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05dis60s-price

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Unit 5Pricing

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    4/29/2010

    Unit 5Pricing Unit Introduction ........................................................................................................ 1

    Unit Objectives ..................................................................................................... 1

    Terminology .......................................................................................................... 2 What is Promotions, Deals and Pricing? ................................................................... 4

    Promotions, Deals and Pricing Integration ................................................................ 6

    Areas Affected by Promotions, Deals and Pricing ................................................ 7 Promotion Price Basis ............................................................................................... 8

    List Price Book ......................................................................................................... 10

    List Price Parameters ......................................................................................... 11

    List Price Book Maintenance .............................................................................. 12

    Batch Cost-Plus List Price .................................................................................. 13

    Mass List Price Book Update ............................................................................. 14

    Calculation of the List Price .......................................................................... 15 Special Price versus Promotion Discount ................................................................ 16

    Special Pricing ......................................................................................................... 18

    Special Pricing Hierarchy ................................................................................... 19

    Total Order Discount Pricing Method ............................................................ 20

    Base Price/Item Alone Pricing Method .......................................................... 20

    Special Pricing Maintenance .............................................................................. 21

    Special Price Types............................................................................................ 23

    Foreign Currency Selling Price .......................................................................... 24

    Foreign Currency List Prices......................................................................... 25

    Special Price Inquiry .......................................................................................... 26

    Special Price Listing ........................................................................................... 26 Promotional Discounts ............................................................................................. 27

    Promotions, Deals and Pricing Calendar Maintenance ...................................... 29

    Promotions, Deals and Pricing Market Segments .............................................. 30

    List Price Discount Methods ............................................................................... 32

     Table of Contents 5-i

    Promotions and Deals Concepts ........................................................................ 33

    Reserved Promotion Term Codes ...................................................................... 35

    Bracket Promotion Pricing .................................................................................. 37

    Bracket Promotions Pricing Flow................................................................... 39

    Qualifiers ............................................................................................................ 40

    Exclusive and Group Promotions .................................................................. 42

    Promotion Categories .................................................................................... 43 Promotions, Deals and Pricing Order Entry ............................................................. 44

    Promotional Pricing Allowed ............................................................................... 44

    Promotion Price Basis ........................................................................................ 44

    Calculated Net Selling Price (CNSP) ............................................................ 46

    Calculated Net Total Order Amount (CNTOA) .............................................. 47

    Batch Order Pricing ............................................................................................ 48

    Batch Pricing Sequence ................................................................................ 49

    Price Source Codes ............................................................................................ 51 Margin Management ................................................................................................ 55

    Pricing Review ......................................................................................................... 57

    5-ii Supply Chain Management WorkshopStudent Guide

List of Figures

    Figure 5-1. What is Promotions, Deals and Pricing? ................................................ 4 Figure 5-2. Marketing Incentive Throughout Product Life Cycle .............................. 5 Figure 5-3. Promotions, Deals and Pricing Product Integration ............................... 6 Figure 5-4. Areas Affected by Promotions, Deals and Pricing .................................. 7 Figure 5-5. Promotion Price Basis Affect on List Prices ........................................... 9 Figure 5-6. List Price Book ..................................................................................... 10 Figure 5-7. List Price Hierarchy .............................................................................. 11 Figure 5-8. List Price by Item/Region ..................................................................... 12 Figure 5-9. Cost-Plus Pricing Example ................................................................... 13 Figure 5-10. List Price by Price Multiplier ............................................................... 15 Figure 5-11. Promotion versus Special Price Discount .......................................... 17 Figure 5-12. Special Pricing ................................................................................... 18 Figure 5-13. Special Pricing Maintenance .............................................................. 22 Figure 5-14. Foreign Currency Selling Price .......................................................... 24 Figure 5-15. Promotions, Deals and Pricing Order Entry ....................................... 27 Figure 5-16. Promotion Discounts .......................................................................... 28 Figure 5-17. Promotions, Deals and Pricing Calendar ........................................... 29 Figure 5-18. Product Market Segments .................................................................. 30 Figure 5-19. Customer Market Segments ............................................................... 30 Figure 5-20. Product and Customer Market Segments........................................... 31 Figure 5-21. Promotion Setup Process Flow .......................................................... 33 Figure 5-22. Reserved Promotion Terms Code Example ....................................... 36 Figure 5-23. Bracket Promotion Pricing Setup ....................................................... 37 Figure 5-24. Bracket Pricing Qualifiers ................................................................... 38 Figure 5-25. Bracket Promotion Flow - Price at Bracket Level ............................... 39 Figure 5-26. Date Qualifications ............................................................................. 40 Figure 5-27. Calculated Net Selling Price (CNSP) ................................................. 46 Figure 5-28. Batch Order Pricing ............................................................................ 48

     Table of Contents 5-iii

Figure 5-29. Batch Order Pricing Programs ............................................................ 49

    Figure 5-30. Batch Order Pricing Programs Continued .......................................... 50

    Figure 5-31. Pricing - Simple Pricing Structure ....................................................... 53

    Figure 5-32. Pricing - Complex Pricing Structure .................................................... 54

    Figure 5-33. Margin Management ........................................................................... 55

    List of Tables

    Table 5-1. List Price Methods Available for Mass List Price Book Update .............. 14

    Table 5-2. Discount Price?Price or Percent .......................................................... 18 Table 5-3. Special Pricing Method Numbers and Definitions .................................. 19

    Table 5-4. Special Price by Salesperson Hierarchy................................................ 20

    Table 5-5. Four Special Pricing Types .................................................................... 23

    Table 5-6. BPCS Reserved Promotion Terms Codes ............................................. 35

    Table 5-7. Promotion CategoriesPossible Combinations .................................... 43

    5-iv Supply Chain Management WorkshopStudent Guide

Unit Introduction

    This unit introduces the concepts and structure of the BPCS Promotions, Deals and Pricing product. The purpose is to give an overview of the setup and integration with other BPCS products.

