DemandTec

Everyday Price Planning

Maximize Margin Opportunities and Outsmart the Competition with Everyday Price Planning

• Maximize margin potential and minimize exposure by understanding the financial impact of everyday shelf price changes
• Simplify trade planning with an integrated pricing and promotion solution leveraging a common data platform
• Outsmart the competition by quantifying competitive price movement against your portfolio and the total category

Planning for everyday shelf price adjustments has evolved into a sophisticated and important capability for consumer products manufacturers. As escalating ingredient and fuel costs are passed through to the customer – and subsequently the consumer – understanding the relative impact everyday price adjustments have on volume and margin metrics is essential.

Typical methods for devising EDLP strategies are largely decoupled from the traditional trade promotion plan. This reality poses challenges in building comprehensive trade plans that account for pricing activities that have become a common promotional lever. Where everyday price analysis does take place, it is often performed outside of the promotional planning environment, creating a cumbersome and imprecise reconciliation process for business managers.

DemandTec’s Everyday Price Planning software service provides an integrated tool for business managers to forecast shelf price buy-downs and advances. The service is part of the DemandTec Trade Planning & Optimization™ solution, and is included with every subscription to the Promotion Planning & Optimization software service.

Maximize Margin Potential and Minimize Exposure by Understanding the Financial Impact of Everyday Shelf Price Changes

Adjusting everyday price poses forecast uncertainty and financial risk for consumer products manufacturers. For example, buying down the shelf price by $.25 per unit or taking a price point back up by 7% may yield vastly different volume, mix and margin outcomes than originally intended. DemandTec’s Everyday Price Planning software service removes the inherent forecast inaccuracy risk and helps pinpoint margingenerating opportunities when making shelf price adjustments.

Through a set of available dropdown menu options, business users can choose among several EDLP tactics, including promoted price, cents off, multiples, and even “buy-one, get-one” pricing tactics. From there, event timing, promoted item designation, store participation and geography assumptions are vetted to build the proper forecast assumptions. These inputs flow into a powerful model-driven forecasting engine to reveal promoted volume and margin, and financial metrics to help take the guesswork out of everyday price scenario planning.

Simplify Trade Planning with an Integrated Pricing and Promotion Solution Leveraging a Common Data Platform

Virtually all pricing and promotion strategies are highly interdependent and should be based on the same set of analytical assumptions. For example, the volume delivered from an end cap promotion will be drastically understated should it be executed while an EDLP buy-down is in-market. Building a total promotion plan that incorporates both everyday price assumptions, such as a six-month EDLP price point, with more traditional promotions provides a total picture and ensures tighter forecast accuracy.

The DemandTec Platform™ makes total price and promotion planning possible, as all demand coefficients are modeled off of the same underlying data model. This structure not only provides a unified set of assumptions for planning purposes, but also delivers a category plan that includes all pricing and promotion vehicles in a single report. Because the platform feeds both scenario types, any updates to the underlying data model will flow to both the pricing and promotion features.

Outsmart the Competition by Quantifying Competitive Price Movement Against Your Portfolio and the Total Category

While EDLP pricing strategies present an opportunity to capture volume and share from the competition, the reverse is also true. As a key volume-driving lever, pricing buydowns from the competition have the potential to erode brand share and margin, offsetting even the best trade plan. To help hedge against anticipated competitive pricing movements, it is important to understand what the financial impact might be should a competing national brand take pricing down during a defined period of time.

Because DemandTec models every item in the category – including competitive brands – the Everyday Price Planning service can quantify the financial impact of anticipated competitive pricing movements. Business managers now have the ability to simulate how competitive pricing adjustments impact their own promoted items, their total portfolio and even the retailer’s entire category. Among other benefits, this preemptive “war gaming” helps manufacturers build a stronger, more category-centric case during the retail sell-in process.

Get Started Today

Ready to plan more effective everyday pricing strategies for your business? Take the next step. For more information, call 1-888-221-6128 or request information online.