CAMPBELL OFFERS FULL-PRICE CPR OPTION

JAMES TENSER

CHICAGO -- Campbell Soup Co. has moved to overcome some barriers its continuous product replenishment program presented to wholesalers and non-everyday-low-price retailers by creating a second program option more compatible with their needs.

Dubbed Option II, this new version of CPR, as Campbell refers to its program, is based on full list pricing, combined with off-invoice allowances that provide a clear incentive for retailers and wholesalers to avoid forward buying and diverting.

While Campbell has been practicing CPR for three years, it introduced the new option in the second quarter of 1994, said Harry Tetlow, vice president of logistics for Campbell Soup. "We developed a second option because we realized our initial program did not address the needs of the wholesaler," Tetlow said in a talk delivered at the Trade Marketing in Transition conference here sponsored by the Marketing Advisory Council, New York.

"Our original program was based on EDLP pricing," he said, noting that 45% of Campbell's customers are retailers and 47% are wholesalers. "EDLP took care of about a third of the retailers, but another two-thirds either were incapable of the electronics part of the program or simply did not want to play in an EDLP game. And 100% of the wholesalers just couldn't manage that."

Since Option II was introduced, said Tetlow, wholesalers are beginning to come on board. "We think getting to 50% in a reasonably short period of time is in the cards," he added, citing a goal Campbell has set for itself.

Tetlow said that Campbell's CPR program has already gone far. It is live with 47 customer distribution centers and in dry runs with another 14. "We have another half-dozen companies who are preparing their systems to go live," he added.

The objectives of the program are to improve cash flow and better use warehouses by providing for level shipments, he explained.

"At Campbell Soup it is not unusual for a customer to order 50 trucks of product one week and nothing for the next two or three weeks," he said, describing an example of how one retailer used to purchase chicken noodle soup -- 5,000 cases in January and then nothing again until June.

Tetlow said that Campbell understands that its customers have made a lot of money on such programs. "The challenge for CPR is to figure out how to get them the money that they make on this program and go back to shipping based on consumption."

Option II retailers and wholesalers participate in all off-invoice promotions, and buy Campbell products for the regular national list price. In addition to the allowances on cases shipped, at the end of the period Campbell writes them each a check equal to 125% of whatever they took in off-invoice products.

"We are interested in what the customer ships out to his store, and we will pay a premium on that," Tetlow said. "The retailer's incentive is to merchandise that product as much as he can."