EDLP (Everyday Low Pricing)

EDLP - everyday low prices

Running a successful company requires more than just a sound business idea and a good product. You also have to know how to make your offering attractive to prospective customers.

However, even the best marketing techniques won’t guarantee an influx of clients if your prices are set too high.

To stand out among competitors and secure a steady flow of customers, you need an effective and reliable pricing strategy.

Below we’ll cover one of the more intriguing approaches to pricing – the Everyday Low Pricing strategy.

Over the course of the article, we will help you understand what this business practice represents, how it works, and discuss the advantages and disadvantages of the Everyday Low Pricing approach. Read on and learn the ins and outs of the EDLP!

What Is Everyday Low Pricing?

Everyday Low Pricing, short for EDLP, is a business strategy aiming to provide various products at a much-reduced cost.

The origin of the Everyday Low Pricing approach can be traced back to when Sam Walton, the CEO of Walmart, implemented the revolutionary ‘Lowest Prices Anytime, Anywhere’ strategy back in 1994.

Since then, that pricing strategy has enjoyed significant success in the very competitive retail industry.

While the High-Low pricing strategy favors price reduction in the form of frequent sales or discounts, the Everyday Low Pricing strategy focuses on sustaining the lower cost of products or services over an extended period of time.

If implemented correctly, the Everyday Low Pricing strategy has the potential to benefit both the customer (a consistently low product cost) and the business (an increase in sales due to more attractive pricing).

groceries and shopping

Why Everyday Low Pricing Works?

The basis of the Everyday Low Pricing strategy relies on the belief that customers enjoy a consistent cost reduction and will actively look for the lowest possible prices on the market.

Data seems to support this notion – 90% of clients take their time to search for the best deals online, while 60% of customers prioritize the price over other qualities of their chosen product or service.

Increased Retention

By using the Everyday Low Pricing approach and setting the prices low, businesses can not only successfully attract the attention of the deal-hunting customer but also increase their chances of retaining that client.

After all, discounts and sales are temporary, while EDLP guarantees low cost as long as it is profitable for the business.

Simplified Decision-Making

Although the average price of a product or service is lower, the business using the EDLP should still successfully profit from the strategy.

That is because the EDLP greatly simplifies the ultimate decision of the customer.

With most pricing strategies, customers have to either pay the full price of the product or wait for infrequent sales or discounts.

This can make the customer uncertain and prevent them from making a buy.

As the client knows that EDLP-focused businesses provide low-cost offers on a constant basis, they might be more inclined to purchase now instead of searching for a price reduction elsewhere.

food aisle on supermarket

How Does Everyday Low Pricing Benefit Both Sides?

Although some benefits of the EDLP strategy to customers and businesses have been mentioned, let’s take a more in-depth look at how this pricing strategy can positively impact both sides.

Reduced Search Costs

In many cases, customers have to search extensively to find the best deals on the market.

This can be a time-consuming and even costly process, as they might have to visit different brick-and-mortar stores before finding the desired product or service at a reasonable price.

With the Everyday Low Pricing strategy, customers can save on search costs as they know that the business offers low prices on an ongoing basis.

Greater Product Availability

Sales and discounts tend to be limited by the supply of products. In other words, once the stock is gone, it’s likely that the sale is over as well.

EDLP practice, on the other hand, is not limited by product availability.

Even if the product is out of stock, customers know that it will be available at the same reduced price once it’s back in stock.

Stable Flow of Customers

Everyday Low Pricing strategy can help businesses create a constant flow of customers.

As clients know that the business offers low prices on an ongoing basis, they are more likely to prioritize that store over others when making a purchase.

competitive pricing

Lower Demand Fluctuations

Adopting the Everyday Low Pricing approach can help companies simplify their demand forecasting process.

As the flow of customers is relatively stable due to the constant low prices, businesses can better predict their future demand.

As the sales predictions get more accurate with EDLP, businesses can avoid situations where they either overstock or understock their products.

