Every Day Low Pricing: Pros and Cons
EVERY DAY LOW PRICING (EDLP) is a pricing strategy that has been a remarkable success for some manufacturers/retailers and a disaster for others. Despite some rather high-profile failures, the strategy attracts attention among all types of marketers. Recent reports indicate that 27% of consumer non-durable manufacturers and 23% of consumer durable manufacturers have adopted an Every Day Low Pricing strategy. The key question is: “what conditions are most critical for successful implementation of the strategy?”
How it works
EDLP is a low-price strategy designed to enhance the competitive position of the supplier based on the following basic premises:
· A consistent, competitive price will lead to an even demand for products
· Inventory and other logistical costs will drop because of better management of product flows.
· Promotional costs and other forms of trade spending will be reduced.
· The cost advantages of steady demand and better inventory management will lead to even lower prices.
One of the advantages of EDLP is that it often leads to more consistent or predictable demand. Suppliers or retailers are able to more effectively control and forecast production, inventory costs, and shipping costs thus stabilizing demand Since periodic deals are replaced by a single, no-deal low price, there is no advantage to customers to postpone a purchase. Successful EDLP strategies tend to generate large volume sales that allow companies to cut costs and pass these savings along to customers. At the same time, retailers or manufacturers are able to leverage their own buying power to reduce their purchase price. These savings, as well, are then passed along to customers.
Where it works best
EDLP works best under many of the same
How it works
EDLP is a low-price strategy designed to enhance the competitive position of the supplier based on the following basic premises:
· A consistent, competitive price will lead to an even demand for products
· Inventory and other logistical costs will drop because of better management of product flows.
· Promotional costs and other forms of trade spending will be reduced.
· The cost advantages of steady demand and better inventory management will lead to even lower prices.
One of the advantages of EDLP is that it often leads to more consistent or predictable demand. Suppliers or retailers are able to more effectively control and forecast production, inventory costs, and shipping costs thus stabilizing demand Since periodic deals are replaced by a single, no-deal low price, there is no advantage to customers to postpone a purchase. Successful EDLP strategies tend to generate large volume sales that allow companies to cut costs and pass these savings along to customers. At the same time, retailers or manufacturers are able to leverage their own buying power to reduce their purchase price. These savings, as well, are then passed along to customers.
Where it works best
EDLP works best under many of the same