets to reduce the expenses of a company?

2. What
would you do if you were an owner of a big company in the situation described
above?

3. Can you
think of a similar choice in everyday life/from your own personal experience?

5. Give the three forms of these verbs (some
of them are regular and some are irregular) and then insert them in the
combinations below in the correct grammatical form:

to intend           _______          _______          to
use   _______          _______

to launch          _______          _______          to
spend           _______          _______

to cost  _______          _______          to win   _______          _______

to come           _______          _______          to create          _______          _______

to sell   _______          _______          to sit     _______          _______

a. We have
already ______ half of our product range! What a success!

b. This
employee ______ a new model of an electronic toy.

c. We need
______ a new model of our car before the new year.

d. Can you
imagine how much it ______?!

e. ______ new computer technologies is a must in the modern world.

f. Our
company ______ to provide free breakfasts to its employees.

g. We
______ the order for chewing gum! It was a hard struggle!

h. ______
at home doing nothing you can not hope to be promoted.

i. A new
manager who ______ a fortnight ago intends to make great changes.

j. You have
no right ______ the company money for private long-distance calls.

6. Fill in the prepositions (if necessary):

1. an alternative ____ the product

2. jets cost ____ tens of millions of pounds

3. instead ____ selling jets, it sold shares ____ time

4. first-class tickets are priced ____ several thousand pounds

5.
Executive Jet came ____ ____ a breakthrough pricing
model

6. we shall consider air travel ____ corporate executives

7. can this allow you to price jets ____ this amount of money?

8. this company spends a lot ____ first-class tickets

9. the convenience ____ private air travel ____ the price ____
the annual business-class travel budget

10. we preferred a relatively cheap time-share ____ Executive
Jet ____ full ownership

7. Word-matching: Match the words from the
left column to those in the right one and then make up five sentences of your
own using these word-combinations:

1. first                                                                      a.
model

2. to intend                                                               b.
class

3. relevant                                                                c.
executive

4. air                                                                        d.
share

5. pricing                                                                  e.
to launch

6. corporate                                                             f.
the products

7. time                                                                      g.
customers

8. to price                                                                h.
budget

9. travel                                                                    i.
travel

10. to win                                                                 j.
question

8. Fill in the articles (where necessary):

1. ____
Executive Jet came up with ____ breakthrough pricing model: instead of selling
____ jets, it sold ____ shares of ____ time in using ____ jet.

2. What is
____ price and how many customers do they win?

3. ____
relevant questions when launching ____ new product are: what products are ____
alternatives to ____ product ____ company intends to
launch?

4. ____
Executive Jet created ____ pricing model in which ____ companies got ____
convenience of ____ private air travel at ____ price of ____ annual
business-class travel budget.

5. This
allowed them to price ____ jets per year at roughly ____ amount ____ company would spend on ____ business- and ____ first-class
tickets.

Keys:

5.

to intend
– intended – intended to use – used – used

to launch
– launched – launched           to spend –
spent – spent

to cost –
cost – cost     to win – won – won

to come –
came – come           to create – created
– created

to sell –
sold – sold      to sit – sat – sat

a. We have
already sold half of our product range! What a success!

b. This
employee created a new model of an electronic toy.

c. We need to
launch a new model of our car before the new year.

d. Can you
imagine how much it costs?!

e. To
use new computer technologies is a must in the modern world.   ????

f. Our
company intends to provide free breakfasts to its employees.

g. We won
the order for chewing gum! It was a hard struggle!

h. Sitting
at home doing nothing you can not hope to be promoted.

i. A new
manager who came a fortnight ago intends to make great changes.

j. You have
no right to spend the company money for private long-distance calls.

6.

1. an alternative to the product

2. jets
cost X tens of millions of pounds

3. instead of selling jets, it sold shares of
time

4. first-class tickets are priced at several thousand pounds

5.
Executive Jet came up with a breakthrough pricing model

6. we shall consider air travel for corporate executives

7. can this allow you to price jets at this amount of
money?

8. this company spends a lot on first-class tickets

9. the convenience of private air travel at the
price of the annual business-class travel budget

10. we preferred a relatively cheap time-share in
Executive Jet to full ownership

7. 1. b; 2. e; 3. j; 4. i;
5. a; 6. c; 7. d; 8. f; 9. h;
10. g

8.

1.
Executive Jet came up with a breakthrough pricing model: instead of
selling jets, it sold shares of time in using a jet.

2. What is the
price and how many customers do they win?

3. The
relevant questions when launching a new product are: what products are
alternatives to the product a company intends to launch?

4.
Executive Jet created a pricing model in which companies got the
convenience of private air travel at the price of the annual
business-class travel budget.

5. This
allowed them to price jets per year at roughly the amount a company
would spend on business- and first-class tickets.

Compiled by Alyona Pavlova