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Decision Framework for Price Changes &amp; Promotional Discounts

EDLP
Divert trade investment away from promotions to keep base price low on an everyday basis

High-Low
Invest in promotion to drive volume and protect share by increasing base price to fund additional promotion depth/frequency

<h2>Manufacturer to Distributor/Retailer</h2>
The price the manufacturer will sell their product to a retailer or distributor. List price is typically maintained at the Case SKU or Case PPG level and is derived from SKU and P&amp;L driven by margin expectations.
<ul>
<li>Bracket Pricing Manufacturers will align distributors/retailers to a bracket. The price in the bracket covers extraneous transportation costs. Brackets may be full truck, LTL (less than truck), half truck, export, military, Alaska and Hawaii.</li>
<li>EDLC (Every Day Low Cost) Manufacturers using trade spend to reduce best bracket list price to negotiated rate. &nbsp;Distributors can pass a portion of trade to indirect customers.</li>
</ul>

<h2>Retailer to Consumer</h2>
Retailer Every Day margin requirement and the price point the base consumer will purchase the product, not waiting on a TPR. A portion of trade marketing spend is used to get to the Every Day Price.

<h2>Retailer to Consumer</h2>
Retailer Promoted Price margin requirement and the price point the incremental consumer will purchase the product. A large portion of trade marketing spend is used to get to the Promoted Price. &nbsp;
<ul>
<li>Typically an above the live accrual rate. &nbsp;</li>
<li>The need to check for overlapping promotions.</li>
</ul>

<h2>Retailer to Consumer Price Strategy</h2>
Kroger is an example of a retailer which promotes frequently using multiple types of merchandising conditions.
<ul>
<li>Example: Every Day Shelf Price $2.99, &nbsp;Promoted Price $2.49</li>
</ul>

<h2>Retailer to Consumer Price strategy</h2>
Walmart is an example of an Every Day Low Price, minimal if any TPR&rsquo;s, the Every Day Shelf Price is always less expense than the High Low retailer.
<ul>
<li>Example: Every Day Low Price: &nbsp;$2.89.&nbsp; No promoted price (TPR).</li>
</ul>

Understanding price types will help you make informed decisions that will impact RGM.

Price Elasticity&nbsp;<img src="https://cdn.buttercms.com/TbCJdo5OQLSglUm7WA3s" alt="undefined" width="21" height="21">

Promotional Price Elasticity/Intensity

Basic Price Elasticity

High-Shallow
Reduce depth of promotional discounts or increase everyday price to recapture margin and drive additional GP

OPTIONS
Ability to leverage both base and promotion on objectives and retailer&rsquo;s category strategy