Everyday Low Price (EDLP) - Definition, Importance & Example
What is Everyday Low Price (EDLP)?
Everyday low price (EDLP) is a type of pricing strategy used in retail sector which provides low prices to the customers every single day consistently without any special pricing discount, sale, comparison shopping etc. in contrast to conventional offers and discounts.
Walmart is known to start the EDLP strategy through its stores in the US as opposed to high-low strategy which was more prominent in the retail industry. EDLP strategy is not used by all the retailers though as it is not always possible to keep lower prices over a period of time.
Importance of EDLP pricing strategy
Traditionally, retail stores used to keep regular pricing discounts, coupon clipping promotions, etc. to promote their sales and increase the footfall in their stores. But, this needs a lot of effort in terms of monetary aspects and physical aspects making it difficult to sustain the competitive advantage. The strategy of EDLP helps to convince the consumer that they will get better and low prices than other competitive stores everyday even though the promotions of competitors at regular intervals might provide lowest prices but they will not be available everyday.
EDLP also helps the retail stores to reduce their demand fluctuation that would occur due to promotions on some days, and also reduces the probability of consumers receiving time degraded products. Everyday Low Price strategy cuts advertising costs as well as the customers don't need to be informed about occasional discounts but they are well aware that they will get the best price whenever they go to the store or retail channel. It also helps building brand image and trust in minds of the customers as they perceive the brand to be trustworthy and economical every time.
It is also assumed that sometimes the sales events and promotions are for stock clearances hence the prices have been dropped but in EDLP, that trust is maintained as products are consistently priced lower but perceived quality is always high.
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Advantages and Disadvantages of Everyday Low Prices (EDLP)
Advantages:
1. It leads to less advertising costs as customers are already aware about the low pricing throughout
2. Lower marketing and sales efforts as compared to High-Low pricing
3. Inventory management is more straightforward as there is no sudden rush of customers pertaining to discounts, promotions or advertisements.
Disadvantages
1. It is not practical sometimes to keep offering low prices on a daily basis
2. If there are sudden fluctuations and prices go high, then there is a risk of losing customer's trust as they are used to lower prices
3. It is mostly applicable to large retail stores as compared to small retail brands
Everyday Low Price (EDLP) Example
Stores like Walmart and Tesco have used the EDLP strategy to a very good extent for their success. Walmart has always been associated with EDLP and has even be part of their branding for many years. Online retail also is following the same trend with Amazon also trying to apply EDLP at many times and regions.
Hence, this concludes the definition of Everyday Low Price (EDLP) along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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