The Internet gives consumers unprecedented power to quickly and easily compare prices and find the best promotions for the products they require. Online pricing transparency, therefore creates the need for brands to closely monitor prices across their categories and against their competitors.
Your potential customers now have the ability to compare your products and those of your competitors either manually or by using price comparison shopping engines. Shoppers then simply click or tap to navigate to the product page at the online store with the best offering, usually the lowest price.
The competitive price of a product ranks second only to convenience when motivating consumers to make a purchase. With the advent of the Internet and mobile apps, your product prices and promotions are always transparent to shoppers and they can also see how often your products (and other products in your category) are on promotion.
Not offering the right price points in your category with online retailers will hit you where it hurts, i.e. your brand integrity and your bottom line.
The information available to consumers within a few clicks or taps influences billions of dollars in daily sales across the world. In the US, 8% of all retail sales have moved online and 64% of in-store sales are influenced by shoppers checking product content, product ratings and prices in advance of or during their shopping experience (Deloitte). In the UK, shopper behaviour is similar to 15% of sales occurring online and 50% of in-store sales being digitally influenced (Deloitte).
Your online retail pricing strategy should seek to maximise brand value, customer engagement, basket, sales and margin. Success doesn't necessarily mean that you always have to offer the lowest price but your pricing strategy must balance profitability, value and consumer appeal if you are to win customers.
"Consumers rarely respond to the lower prices enough to offset lower margins."
Dr Kurt Jetta, CEO, Founder and Lead Product Developer for TABS Analytics, a technology-enabled retail and consumer analytics firm.
A successful pricing strategy begins with a deep understanding of your category, each of your channels, and your shoppers. Understanding what motivates and drives value perception for your key shoppers can help you determine the right mix of price and promotion for each of your online retailers.
How to automate Competitor Price Tracking
All of the above is vital but one of the most important aspects of pricing optimisation is conducting competitive analysis. Automated competitor price tracking of individual products in ecommerce can help you maximise your placement on the digital shelf and comparing prices at the category and even the brand level can help you understand the competitive outlook at a deeper level.
Competitive online price monitoring at the category level helps retailers understand where they have pricing power and can command a premium across different verticals. While one retailer might be selling a laptop at a higher price, they might be more competitive in the electronics category as a whole.
Brands can shape their value proposition by honing in on the items that matter most to shoppers. Comprehensive pricing strategies include pricing position not just by item, but category and channel as well. Investing in categories where your brands command a premium can enhance your growth even in highly competitive categories.
Another tactic is to test prices frequently on key items that can withstand price elasticities. Monitoring shopper response and tracking sales data can help you optimise prices for items, category, channel, and geography.
Additionally, where your brand has strong brand affinity and price position it allows you to test related product offerings for cross-selling opportunities.
Managing Price and Promotions in Ecommerce
Brands that take a proactive approach to daily monitoring of product price and promotions will be better placed to protect the integrity of their brand and category, as well as drive sales both online and on the high street.
Measuring daily activity will allow your brand to optimise for value and profitability. Also, analysing pricing activity will give you a deeper understanding of the pricing strategies and promotional mechanics at play in your category.
Armed with this knowledge, you can answer strategic questions that are key to both brand and category success.
For example: Is there a high level of price competition amongst retailers that may be damaging the perceived value of the category? Is promotional activity too frequent or are discounts too great, teaching consumers to wait for promotions to make their purchases?
Both of these dynamics are damaging to the category, and brands should work with retailers to develop a strategic plan to protect the brand, category and store by determining prices and promotions that are attractive to consumers while still delivering value and profits to manufacturers and stores.
If you have minimum advertised price agreements with your retailers, ensure that online stores are compliant. Work with retailers to make sure your product price ladder is in place.
Do your low, middle, and high tier products have the right price gaps? If products are priced correctly, do you have the right product mix available in your key online stores or are there additional items that would offer the right price points for each individual online?
Equally critical is to make sure that your prices are in alignment with those of your competition and that you are winning your fair share of promotions in online stores. Consumers are forever comparing prices in online stores so it’s critical that your products are competitively priced compared to the rest of the category.
With up to 25% of gross sales revenue feeding back into trade spend, it is essential for brands to actively manage promotions in online stores to justify and optimise that investment.
It is necessary to align on the right price and annual promotional strategy with retailers to offer consumers value while maintaining price integrity for category and continue to monitor price and promotion activity to ensure retailer compliance to agreements.
Automated Competitor Price Tracking
Even if you currently have access to competitor pricing, do you use it in an efficient, purposeful way? With BlackCurve's platform you’ll see all the necessary data in a single view, and by using our simple tools, quickly understand where you’re competitive and where you’re not.
We understand that it’s not always about being the cheapest, so in the future you’ll be making better-informed decisions on your pricing strategy.
Our eCommerce intelligence platform allows brands to track pricing and promotions for their own products as well as their competitor’s products.
Related Posts
Competitor Price Tracking: How to Spy on the Competition
The Benefits of Price Tracking Software
Competitive Pricing Strategies for Retailers
How to Price a Product in a Competitive Market
5 Competitive eCommerce Pricing Strategies to Help Grow Your Company
Why You Need to Understand Competitor Pricing
Sources
https://www.clavisinsight.com/solution/price-tracking-online
http://upstreamcommerce.com/6-reasons-to-track-competitors-prices-daily.pdf
https://www.boundless.com/business/textbooks/boundless-business-textbook/product-and-pricing-strategies-15/pricing-methods-93/competition-based-pricing-436-411/
http://www.priceintelligently.com/blog/bid/161610/Competitor-Based-Pricing-101-The-Necessities-and-Your-Pricing-Strategy
https://greatb2bmarketing.com/b2b-marketing/competitive-marketing-campaign/
http://www.boardroommetrics.com/blog/types-of-pricing-strategies-2-competition-based-pricing-20130625.htm
The Strategy and Tactics of Pricing by Tom Nagle and John Hogan, 2016
Pricing Strategy: Tactics and Strategies for Pricing with Confidence by Warren D. Hamilton, 2014
Pricing with Confidence: 10 Ways to Stop Leaving Money on the Table by Reed K. Holden and Mark Burton, 2014
Pricing for Profit: How to Develop a Powerful Pricing Strategy for Your Business by Peter Hill, 2013