Fixing Sales Prices of Merchandise on Par with Competitors · PDF fileFixing Sales Prices of...

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© 2011 SAP AG 1

Fixing Sales Prices of Merchandise

on par with Competitors

Applies to:

SAP IS Retail 6.0 (release number, SP, etc.) to which this article or code sample applies. For more information, visit the Business Process Expert homepage.

Summary

This document depicts about the process of capturing competitor prices in IS Retail for merchandise against store/merchandise group/competitor group and calculating retail sales prices of merchandise based on competitors information.

Author: Ramakrishna Nuthalapati

Company: Infosys Technologies Limited

Created on: 07 March 2011

Author Bio

Ramakrishna Nuthalapati is a consultant working for MNC Company in India.

https://www.sdn.sap.com/irj/sdn/bpx

Fixing Sales Prices of Merchandise on par with Competitors


© 2011 SAP AG 2

Table of Contents

Objective ............................................................................................................................................................. 3

Case Study ......................................................................................................................................................... 3

Assumptions ....................................................................................................................................................... 3

Process Flow ...................................................................................................................................................... 4

Define Price Entry Type .................................................................................................................................. 5

Define Pricing Strategy ................................................................................................................................... 5

Define List Variant ........................................................................................................................................... 7

Define Sales Price Schema ............................................................................................................................ 7

Create new pricing Type and assign to Distribution Chain ............................................................................. 8

Defining controls per list fields against Sales Price calculation schema ........................................................ 9

Assignment of Condition tables .................................................................................................................... 10

Creating Competitor Class & assigning competitors to the class ................................................................. 10

Maintain competitor pricing data at Store /Merchandise category level ....................................................... 13

Capturing Competitor Prices/Price entries .................................................................................................... 14

Calculating Sales prices by considering Competitor sales prices ................................................................ 16

Related Content ................................................................................................................................................ 20

Disclaimer and Liability Notice .......................................................................................................................... 21



© 2011 SAP AG 3

Objective

In Retail, pricing is the main component which affects the business in a major way. Appropriate pricing strategy need to follow to attract and retain target customers. If the product differentiation is very low compared to competitors, retailers always need to watch competitor pricing strategy and adopt or draw different pricing strategy to win the customers.

Here we try to explain and understand the customizing involved in competitor pricing in IS Retail.

Case Study

R300-Great Group Retail Inc is an US based company, pioneer in Retail business of Food&Grocery, Garments & Electronics.

Great Group Retail Inc has got cut throat competition from Mega Value Retail Inc and wants to follow the Low price strategy – 10% less compared to Mega Value Retail Inc.

Assumptions

1. Company code, Company, Sales organization and other logistics master data are already defined and assigned in the system.

2. Chart of Accounts, Fiscal year definition and other finance related master data are already defined and assigned in the system.

3. Various numbering systems for the article or Site and Competitor Mater & other master data are already available in the system.

4. Screen shots / other diagrams are depicted only to understand the process flow. 5. We are considering Store R315, Competitor-301285 and article R100018.



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Process Flow

Define Price Entry Type

Define Pricing Strategy

Define List Variant

Define Sales Price schema

Create new pricing Type and assign to Distribution Chain

Defining controls per list fields against Sales Price calculation schema

Maintain competitor pricing data at Store /Merchandise category level

Assignment of Condition tables (Allowed Pricing levels )

Creating Competitor Class & assigning competitors to the class.

Capturing Competitor Prices/Price entry

Calculating Sales prices by considering Competitor sales prices

3.1

3.8

3.2

3.3

3.4

3.5

3.6

3.100

3.7

3.9

3.11



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Define Price Entry Type

Price Entry type can be defined from the following path.

IMG: Logistics-GeneralRetail PricingCompetitor pricesMaintain price entry type.

Copy the existing price entry type 0001 and name it as CP00.In pricing type no range assignment can be done, which will use this no series for the pricing entry list while capturing competitor prices.

No range can be defined by using T code: WC63

Define Pricing Strategy

Path: IMG: Logistics-GeneralRetail PricingCompetitor pricesMaintain Pricing Strategy

As the retailer wants to follow the low price strategy of 10% less than the competitor, we will copy the strategy 02 to pricing strategy Z1.

If you go to detail level we have different fields like strategy type, initialization, rule, percentage, price pt rounding.



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Strategy:

Mainly decides what type of strategy to follow.Suggesested price will be lower or higher than competitor. Option C will be chosen if we want the system to suggest average price of competitors.

Initialization:

The option chosen here will helpful if there is no competitor prices not available in the system.

End Rule:

It is linked to the percentage rate field. Give Percentage as10, as we want to maintain 10%less than the competition.



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Price point rounding

If you want rounding rules to follow, need to tick the field.

Define List Variant

Path: IMG: Logistics-GeneralRetail PricingSales Price CalculationDefine list variants &assign items.

Copy the standard list variant and save as 20.

While copying the list fields also will get assigned to List variant. List variants will define how the list Screen (pricing table should appear) and what list fields need to appear.

Define Sales Price Schema

Path: IMG: Sales & DistributionBasic Functionspricingpricing controlDefine and assign pricing proceduremaintain Pricing Procedure

Copy WWS004 and name it as WWSMBW. Check VKMP condition type is available and ensure requirement 85 is assigned to it.



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Create new pricing Type and assign to Distribution Chain

New pricing type:

Path: IMG: Logistics GeneralRetail Pricingsales price calculationMaintain Pricing type

Create new pricing type by copying US04 and name it as CP00.

