P & G Value Pricing

Nearly a year after value pricing was transplanted to Europe from the U.S. by Procter & Gamble and Barilla, this strategy of eschewing price promotions in favor of offering shoppers consistently lower prices has been followed by a drop in sales and market share for both companies.
A similar thing happened in the U.S. in 1991 when value pricing, or every day low pricing as it is also known, was introduced by P&G. Although sales initially flagged, the packaged goods giant's overall volume market share has for the past three years either held its ground or advanced. But conservative European retailers still need to be convinced. P&G brought 'Every Day Low Pricing' (EDLP) to Germany in early 1996. In response, Rewe, the country's largest retailer, and major supermarket chain Spar have now delisted P&G brands, including its Ariel, Vizir and Lenor laundry products, Bess toilet paper and Tempo tissues. Both retailers continue to order the popular Pampers disposable diaper and Always feminine product brands.
According to P&G Germany's annual report for the year to June 30, 1996, sales declined 2% to $4.48 billion, compared with the same period a year earlier, while profit rose by 77% to $72 million. The report noted that sales were down for detergents and cleaning products, but were up for Pampers, Fairy dishwash ing liquid, Always and Tempo. "The development starting this summer shows that the losses we had by launching the EDLP system were on a short-term basis," said Christel Karesch, a spokeswoman for P&G Germany. "Sales are rising a gain." P&G is also in talks with the retailers that delisted its brands. In the U.K., three brands to which P&G has applied EDLP have seen their sales fall also. In the year to Aug. 31, 1996, Ariel's sales in U.K. supermarkets fel l 5.8% to $347 million, Pampers' slid 2% to $261