Model-Based Promotion Pricing System

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Solution Overview

Problem

Current systems for retail price determination rely heavily on trust between manufacturers and retailers, leading to potential fraud and errors in implementing promotional offers, as manufacturers lack direct control over retail prices and auditing capabilities.

Innovation Solution

A model-based promotion and price computation system that separates promotional offers from manufacturers and retail price setting by retailers, using a combined pricing model that incorporates manufacturer-provided promotional information and retailer-determined price parameters, with secure auditing capabilities to verify proper implementation.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Adaptability or versatility

If manufacturers and retailers rely on trust-based contractual agreements for promotional pricing, then promotional offers can be implemented with manufacturer input, but fraud and errors occur when retailers fail to implement promotions properly

Engineering Contradiction:

Improvemanufacturer promotion inputVSAvoidpromotion implementation accuracy

Core Design Contradiction:

Adaptability or versatilityVSReliability

Solution Approach 1:

The patent introduces an electronic auditing system as an intermediary between manufacturers and retailers. This system automatically verifies promotion implementation by comparing actual retail prices against promotional pricing models, eliminating reliance on trust-based manual auditing while preserving manufacturer control over promotional offers

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The system implements continuous feedback loops where retail pricing data is automatically collected, analyzed, and compared against promotional requirements. This real-time feedback mechanism enables immediate detection of implementation errors or fraud, ensuring reliable promotion execution while maintaining manufacturer versatility in offering promotions

Inventive Principle:

Principle #23Feedback

2Ease of operation

If retailers have full control over retail price setting, then they can respond flexibly to market forces, but manufacturers cannot ensure their promotional offers are properly implemented

Engineering Contradiction:

Improveretailer price setting freedomVSAvoidpromotional offer implementation

Core Design Contradiction:

Ease of operationVSReliability

Solution Approach 1:

The system segments price determination into two independent components: retailer-set base prices and manufacturer-defined promotional discounts. This segmentation allows retailers to maintain control over base pricing while ensuring promotional offers are applied correctly through automated verification of discount calculations

Inventive Principle:

Principle #1Segmentation

Solution Approach 2:

An electronic auditing system acts as an intermediary that monitors the interaction between retailer pricing decisions and manufacturer promotions. The system verifies that promotional offers are properly applied without restricting retailer autonomy in setting base prices or selecting which promotions to offer

Inventive Principle:

Principle #24Intermediary (Mediator)

3Measurement precision

If traditional auditing procedures are used to verify promotion implementation, then some verification is possible, but the process requires significant trust and is vulnerable to record manipulation

Engineering Contradiction:

Improvepromotion verification capabilityVSAvoidauditing system trust requirements

Core Design Contradiction:

Measurement precisionVSDevice complexity

Solution Approach 1:

The patent replaces manual, trust-based auditing mechanisms with an automated electronic auditing system. This system uses computerized data collection and analysis to verify promotion implementation, eliminating the need for complex trust relationships and manual record-keeping while enhancing verification precision

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Solution Approach 2:

The auditing system enables self-verification where the system automatically collects, analyzes, and reports on promotion implementation without requiring manual intervention from manufacturers or retailers. This reduces complexity by making the auditing process autonomous and objective

Inventive Principle:

Principle #25Self-service

4Reliability

If manufacturers delay promotion implementation due to operational issues, then errors can be avoided, but consumers do not receive intended promotional benefits

Engineering Contradiction:

Improvepricing accuracyVSAvoidpromotion implementation speed

Core Design Contradiction:

ReliabilityVSProductivity

Solution Approach 1:

The system performs preliminary validation of promotional pricing parameters before implementation, checking for errors or conflicts in advance. This preliminary action ensures pricing accuracy is maintained while enabling rapid, error-free promotion deployment without operational delays

Inventive Principle:

Principle #10Preliminary action

Data Source

PatentUS11113710B2Model-based promotion and price computation system and method

Publication Date: 2021.09.07 PHILIP MORRIS USA INC

AI summary

A system and method for providing model-based promotion and price computation is described in which promotional offers in the form of promotion information from a manufacturer are combined with price determination parameters from the retailer to calculate a final retail price. The system prevents fraud by eliminating the heavy dependence on unverifiable trust between the retailer and manufacturer and by assuring that the consumer will receive the benefit of the promotions intended by the manufacturer.