Synchronization to achieve the benefits of CPR
Synchronization to achieve the benefits of CPR
Regional promotions and variable customer allowances further increased pricing complexity. It is always difficult and almost impossible to keep constant product price because of the pricing complexity generated by regional promotions, marketing incentives and variable customer allowances. The CPR (Continuous Product Replenishment) system improved the ability to handle promotion. Traditionally, retail stores would need to hold large volumes of inventories and manufacturing costs in preparation for the dramatic shifts in volumes after implementing promotion and they still need to handle promotion manually because of the difficulty of forecasting correctly. However, with the CPR system, which developed and deployed a new sales tool to calculate the promotion’s effect on sales improvement, the changes of volume could be forecasted and estimated much more accurately, thus achieve a low inventory level and an effective handling of product promotions at the same time.
In order to support CPR implementation, EDLP (everyday low price) was provided as a new pricing policy which give customers an equal average price as traditional pricing strategy. It was considered as an alternative to eliminate forward buying and to achieve a competitive product purchase cost.
Although the average price of EDLP was structured equal to the average price paid by customers using the traditional pricing structure, most of potential CPR customers (consisted of large, sophisticated retailers and wholesalers) believed that they usually got the lower-than-average price owing to large procurement as promotion under the traditional pricing policy. The EDLP, by contrast, simplified the procurement process and eliminated most of the profit-added roles such as forward buying and promotion funds capturing. It seemed unfair and not cost-effective for them to adopt EDLP. However, the savings in inventory handling and storage costs, according to the
Regional promotions and variable customer allowances further increased pricing complexity. It is always difficult and almost impossible to keep constant product price because of the pricing complexity generated by regional promotions, marketing incentives and variable customer allowances. The CPR (Continuous Product Replenishment) system improved the ability to handle promotion. Traditionally, retail stores would need to hold large volumes of inventories and manufacturing costs in preparation for the dramatic shifts in volumes after implementing promotion and they still need to handle promotion manually because of the difficulty of forecasting correctly. However, with the CPR system, which developed and deployed a new sales tool to calculate the promotion’s effect on sales improvement, the changes of volume could be forecasted and estimated much more accurately, thus achieve a low inventory level and an effective handling of product promotions at the same time.
In order to support CPR implementation, EDLP (everyday low price) was provided as a new pricing policy which give customers an equal average price as traditional pricing strategy. It was considered as an alternative to eliminate forward buying and to achieve a competitive product purchase cost.
Although the average price of EDLP was structured equal to the average price paid by customers using the traditional pricing structure, most of potential CPR customers (consisted of large, sophisticated retailers and wholesalers) believed that they usually got the lower-than-average price owing to large procurement as promotion under the traditional pricing policy. The EDLP, by contrast, simplified the procurement process and eliminated most of the profit-added roles such as forward buying and promotion funds capturing. It seemed unfair and not cost-effective for them to adopt EDLP. However, the savings in inventory handling and storage costs, according to the