Retailers know that consumers who shop online prefer the lowest price stores. However, most don’t know how to respond to this behavior. The worst-case scenario is making pricing decisions in an information vacuum, without data on competitors’ prices for similar products. Whether you position your products as premium or prefer the low-end segment and sales, you should develop your own price monitoring strategy.
A good competitor price monitoring strategy acts as a navigator, showing you what your competitors are doing and how you can respond so you don’t miss out on opportunities.
Here are 4 goals that should be a starting point when defining the tasks that a price monitoring strategy will accomplish for your company.
- Accuracy – price monitoring should be a source of accurate and reliable data
- Timeliness – price monitoring should provide actionable information at the right time
- Action – One of the reasons why some online retailers fail is the lack of real action based on price monitoring data
- Competitive advantage – set goals that will link price monitoring data to increased market share, or revenue growth, or other important business outcome
Next, we’ll look at the practical steps needed to develop a competitor price monitoring strategy that will help you achieve all of your goals.
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Step 1: Decide on your market positioning
Market positioning is the first and essential element of a price monitoring strategy. It will help you understand what kind of price data you need to collect. There is nothing more disconcerting than realizing that every competitor is selling their products cheaper than you. Without a clear brand positioning in the market, you can easily panic and think about discounting everything in the store.
Therefore, competitor pricing data should be used in a way that maintains your brand positioning and value proposition. However, market sault data positioning is not only about the value proposition, but also about another, broader concept: brand DNA.
Successful brands typically have a specific brand DNA. No two successful brands have exactly the same DNA. This means that they cannot, by definition, succeed by selling products at the same price.
Take luxury sportswear brand Nike, for example. 10 essential e-commerce business growth tools every online store should use A pair of Nike Air Jordans starts at $200. Collectible pairs of Air Jordans have been priced at over $10,000, according to Money Inc.
Nike positions itself as a premium brand and has the DNA of an elite sportswear brand. It has nothing in common with budget clothing brands like Zara.
If Nike tried to price its shoes like Zara, the company would quickly go bankrupt, given Nike’s inherent brand DNA.
The positioning of a brand on the market determines its place among other products in terms of product quality, exclusivity and, finally, price. Thus, a product can be in any of the price segments:
- Low
- Average
- High
Decide on this point in advance so that you can correctly interpret and use pricing data and not harm your company.
Step 2: Research your competitors
The next step in developing a price monitoring strategy is to identify and study your competitors. In this process, we suggest creating 4 separate lists of competitors based on different strategic relationships with your brand.
- Competitors with similar positioning – study competitors with the same positioning as you
- Completely different positioning – studying competitors with a completely different positioning from you, these can be companies from a low or high market segment
- Most Important Competitors – Identify your most important competitors, this could be a shorter list of 5-10 companies that you consider to be the most significant
- “Benchmarks” for your brand – identify competitors who have already achieved what you want to achieve and who can be used as an example to achieve your goals
Separate lists of different “types” of competitors can provide much more actionable insight than simply compiling a single list of competitors. As you examine different groups of competitors and identify commonalities within each group, you’ll find it easier to derive patterns for each list.
For example, you may notice that companies with similar positioning sell their products at a higher price on average than you do.
Or find that a group of brands in a premium market segment where you don’t compete are selling your core products at a deep discount to attract affluent customers.
In any case, studying competitors, ideally broken down into groups, provides insight into competitive behavior in the market.
Step 3: Identify competitor sites and products that you will monitor
To collect pricing data, we recommend using a price monitoring tool from iDatica to automate the process. According to TechCrunch, large retailers like Walmart and Amazon, with their commitment to low prices, use extremely complex pricing algorithms. However, using a tool like iDatica’s own price monitoring software will allow your company to easily access the core functionality.
Once you have selected and installed the right tool, you will need to find competitors’ websites and select the products whose prices you want to monitor. iDatica ’s price monitoring software automatically collects price data and other information that may be of interest to you, such as:
- Product Description
- Product image
- Reviews
- Shipping cost
Step 4: Test the data you’ve collected on suitable products
Be sure to check the data you received as a result of monitoring competitors’ prices.
You can start with one of the data groups, for example, focus on your key products. Set up a system to monitor prices and collect data over a certain period of time, say 2-3 days or a week.
Then look at pricing data collected from competitors’ stores for the products you sell.
This baseline data will help you ensure that your strategy is providing the right information to use. If you find that a product is missing from the selection, add it. And if some prices seem outdated, check your price monitoring tool settings.
Once the data quality is satisfactory, the tool can be applied to all products in a store or catalog.
Step 5: Identify problems and adjust your competitor price monitoring strategy
After testing a price monitoring strategy or working with it for some time, you may encounter problems that require adjusting the strategy.
For example, some products may run out at a competitor’s warehouse, or one of the competitors may change its website. In such cases, it is necessary to analyze the reasons for the absence or inaccuracy of data and make a decision, for example, on the advisability of excluding a competitor from the price monitoring group.
Analysis and customization of the competitor price monitoring system from iDatica will allow you to keep the received data up-to-date. Later, you will be able to view fresh data at intervals of, say, two weeks, to set the right prices for goods in the store and gain maximum advantage in the market.
Step 6: Incorporate price monitoring into your daily routine
If you sell products in a highly competitive vertical, checking data at long intervals may not be optimal. The situation in such a market may require checking prices across the entire industry in near real-time. Therefore, monitoring should be done in shorter intervals.
Price monitoring software from iDatica tracks daily price changes. The data is displayed in one convenient dashboard, so you can see your competitors’ price changes at a glance.
This way, you can include price monitoring in your daily management tasks. By updating price information daily, you can identify opportunities or identify the need to adjust prices based on competitors’ actions.
Benefits of Competitor Price Monitoring Strategy
Developing a competitor price monitoring strategy will provide you with important data that will help you make your products more attractive to more customers. To achieve this goal, you need to clearly define your brand positioning, identify competitors to track, and use the right price monitoring tools. By implementing an effective price monitoring strategy, you will be able to receive information about important changes in the competitive environment on a weekly, daily, or even real-time basis.