This appendix covers the following topics:
Tech Emporium is a fictitious manufacturer of high-tech gadgets for the networking industry. The company’s two most popular products are Brainglo and Infratimers. Both Brainglo and Infratimers are sold in a product grouping for tools items. Brainglo also belongs to the infrastructure product grouping.
Tech Emporium sells its products to two classes of customers: OEM companies and emerging growth companies. In this case study, we examine orders placed from National OEM (an OEM company) and an emerging growth company called HTG (Hoping to Grow).
The following tables illustrate Tech Emporium's pricing situation. The first table depicts the price lists, discounts by customer are depicted in the next table, and discounts by products are depicted in the third table. These tables are for reference throughout this case study.
| Products | Corporate Price (default) | National OEM Price | HTG Price |
| Brainglo | $200 | $175 | Not applicable |
| Infratimers | $160 | Not applicable | $150 |
Note: The Corporate Price List contains all items. If a product is not on a price list (marked not applicable), then the price defaults to Corporate.
| Customer | Customer Class | Price List | Discount | Discount Name | Exceptions |
| National OEM | OEM | National OEM | 3% | VIP discount | Customer class is OEM |
| HTG Ltd. | Emerging growth | HTG | Null | Null | Null |
| Product | Product Grouping | Discount | Exception |
| Brainglo | Infrastructure | 5% | Customer specific price list |
| Brainglo | Tools | 10% | Null |
| Infratimers | Tools | 10% | Null |
The following section introduces several pricing scenarios.
Price List Scenario
Tech Emporium wants certain customers to receive special pricing treatment for some products and standard pricing treatment for other products.
National OEM and HTG want to place orders for Brainglo and Infratimers.
Pricing Actions and Rules
To receive the special and standard prices, pricing actions, and rules are defined. Break down the pricing action into two parts.
| Pricing Requirement | Pricing Rules |
|---|---|
| Receive special price for product base on an applicable price list. | Price list is not specified on the order. Customer is eligible for a specific price list. Ordered item must appear on the specific price list. |
| Receive standard treatment price for other products. | Ordered item must not appear on the customer's specific price list. |
Discount Scenario
Tech Emporium offers discounts based on customers and product groupings.
National OEM is entitled to receive a special VIP discount of 3 percent for all of its orders. HTG belongs is in the emerging growth customer class; it is not eligible for the VIP customer discount.
There is a 5 percent discount on products in the infrastructure product group and a 10 percent discount on the tools product group (Brainglo is in both the Infrastructure and Tools product group and Infratimers is only in the Tools product group). If a customer is eligible for multiple discounts based on product groupings, then that customer will receive the lesser of two discounts. For example, a customer can not receive both a 5 percent and 10 discount for Brainglo.
Pricing Requirement 2
In certain cases, multiple discounts cannot be applied at the same time to the order. If a customer is eligible for both a 5 percent and 10 percent discount, then that customer should get only the 5 percent discount.
Pricing Requirement 3
Applying discounts depends on if an item has received special pricing promotions. Products in the infrastructure category get a 5 percent discount if the price is derived from the customer specific price list. Products in the tools category are entitled to a 10 percent discount.
Pricing Requirement 4
Discounts can be given based on a the structure of the customer hierarchy. Customers in the OEM customer class are entitled to 3 percent discount on all orders, whereas customers in HTG customer class are not entitled to any discounts.
Pricing Requirement 5
There are discounts that look at individual lines on the order. Other discounts may look at the entire order. For example, Customers in the OEM customer class are entitled to an order level VIP discount. Therefore, the 5 percent discount and 10 percent discount can be applied only to the order and not to individual lines.
| Pricing Action | Pricing Rules |
|---|---|
| Give 5% discount | Only for the order line. Applies when user leaves the line. Applies when ordered item is from Infrastructure product group. Only when customer specific price list is selected. If there are conflicting discount, this one is selected. |
| Give 10% discount | Only for the order line. Applies when user leaves the line. Only when ordered item is from the Tools product group. |
| Give 3% discount | Only the entire order. Applies when customers are in the OEM customer class (in this case, only National OEM will receive the discount). |
Now that each requirement has been divided into individual pricing actions and pricing rules, we will show you a method of implementing these rules and actions using Oracle Advanced Pricing.
