Customers love discounts and retailers know that. Consequently, they use discounts to gain more customers and drum up sales. While this is a great strategy for making more sales, you could end up with losses if you overdo it.
Retailers must be innovative with regard to giving discounts in order to avoid making losses. Discounts are good because they help you to maintain your customers. Also, they attract new customers to your business.
Competitive pricing analysis with netRivals software allows you to analyze current market scenario, as well as what is going on with your competitors there. This sort of data allows you make better inform pricing decisions. This could be a good way of determining when is the right time to offer discounts and change prices to adapt to market situation and compete in a better way without risking your profit margins.
Here Are Your Options
If you are looking into embracing a competitive pricing strategy in your company, here is what you need to know.
Lower Your Prices
Your customers need to know that your product will cost them less than your competitors.
Make Your Prices Equal to the Competition’s
Offer prices that are equivalent to what the competition offers. In addition, give your Customers more incentives to choose your product over your competitor’s. For instance, refine the quality of your product.
Raise the Price of Your Product
Many consumers follow the ‘cheap is expensive’ adage. Figure out what your product needs to make it better than your competitor’s. Customers will pay for a product that is superior quality even if they have to pay slightly more.
How to Endorse Competitive Pricing in Your Business
A business owner must be tactful in order to continually raise their profit margins. Competitive pricing is one way you can ensure the money keeps coming in. The strategies below will help you set your prices competitively:
Set Your Prices below Market Value
This can be a little tricky as you could end up incurring losses. To reduce your chances of losing revenue, compare factors such as:
- Variable costs
- Fixed costs
- Potential product prices
Evaluate Your Operating Costs
Consider writing up a list of your overhead and equity and try to figure out how you can reduce your operating costs. Try paying your invoices early on time or incorporating technology to reduce costs.
Gauge Your Competition
Bench-marking your competition is one way of understanding them. You must compare prices in order to work out how you are going to set yours. Moreover, prices tend to seesaw with time.
Study how the competition sets their discounts−if they do. Also, find out if the discounts are seasonal as well as why they give them. Get as much information as you can to help you price your products competitively.
Tips on Executing a Competitive Pricing Analysis
1. Ascertain the Accuracy of Data
In order to constructively analyze your competitors, the data you are examining must be accurate and standard. The following is a list of the points of reference when checking out quality data:
The intensity of the Comparisons
All attributes of the product under scrutiny must be taken into consideration. These include quality, color and technical characteristics.
Use of Automated matching Systems
Automated price matching allows you to avoid the burden of manual matching. It connects lots of products automatically based on common references such as the EAN code. If, for some reason, it is not able to make connections based on the aforementioned references, it suggests matches.
These matches are based on features such as photos and titles. Ultimately, automated matching makes use of pricing intelligence software and the provided data allows you to make whip-smart decisions.
Planned Data versus Delivered Data
Sometimes you will find that some information is missing on the competitor’s sites. As a result, the data you approximated before collection may be more than the amount you are able to access. Thus, delivered data may be less than expected data.
Most Recently Updated Data
Only use data that has been updated recently. The best data to check out is that which has been updated at least a couple of hours before the price was updated.
Frequency of Data Delivery
Every 20 to 30 minutes, your internal system should receive product and pricing data. This helps to facilitate a more compelling data breakdown.
2. Work Out the Data Specification
Your business must figure out the specifications of the data they need to collect for pricing comparisons. The following are the specifications to look into:
The Competitor’s Price Index
This shows you where the competition’s product has been positioned in the market over a specific period of time. It helps you to anticipate the ambulation of the market and factor that information in your pricing.
The Competitors’ promotional Offers
Consumers are in a constant search for the best discounts. Retailers are aware of this and try their best to outdo each other in discount offers. A Company must be aware of the competitor’s promotional activities as well as the sales in order to amend their own.
The rules of supply and demand may apply here. Retailers may regulate their prices depending on the competitor’s product stocks.
3. Classify the Competition
This classification will depend on factors such as target consumers and the quality of the product. Competitors can be categorized into three groups:
The primary group consists of direct competitors who target the same consumers as you. Secondary competitors go for either improved or lesser versions of your product. Lastly, the third group focus is on products that are not immediately relevant to your product.
This classification allows the retailer to direct their attention to the right competitors. This not only saves them time and effort but also money. It is also important if the retailer plans on expanding their product in terms of quality and as well as reach.
4. Track Competitors’ Online Activity
Another way to get a feel of the market is to monitor the competitors’ online activity. This includes websites, blogs as well as social media presence. The following factors must be monitored:
- Interaction with consumers
- Whether the sites and social media accounts support mobile gadgets
- Product descriptions
- Visual display
- Customer support
- Feedback options
- Response rate
Moreover, you can follow your competition on social media and sign up for newsletters and bulletins from their websites. This way, you will have an inside look into what attracts customers to the competition and make the necessary amends to your product.
Businesses do not operate as islands. Checking your competition out is one way to find out if your pricing is in line with the market value. Establishing a pricing system is often formidable. You must study the market in order to find out what the right procedures are.
Competitive pricing brings you that much closer to achieving your business objectives. You are able to compete on an even or higher level with your competition, get more customers or clients and raise your profits margins.