Pooja Vora

March 11, 2015

DSO 483 Case Assignment 2
MW 12pm
Henkel Iberica (A)
What does an Everyday Low Price (EDLP) strategy mean? What are the costs
and benefits of this strategy?
An Everyday Low Price Strategy is usually utilized by cost-leaders to offer
consistently low prices all the time. One of the greatest benefits of this
strategy is that it eliminates a great deal of marketing costs (i.e. sales,
promotions, advertising, etc.) by ensuring customers that the companys
prices are the best always. The strategy also saves money on re-packaging,
re-labeling, and the labor associated with promotions. Furthermore, EDLP
strategy allows for better sales demand forecasting, as there is less variation
in sales throughout the year. And finally, an EDLP strategy may strengthen a
companys reputation by guaranteeing consumers low prices always.
A disadvantage of using an Every Day Low Price strategy is low perception of
quality. Also, profit margins are very low, and volume of sales is expected to
make up for these low margins. However, volume may be hard to achieve for
some companies, especially if quality is in question.