    Promotions, Deals and Pricing controls list pricing and incentive programs used by: ? Consumer products manufacturers and distributors. ? Wholesale trade, durable and non-durable. ? Manufacturer/distributor with complex marketing and pricing strategies. BPCS Promotions, Deals and Pricing expands this definition to include tracking promotion effectiveness and maintenance of the pricing and discounting structure.

    Unit Objectives

    At the end of this unit you will be able to:

    ? Create list price and special price structures. ? Define market (customer) and product (item) segmentation logic used to establish BPCS

    Promotions, Deals and Pricing.

    ? Explain reserved promotion terms such as off invoice, bill back, splits, and brackets.

    ? Define discount methods:

    ? Discount Price

    ? Discount Amount

    ? Discount Percentage

    ? Cash Value

    ? Free Goods ? Establish promotions in order to process customer orders. ? Understand pricing logic used when determining the net price of a customer order and

    line.

     Pricing 5-1

    Terminology

    Listed below are terms presented in this unit.

Accrual type of promotion. The customer receives credit or Bill-Back

    rebate for performing a required activity such as providing

    additional product shelf space. Credit is available after the

    invoice is generated. The order or invoice net price does not

    reflect Bill Back discounts.

    Promotional pricing evaluates like groups of lines to determine if Bracket Promotions

    they qualify as a whole for eligible discounts.

    A code assigned to a customer and used in Special Price Customer Discount

    Maintenance (PRO140) and Promotions to make a common Code

    discount available to a group of customers.

    The ability to decrease the list price by a set amount. Discount Amount

    The ability to increase or decrease the list price by a percentage. Discount Percent

    The ability to override the price with a discount price. Discount Price

    A promotion offering a specific quantity of an item free rather Free Goods

    than a discount amount, price, or percentage. For example, buy Promotions

    10, get one free.

    Normally the same as base currency because it is used to value Global Currency

    inventory. This valuation is reflected in the company’s books and

    is used for sales history and product costing such as standard,

    frozen or actual cost. List Price refers to the price of the item before any discounts are List Price

    applied. There are a variety of List Prices available in BPCS.

    Generic numeric currency figure. Monetary Unit

    A type of discount applied directly to the invoice based on Off Invoice

    qualification at the line item level and/or total order level.

    The expected increase in sales (quantity and/or amount) during Projected Lift

    the promotion period. Identifies the method of handling promotions either line, total Promotion Terms

    order, split, off-invoice, or bill-back. Code

    5-2 Supply Chain Management WorkshopStudent Guide

A period defining the start and end dates for a promotion. Used Promotions Period

    for analysis and tracking, promotion periods may overlap.

    Those characteristics that an order or line must contain before Qualifiers

    eligible discounts are made available. The file (ESP) stores list pricing and special pricing methods. Special Price

    Special pricing can be based on customer or salesperson and item Master

    number based on the system parameters. A method of applying discounts by item, customer, item discount Special Prices

    code, customer discount code, or combinations of these. The

    discounts can also be applied by salesperson and item

    information. Special prices may be used in calculating a net

    price.

    A discount method which applies both off-invoice and bill-back Split Discount

    to one transaction.

    A promotion with part of the discount off invoice, applied during Split Promotions

    order entry and the remainder is a bill back applied during cash

    application.

    A pricing method which is based on the total invoice amount or Total Order

    quantity. All lines may have line discounts applied and the total Discount

    order discount is calculated on the netted line amounts. The

    terms Total Order Discount and Order Total Discount are

    interchangeable throughout the product; their meanings are identical.

    Transaction Currency is used for tracking customer order Transaction

    amounts in the customer’s currency. Global Currency is Currency

    converted to Transaction Currency by dividing Global by the

    Exchange Rate.

     Pricing 5-3

What is Promotions, Deals and Pricing?

    Promotions, Deals and Pricing is the product within BPCS facilitating structured list pricing

    logic as well as incentive pricing. The list pricing logic allows specification of a variable List

    Price. The variable List Price of an item can be based on Customer, Region, Cost, Facility,

    Customer Discount code, currency, or can be retrieved from the Item Master. The list price

    can then be used in conjunction with special prices to form a promotional price basis. This

    calculated promotional price basis can then have line level, total order and/or the bracket

    promotions applied to it. The incentive pricing contained within the Promotions, Deals and

    Pricing product includes Special Pricing as well as Promotions; they can both be used

    concurrently in pricing customer order lines.

    The figure illustrates Promotions, Deals and Pricing.

    Time Frame1996

    Buy get FREE

    Per

    OrderAmount of

    Product

    Seasons

    Customer

    Region

    Product

    Figure 5-1 What is Promotions, Deals and Pricing?

    Special Prices and Promotions are marketing incentive programs used by your company to

    promote products or product lines to increase sales. Incentive pricing can be offered by

    customer and item combinations, salesperson and item combinations, region, season, date

    range, and buy one get one free types of incentives.

    5-4 Supply Chain Management WorkshopStudent Guide

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