Have you ever wondered how big and successful brands reach the top? The answer is they understand their competition. It is not possible for any company to be the best as well as stay the best unless they compare themselves with their competitors. It helps in finding out how they are different and how to capitalize on the mistakes of competitors to fetch a good market share. This stands true for the price. It is a known fact that consumers are extremely price-sensitive. It has become easy to compare prices both offline and online and switch to the competitors if they offer the product at a lesser price or offer more value. That’s why every business needs strategic and strong competitive pricing intelligence for being successful in the retail arena. For creating an effective strategy, a business must know who its competitors are and also rank them with regard to price.
Competition is inevitable in every market and it stands truer for the eCommerce market. Furthermore, when there are a lot of competitors, the market is more balanced and takes a customer-centric approach. As we discussed earlier, the assumption is that the customers are price-sensitive. So, to capture a larger market share, you must have a price that suits your business profitability and also converts more customers. And working out such a pricing strategy can be a very challenging task for every business.
Let us deep-dive into the basic concepts of competitive pricing analysis and how they can help you grow.
What Is Competitive Pricing Intelligence?
Competitive is the process of doing research on competitors to analyze their strengths and weaknesses and then compare the results with your business operations for improving the operations. Competitive pricing intelligence plays a crucial role as it helps the business in understanding its position in the market, gain a competitive advantage, and highlight business opportunities.
Analyzing the competitive pricing will help in identifying what is your position in the retail landscape. You will be able to gauge if you can decrease the price for a competitive edge or increase them for growing your profit margins. Tracking the competitors also helps in highlighting existing pricing strategies.
How To Perform Competitive Price Analysis?
It is a known fact that you need to compete when it comes to pricing. However, businesses fail to identify who their competitors are and what are their prices. Sometimes, your competitors might be different than whom you assume to be. The actual competitors are the ones who steal the customers. The below-mentioned steps will help in identifying, evaluating, and understanding the competitors for setting your prices accurately.
- Identify Actual Competitors
You should start with Google as customers start shopping from there. So Google is the place where you should begin your research for competitive pricing. It will also help in narrowing down the list of potential competitors. You can type the name of your product/ service or industry and see what comes. Make a list of the companies that pop up.
Google is a powerful tool which should be used for competitive analysis. Search the product and Google will let you know the relevant companies. You will get the same results as customers will see. Competitive pricing intelligence offers insights that can lead to actionable opportunities for your business improvement.
- Categorize The Competitors
When we talk about SEO tools, it is to be known that when you search the competitors, the ones which rank high might not be your business competitors. However, you should track both, your keyword competitors as well as business competitors for different reasons. The idea is to beat the competitors on Google, rank high, and drive more visitors to the website.
The next step is to categorize the competitors. You can make a list of main competitors and secondary competitors. You can also create other segments such as search competitors, price competitors, new competitors, or the ones that have products which you wish to develop someday. This will ultimately help in customizing your strategy based on how they compete with you.
- Read Competitor Content
You need to have a look at how the competitors are talking about themselves and the products you have in common with them. You can find it by going through their website. You can start with easy ones, like blogs. Their target audience is likely to be the same as you.
Try to gauge how they are describing their products/ services. You can download gated content such as eBooks and product guides. You must see if they have videos and subscribe to their newsletters. Visiting their social media is also important to gather information. It will offer good insight into their products and processes.
- Analyze Competitor Prices
Price analysis is a major step. The most important reason for competitive pricing intelligence is optimizing your prices for the market. It can prove to be a huge advantage if you know their prices. When you visit their website, you should keep an eye on any information related to prices and note it down. Most competitors will have their products listed on e-commerce portals.
With price intelligence tools you can check if the prices are different. Take note of pricing strategies. The idea is to know about their prices and then price your products lower. Lower pricing might not always be the right choice and hence the goal is to understand their pricing.
- Compare The Websites
Competitive pricing analysis is also about having a look at each company’s online presence, especially its websites. It offers great information as they represent the customer journey. You should compare your website with competitors and observe which one offers a better experience to the customers. You can develop the right strategy when you know what is working and what needs to be worked on.
The aim is to offer customers an easy online experience. A slow website, broken links, and content not updated frequently can make the shopper leave your site and switch to a competitor.
- Customer Reviews
You must check the customer reviews about your as well as competitor’s products. See if the reviews are positive and what people are talking about the quality, value, shipping, etc. When you know how customers look at your competitors, you can find out the areas to beat them. You will be able to find a path for improvement. An excellent strategy is to know what shoppers want and what they think to offer custom products tailored to their needs.
Benefits of Competitive Price Analysis
1. Take a Large Market Share :
Every large market is divided into smaller sub-markets. Now, when we say sub-markets, they are distinguished industry-wise, by category wise and so on. Here, every company wants to enjoy a bigger share in order to ensure better profits. With the help of pricing analysis, you can study your exact position in the market against the competition. This is very essential to grow the market share. You can reduce your pricing and have a good volume selling or go for premium pricing and get a smaller audience who are willing to spend more on your products. However, you can do that if you have enough information on hand to move ahead without any hindrance.
2. Keep an Eye on the Market Position:
Now, we all know that market always fluctuates and can never be static. Likewise, your pricing should also match the trends to stay on par with the ongoing trend. For instance, if the market is going through some major changes and all the prices are dropping, then you cannot keep a higher price without justification or else, you will lose out on customers. Now, when we say this, it doesn’t mean that you have to drop prices always. Everything depends on the nature of your business and what you market. But knowing which strategy to adopt can only be done with a better understanding of the market which can be done with the help of effective pricing analysis . That does make sense.
3. Boost Your Pricing Position:
With the help of consistent competitive pricing analysis, you can reduce your chances of losing customers. Let us explain in detail. For instance, you sell luxury automobiles. Now, the market scenario is not known to you. Here, your competition might increase prices and you might still be selling at the same price. So, your target customers are already wealthier and are willing to spend higher for better quality. Hence, they might misinterpret your product as a cheap alternative in your segment. Now, we don’t want that.
Price Your Product For Maximum Outcome
Considering the above-mentioned benefits, it is a wise decision to invest in competitive pricing intelligence tools to give your business a competitive advantage. WebDataGuru is the best data extraction and pricing company providing efficient tools for competitive price analysis. We don’t believe in one-size-fits-all. We have tailor-made solutions for distinctive industries. Any company can rest assured that they will have a good leverage over their competition if they go for our exclusive pricing tools. Want to know how? Then Join Your Mailing List!