8 Tips to Leverage Competitive Pricing Intelligence
date of publication
June 13, 2023
time to read
In the face of rising inflation and shifting consumer behaviors, knowledge of your competitors’ prices has become more important than ever. But it's not just about keeping tabs on the competition. It's about strategically leveraging this information to bolster your business performance.
Competitive pricing intelligence gives you a detailed blueprint of market price positioning. During times of constant cost increases, understanding how your competitors adjust their prices is crucial in determining the correct price positioning for your product and creating a competitive advantage.
Moreover, when provided at scale, competitive pricing intelligence allows businesses to automate competition-based price adjustments. So, how can you fully leverage this intelligence for better pricing decisions? Let’s examine the eight steps that can guide you through this process.
1. Define pricing strategy and implement prerequisites
Before you immerse yourself in the world of competitive pricing intelligence, it's crucial to establish your pricing strategy and implement certain prerequisites. These initial steps create a solid foundation for your competitive pricing efforts, setting you up for success down the line.
What are your pricing goals? How do you define your value proposition? These are the first questions you need to consider when developing your pricing strategy. You should also factor in the impact of supply, demand, and costs as well as anticipate customer and competitor reactions to price changes.
With your strategy crafted, your next move is to put the necessary processes in place to unlock the full potential of competitive pricing intelligence. This includes centralizing your data, which is critical for making more informed pricing decisions along with differentiating prices by geography, season, and channel.
2. Identify your competitors
Embarking on the journey to successful competitive pricing demands an essential first step: recognizing your competitors. This includes both direct competitors, who offer identical products, and indirect competitors, who satisfy the same customer need, albeit in a different way.
Understanding who you're competing with provides a compass for navigating the market and creating pricing strategies that give you a competitive edge.
Identifying your competitors isn't merely about listing businesses with similar products. It involves a competitive analysis of their business models, pricing structures, value propositions, and communication strategies with customers.
3. Source competitive pricing data
The data you collect can be as diverse as the market itself, spanning from the pricing models your competitors employ, the discounts and promotions they offer, to how their prices fluctuate over time. There's no one-size-fits-all approach to sourcing this data, and the methods you choose should align with your unique business needs and available resources. Let's break down the four primary methods.
Picture this as a bird's-eye view of the industry landscape. Market research offers a wealth of data and insights on industry trends, including pricing. Bespoke research can be commissioned or existing reports are available from research firms and industry associations. While they can offer a high-level understanding, they tend to age like bread, not wine — becoming stale relatively quickly. Nonetheless, they serve as a useful tool for initial orientation and broad strategic planning.
Gain a direct snapshot of your competitors’ prices for a range of products by conducting mystery shopping. This method offers insights into the in-store and online brand positioning of your competitors. Keep in mind, though, it provides a static snapshot rather than a dynamic picture.
Turn the tables and let your customers do the talking. In a B2B environment, sales feedback can be a goldmine of information. Yes, it's inherently partial and influenced by the perspectives of prospects and customers. But isn't that what makes it so valuable? It offers a unique insight into the perception of your prices in the market.
Think of this as the modern-day equivalent of a secret agent gathering intel. Web scraping is the process of systematically sifting through websites to extract competitors' product and pricing information. For B2C businesses, this method isn't just an option — it's the preferred source of competitive data. Scraping providers offer up-to-date competitor information on an ongoing basis.
4. Analyze data collected for insights
Collecting competitive pricing data is only the first step; the true magic lies in its analysis. By carefully dissecting the data, you can spot critical trends and understand the profound impact of pricing on sales. This isn't just about crunching numbers, but rather uncovering the narratives hidden beneath the figures. These narratives offer glimpses into your competitors' strategies and market behaviors, allowing you to anticipate shifts and quickly adapt.
Furthermore, identifying how price adjustments affect sales volumes gives you a direct insight into customer price sensitivity. By understanding how your consumers respond to price changes, you can make more effective pricing decisions. This, in turn, can boost sales and increase customer satisfaction.
5. Use insights to make better pricing decisions
Equipped with the insights derived from your data analysis, you're now positioned to refine your pricing and enhance your profit margins. This process of margin optimization isn't based on guesswork or intuition; instead, it's centered around the use of robust, data-driven insights to make informed pricing decisions.
Applying these insights can significantly improve your profitability and strengthen your competitive position. By proactively aligning price adjustments with market trends and competitive movements, you're not merely keeping up with the industry — you're setting the pace. This approach to margin optimization is key to maximizing your financial success in a competitive environment.
6. Determine when to use competitive pricing
Understanding when to deploy competitive pricing is as crucial as knowing how. Should you lower your prices to match competitors if your performance is good? Which competitor should you benchmark against? Is there a risk of a price war?
Competitor prices should not be the sole factor determining your prices. You also need to take into account sales performance and other KPIs, such as conversion rates, to assess the need for price changes. On top of that, different situations may call for different pricing strategies, such as cost-plus or value-based pricing. The trick lies in discerning which approach suits your specific circumstances best.
7. Constantly monitor your competitors
Competitive pricing intelligence is an ongoing process. In the dynamic world of business, changes are the only constant. Prices fluctuate, trends evolve, and the competitive landscape is always shifting. Thus, it's vital to keep a close watch on your competitors, continually monitoring and updating your data to stay current.
This continuous vigilance empowers you to stay ahead of the curve. By swiftly responding to a competitor's price drop or identifying a budding pricing trend, you can capitalize on opportunities, thereby ensuring your business remains competitive and profitable.
8. Streamline the process with pricing automation
In managing extensive catalogs with hundreds of thousands of SKUs across various regions, online, in physical stores and marketplaces, you'll quickly discover that spreadsheets simply don't cut it. You'll need a more efficient and scalable tool to handle this level of complexity.
Enter pricing automation tools like Pricemoov. Powered by internal and external data, Pricemoov enables you to effortlessly centralize and analyze competitive data. By consolidating competitor information, along with all other price-impacting data, you gain the ability to make intelligent pricing decisions at scale.
Pricemoov enables users to set and dynamically optimize prices across their omnichannel business. Here's how it empowers you:
- Visualize: View your current catalog price positioning versus the competition. Users can make informed pricing decisions aligned with market dynamics directly on the platform, making it adaptable for all levels of pricing maturity.
- Automate: Manage and optimize prices at scale, covering entire product catalogs if needed, by providing users with pricing strategy templates that leverage competitive data.
- Analyze: Tap into historical competition dashboards. Users can easily rate their performance and understand competition price update patterns to better anticipate future price changes.
Unlocking the power of competitive pricing intelligence
In today's fast-paced business world, mastering competitive pricing intelligence is no longer just a nice to have — it's essential for thriving in an increasingly complex digital landscape.
By taking a methodical approach to defining your pricing strategy, identifying your competitors, sourcing and analyzing competitive pricing data, and consistently keeping an eye on your competitors, you'll be well-equipped to make informed, data-driven pricing decisions that elevate your competitive standing.
But why stop there? The power of pricing automation can streamline this process, enabling you to manage millions of prices with ease and efficiency. Remember, each stride you take towards better pricing decisions ultimately contributes to your bottom line.
At Pricemoov, our mission is to empower businesses like yours to excel in a constantly evolving digital world, through the power of intelligent pricing. We pride ourselves on offering a best-in-class pricing experience with our intuitive, adaptable, and scalable platform.
As relentless innovators, we continuously strive to deliver advanced, actionable solutions that accelerate your pricing transformation and fuel profitability. Book a demo today to learn more.