Sales price schema will be tagged in pricing type.

Assign Pricing type to organization level/ref site

Path: IMG: Logistics GeneralRetail Pricingsales price calculationAssign pricing type /reference site to organization Level

Assign the new pricing type CP00 to Sales Org R300, Distribution channel R1.if required, we consider other parameters like Price list & currency.



© 2011 SAP AG 9

Defining controls per list fields against Sales Price calculation schema

Path: IMG: Logistics GeneralRetail Pricingsales price calculationControl Data for Pricing table and Back upcontrols per sales price calculation schema and List field

Copy all the list fields from WWS004 to WWSMBW. Here settings for each pricing table list field against pricing can be done.

Make sure that transfer type A is set for VORPR list field.



© 2011 SAP AG 10

Assignment of Condition tables

Path: IMG: Logistics GeneralRetail Pricingsales price calculationControl Data for pricing table and Back upAssignment of condition table.

Here relevant condition tables will be assigned against pricing level/condition type/application and Sales price schema.

We will copy all records from WWS004 to WWSMBW.

Creating Competitor Class & assigning competitors to the class

Here we will create our entire competitor as customers under Competitor Account Group and assign it to competitor class.

Here we will not concentrate on creation of competitor as customer. We will proceede creating new customer class and assign competitor to this class.

T Code: CL01

Create new class of COMP 11 under classification 011 and assign our competitor-301285 to this group.



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Assigning competitors to competitor class can be done by using T Code: CL24N

Click on only new assignments which will give new window asking which objects do you want to assign to class. Chose customer.



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In next screen you can assign all your competitors to this class and save.



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Maintain competitor pricing data at Store /Merchandise category level

Now we will assign our pricing strategy, class type and competitor group to Store via Merchandise category.

This can be done from site screen by choosing Merchandise category.

T code: WB02(Site Change)

We will update against R1141 Merchandise category as the article R100018 (Example) falls under R1141 MC.

Till now we have completed the process of Customizing. Now we need to capture competitor data in our system and use the data while running price calculation. This will be explained in further steps.



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Capturing Competitor Prices/Price entries

T Code: WMB1

We will choose the price entry type CP00 created in our process. Give competitor group COMP11 and article as R100018 as we are planning to capture competitor prices for article R100018 against comp titor Class COMP11. Execute the process by giving customer as 3001285.



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Double click on the Competitor which will take you to price capturing screen.

Give entry site as R315 give the competitor price as 80 and see the price activation data. When we activate the price data will get saved to VKMP Condition type.

Choose the row and activate the prices by choosing activate prices and save.



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We will get the message that Price entry was saved .we can view the price list from WMB3.

Capturing Competitor prices can be done in Non SAP system and can be interfaced with SAP through Idoc type COND_A as we are capturing competitor prices as condition records against condition type VKPM.

Calculating Sales prices by considering Competitor sales prices

T code: VKP5

This is the standard T code used for calculating Sales price.

Price calculation is depended on Purchase price determination sequence and sales price determination sequence.

Here we will use Purchase Price determination Sequence as 01 & Sales Price determination Sequence as 03 as we want to carry forward suggested sales price as final price.

Here we will not concentrate much on these as our motto is to explain about competitor pricing.



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Display of price calculation will depend on display options like list group & List variant.

Here we will use List variant 20 which we have created in the process.

We will calculate the price for article R100018 & Site R315.

Execute the process after giving necessary details like article, Site, Purchase Price determination sequence& sales price determination sequence& list variant.

Next you will be taken to price table screen.

Here we can see suggested price as 71.99 and is copied in to final price as we have chosen sales price determination sequence as 03-use suggest prices as sales price.

We can see the margin as 86.99 and previous price as 86.99.

By clicking on sales button, we can see the condition values which it has fetched in to SP schema.



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If we have glance on VKPM records we can see it has got 3 values (100, 120, and 80)

Note*100,120 are the comp prices maintained for other competitor and assigned this store and MC.

Since in the pricing strategy we have chosen Strategy type as A-Lowest Price, it has considered Lowest Value i.e. 80.

So the suggested sales price should be 10% than the competitor price-80.

Note: we gave end rule as A and Percentage as 10 in pricing strategy.

Suggested sales Prices=80-(80*10/100) =72

But the suggested price is 71.99 this due to rounding rule.

Once we save this working system will save this data and pricing document will be created.

Prcing document can be viewed by using VKP7 T code.

For confirmation we will check the price of article R100018 for site by using T code VK13.

We can see sales price of 71.99.



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We have completed the sales price calculation based on competitor Prices (market research) and adopted the Low price strategy.

We can create more pricing strategies and can be followed to have better competitive pricing. We can have premium pricing in lieu with competition also.

Hope this document will be useful in customizing different competitor pricing strategies and fixing merchandise price on par with competitors.



© 2011 SAP AG 20

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Disclaimer and Liability Notice

This document may discuss sample coding or other information that does not include SAP official interfaces and therefore is not supported by SAP. Changes made based on this information are not supported and can be overwritten during an upgrade.

SAP will not be held liable for any damages caused by using or misusing the information, code or methods suggested in this document, and anyone using these methods does so at his/her own risk.

SAP offers no guarantees and assumes no responsibility or liability of any type with respect to the content of this technical article or code sample, including any liability resulting from incompatibility between the content within this document and the materials and services offered by SAP. You agree that you will not hold, or seek to hold, SAP responsible or liable with respect to the content of this document.

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