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Procter & Gamble Co. is joining with Willard Bishop Consulting to launch new software that helps retailers decide, among other things, what items to carry and how to price and promote them.

The Category Profitability & Cost Model software, owned by Barrington, Ill.-based Bishop, uses activity-based costing, analyzing the profitability of each product based on such factors as labor, promotion and marketing expenses.

Using analytical models developed by P&G, scanner data from Information Resources Inc. and store layout software from Intactix, it will show retailers how new products, product variety and other category management decisions affect profits.

The software also will be available to P&G's rival marketers and brokers, but likely at a higher cost than for retailers and wholesalers, which would get discounts for data they provide to update the software, bringing their net cost to about $750, said Paul Weitzel, director of Bishop.


The price for retailers amounts to "almost giving it away," compared to rival packages with prices of $20,000 to $25,000, said Burt Flickinger, consultant with Reach Marketing. He believes P&G wants the software to become an industry standard so other marketers will pay full price, not yet set by Bishop.

An added advantage for P&G is that many of its brands score well in an activity-based costing analysis, and the software could build a case for greater retailer support of P&G promotion and co-marketing initiatives.

"In terms of revenue, it wouldn't be a big play," Mr. Flickinger said, "but in terms of giving them a strong competitive advantage and platform to build share for their brands, it gives them a tremendous advantage."

Once the software is in the hands of other marketers though, it will be hard for P&G to maintain control, and others should be able to use data to their advantage, too, said Ken Harris, a partner with consultancy Cannondale Associates.

Mr. Flickinger said P&G is rumored to be looking at using IRI scanner and U.S. Census data to develop store-specific micromarketing software for retailers.

A P&G spokeswoman wouldn't comment on that.

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