Reduced Operational Costs

Everyday Low Pricing strategy can also lead to operational cost reduction for businesses. EDLP approach reduces the need for an extensive marketing effort to promote sales or discounts.

The constant low price is already attractive enough to draw in customers.

Additionally, businesses don’t have to worry about the additional costs associated with running a sale, such as hiring extra staff.

Moreover, Everyday Low Pricing helps save money by minimizing the movement and fulfillment of products typical for sale events.

What Are the Disadvantages of Everyday Low Pricing Approach?

While the Everyday Low Pricing strategy is certainly effective, it is not perfect. Everyday Low Pricing approach has several drawbacks that can create issues for businesses including:

Lower Profit Margins

Adopting the Everyday Low Pricing strategy can lead to lower margins for businesses.

As the product costs are constantly reduced when compared to the High-Low pricing strategy, businesses might have a harder time making a significant profit.

Everyday Low Pricing strategy requires high sales volumes over a longer period of time to turn out profitable.

This might make it unsuitable for businesses with lower budgets or shorter timeframes.

Potential For Reduced Credibility

While adopting the EDLP strategy can help you guarantee low prices on all of your products, it might not be enough to completely convince your customer base.

Modern-day clients are well versed in deal-hunting and know how to find the best prices on their own.

If it turns out that your competitors offer lower prices on similar products, it might damage the credibility of your business.

Customers will no longer know you as the go-to retailer for the best deals and might start looking elsewhere.

As such, it’s important to always stay on top of the competition and monitor the prices of products.

Possible Reputational Damage

Many customers don’t understand the mechanisms behind the Everyday Low Pricing approach.

Some of them might believe that businesses are only able to set consistently low prices by using subpar or counterfeit products.

This might lead to a negative reputation for the business, as customers will start to see it as untrustworthy.

As a result, businesses should focus on educating their target audience about how EDLP works and what benefits it provides.

Businesses adopting EDLP should also use all means available to monitor product reviews or ratings to quickly detect any negative sentiment and address it before it gets out of control.

Which Brands Use the Everyday Low Pricing?

Everyday Low Price approach is usually associated with larger retailers who have the capability to sell large volumes of products.

Some of the more popular brands using this pricing strategy include:

  • Walmart (creator of the EDLP strategy)
  • Bunnings
  • Trader Joe’s
  • Tesco
  • Procter & Gamble
  • Winn-Dixie
  • Food Lion
walmart

Need Vs. Want

Businesses interested in adopting the EDLP approach should first ask themselves what sort of category most of their products are in.

We can distinguish two categories here – the ‘needs-oriented’ goods and the ‘wants-oriented’ commodities.

‘Needs-oriented’ products are the ones customers cannot go without, such as food, water, supplies, and other essentials that people need to live.

On the other hand, ‘wants-oriented’ items are those that people can survive without but still desire. This might include gadgets, entertainment, clothes, etc.

EDLP approach works very well with ‘needs-oriented’ commodities. Many customers don’t want to extensively look for deals on basic products such as bread, bottled water, or groceries.

However, Everyday Low Price is not as effective when it comes to ‘wants-oriented’ products, such as designer clothing.

These goods are usually significantly more expensive, meaning that customers will be much more price-sensitive and likely to look for more attractive sales and discounts.

If your market revolves around the ‘wants’ category, choosing EDLP as your strategy might not be the best idea.

Conclusion

Everyday Low Pricing strategy has the potential to benefit both businesses and customers.

Clients get to enjoy reduced prices on various products, while businesses can increase their sales and simplify some of the operations and business processes.

However, the EDLP approach is not perfect. Lower profit margins can harm companies if the sales volume is not high enough.

Additionally, enterprises need to constantly monitor their competition to ensure they offer the best possible deals.

Before deciding to use Everyday Low Pricing as your business strategy, make sure to carefully weigh all the pros and cons.

Moreover, take into account the specifics of your target market and the type of products you offer. Only then will you be able to make an informed decision that’s best for your company! Good luck!


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