In today’s ever-changing market, having your prices in place is one of the most critical assets. It’s specifically important in a very saturated market, such as the e-commerce field. Being able to observe the market, analyze competition and adjust the prices seems like a no-brainer, yet not every company pays that much attention to it.
There are many useful tools for e-commerce businesses looking to stay ahead of the competition and maximize profits. However, in this article, we’ll cover every important aspect of the competitive pricing analysis features.
What is competitive pricing analysis?
Competitive pricing analysis is an evaluation of the consumers’ reaction to new prices with the help of complex research. The main factors in the whole process are historical data and various polls. The whole point of doing this type of analysis is to measure customers’ response to a price, taking out things like the company’s costs and profits from the equation. After an initial price analysis is done, pricing analysts use the data to create an optimal offering.
This analysis and its outcomes wholly refer to the company’s competition and use it as a reference. This strategy is often referred to as competition-based pricing. Using your rivals’ prices as a benchmark is definitely one of the best ways to figure out how to shape your offering and how to price your goods.
How to Conduct Competitive Analysis Pricing
Dealavo – a price monitoring tool of the future | source: www.dealavo.com
As was already said earlier in this article, setting up price monitoring software should be a no-brainer from an e-commerce company’s point of view. Not only does it save you time, but it also collects, analyzes and adjusts the data more accurately and packs it into easy-to-use reports and sheets. One example of such a tool is Dealavo. The tool enables businesses to scan the whole market, monitor the prices, track competitors and many more. It’s also integrable with many online platforms such as WooCommerce or Idealo.
Moreover, Dealavo has one of the fastest price refresh rates among other competitors, that is 15 minutes. It also offers features that make daily operations much easier like open API, banner monitoring, promotions monitoring and up to 99% SLA.
To successfully conduct a competitive analysis with a tool like Dealavo, you need to:
1) Select the products you want to track and set up your competitor list. While the offering’s part is relatively easy, it’s important that you separate your competitors into primary, secondary and tertiary ones. It will give you more view of what rival is the closest to you in terms of price, size, market share etc.
2) Use Dealavo’s dashboard to view pricing data for your products and those of your competitors, including historical pricing data and price changes over time. Through that, define data parameters and what exactly you’ll be looking for. There are parameters that are being monitored most often, such as product availability, price index and competitors’ promotions activity.
3) Analyze the data to identify pricing trends and strategies used by your competitors, such as discounts, promotions, and pricing changes based on seasonality.
4) Use the insights gained from the analysis to make informed decisions about your own pricing strategy, such as adjusting prices to remain competitive or implementing dynamic pricing based on market conditions. If using collected intel seems hard to you, that’s because it might be tricky. Don’t worry though – if you use a price monitoring tool, there are experts that will be keen to help you with the strategic changes.
5) Continuously monitor your competitors’ pricing to stay up to date with market trends and adjust your pricing strategy accordingly.
The Advantages of Conducting Competitive Analysis Pricing
Conducting a competitive pricing analysis may have a crucial impact on e-commerce businesses helping them to adjust better to market changes and maximise profits.
Pricing Optimization and Increased Revenue
By understanding the pricing strategies of your competitors, you can optimize your own pricing to remain competitive and increase revenue. Price tracking software can help businesses in pricing optimization so that they stay competitive and generate the biggest profit possible. Dealavo is one example of software that’s main goal is to increase the company’s revenue. It also offers an automated pricing engine that can help businesses boost their profits by adjusting prices according to competitor activities. Prisync integrates with e-commerce platforms and product information management systems so that businesses can synchronize pricing data across all their systems.
Time Savings and Opportunity Identification
Using price tracking software for a competitive price analysis sellers can easily compare and analyze hundreds of competitors’ offerings saving them a lot of time on doing it all manually. Having a tool like Dealavo on your side will give you more time for other important aspects such as marketing, customer service or internal improvements. Besides that, conducting such analysis lets online businesses spot rivals’ weaknesses and turn them into valuable opportunities.
Inventory management
By monitoring your competitors’ pricing, you can adjust your inventory levels to ensure you are not overstocking or understocking products. It’s often an overlooked process, that may be improved easily.
Repricing
With the help of price tracking software like Dealavo, you can implement dynamic pricing strategies that automatically adjust your prices based on market conditions, such as changes in competitors’ pricing or seasonal demand.
Promotions and Discounts
A competitive pricing analysis can give you insight into the types of promotions and discounts your competitors are offering, allowing you to make informed decisions about your own pricing strategy. With this type of knowledge, it’s nearly impossible not to attract new customers.
Consumer Behavior and Loyalty
By understanding how your competitors’ prices affect consumer behavior, you can set your pricing strategy accordingly to attract more customers and improve conversion rates. Price tracking software provides businesses with features that help maintain competitive prices so that customers are satisfied and stay loyal. It’s a vital aspect in today’s world of dynamic markets and highly-demanding buyers.
How to Use the Findings from Competitive Pricing Analysis
Once you have conducted a competitive pricing analysis using a tool like Dealavo, you can use the findings to make informed decisions about your own pricing strategy. Here are some ways to include while working with your findings.
Adjusting Your Prices
Use the data on your competitors’ pricing to determine the optimal price point for your products. This can help you remain competitive while still maximizing profit.
Implementing Dynamic Pricing
Use the insights gained from the analysis to set up dynamic pricing strategies that automatically adjust your prices based on market conditions, such as changes in competitors’ pricing or seasonal demand.
Offering Promotions and Discounts
Use the information on your competitors’ promotions and discounts to plan your own advertising strategy that will be attractive to consumers. Fill the gaps that the competitive pricing analysis have revealed and outrun your competition in as many planes as possible.
Improving Customer Experience
Use the information on consumer reactions and loyalty, such as how your competitors’ prices affect buyers behavior, to improve the customer experience. To do that, you can simply adjust your prices to attract more customers and improve conversion rates. The data you get from CPA may indicate what patterns work in your industry when it comes to creating a positive CX.
Positioning Your Brand
Use the competitive pricing analysis to position your brand in the market, for example, you can price your products higher if they are of higher quality or you can price your products lower if they are more affordable.
Summary
Competitive intelligence is a vital component in every e-commerce-oriented business. Continual market competition and price analysis enable one to maintain a state of superiority over rival firms. By conducting such analysis, companies can penetrate new markets, introduce new products, and monitor the clientele of competitors. One thing to keep in mind is to always use a price monitoring tool for the task as it gathers intel more accurately, letting you invest your time instead of spending it on manual scraping.