Price List Setup
Setup requires two customer specific price lists and one corporate price list. Attaching a qualifier of customer name makes the price list customer specific. Customers do not specify a price list when ordering. This enables the pricing engine to search for a price list. In Oracle Advanced Pricing qualifiers direct the pricing engine towards a specific price list.
A secondary price list must be set up for the products that do not have special pricing. For this example, the Corporate Price List, which includes all of Tech Emporium's products, is the secondary (or default) price list. When the pricing engine does not find an ordered item on the primary price list, the pricing engine searches the secondary price list.
Discount Setup
Modifiers and Qualifiers
Other pricing actions, such as discounts, are implemented through the use of modifiers and qualifiers. You can map each pricing rule to a section on the modifier form. You can also attach qualifiers to modifiers to specify the eligibility conditions for a discount.
Incompatibility Groups
A customer may be eligible for a 5 percent and a 10 percent discount. A rule is set that the customer cannot receive both discounts; the customer should receive only the 5 percent discount. By grouping discounts into the same incompatibility group, discounts no longer conflict. The pricing engine examines modifiers within the same incompatibility grouping level and selects only one modifier. Implementers select whether precedence or best price is used for incompatibility resolution for each pricing phase. Precedence has been selected for this case study. Both the 5 percent and 10 percent discounts are in the same incompatibility group; the pricing engine will select the modifier line with the lowest precedence value.
Pricing Phase
Incompatibility works only within a pricing phase. Discounts can be applied at different times in the order cycle. Tech Emporium applies three discounts at different times within the order cycle. The first two discounts apply when you leave the order line; this pricing phase is called list line adjustment. The third discount is applied when the order is saved: this pricing phase is called all lines adjustment. For all lines adjustment, the pricing engine must evaluate all the lines on the order.
Discount Example
One of Tech Emporium's pricing rules is that customers associated with the OEM customer class are entitled to a 3 percent order level discount. National OEM is eligible for this discount. There is no need to define an incompatibility group for this during setup because it applies in addition to other discounts. Some discounts are at the line or group of lines level, while others are order level discounts. The 3 percent VIP discount is an order level discount, while the 5 percent and 10 percent product discounts are line level discounts.
5 Percent Discount
To ensure that the discount applies when there are conflicting discounts, the precedence value must be smaller than that of the other discount. Incompatibility is set to Level 1 Incompatibility Group.
10 Percent Discount
This discount is applied after the user leaves the order line. The incompatibility is Level 1 Incompatibility Group. The precedence value is a higher number (lower precedence).
3 Percent Discount
You must define the order level discount and attach a customer class qualifier. The discount always applies when the customer meets the requirement. Do not define an incompatibility group. Customer class is the qualifier.
Based on the price list and modifier setups discussed in this case study, the following tables depict how orders from National OEM and HTG appear.
The following table depicts a National OEM order:
| Item | Quantity | Price List | List Price | Selling Price | Price Adjustment |
|---|---|---|---|---|---|
| Brainglo | 1 | National OEM | 175.00 | 161.00 | 3% OEM discount 5% infrastructure products discount |
| Infratimers | 1 | Corporate | 160.00 | 139.20 | 3% OEM discount 10% tools discount |
The following table depicts an HTG order for the same items:
| Item | Quantity | Price List | List Price | Selling Price | Price Adjustment |
|---|---|---|---|---|---|
| Brainglo | 1 | Corporate | 200.00 | 180.00 | 10% tools discount |
| Infratimers | 1 | HTG | 150.00 | 135.00 | 10% tools discount |