Having a competitive price along with added value are the keys to outperforming your competitors. Unfortunately, perfecting a pricing strategy isn’t an easy task, and it requires continuous monitoring. To maintain a competitive price, retailers need to either change prices internally or put a pricing engine to work on their behalf.
In this blog post we’ll share what competitive price analysis is, and the reasons retailers should consider automation.
Defining Competitive Price Analysis
Competitive price analysis is the process of collecting and analyzing competitors’ pricing. Using the collected data, you’re able to compare prices and see when your competitors ran promotions and sales. Over time, you gather enough data to identify your competitors’ competitive pricing trends and discounting behavior. Additionally, the market trend insights allow you to make smart, real-time decisions to outperform competitors.
Retailers should take competitive price analysis a step further by automating the process. This creates a handful of benefits for retailers.
Five Reasons to Automate
1. Faster and More Accurate
Imagine mining data on a handful of competitors’ websites for the price of various SKUs. After all your hard work, the prices may no longer be accurate, as eCommerce is an ever-changing landscape. The decisions you make with outdated data won’t have the best results.
Even if you do efficiently collect pricing data manually, can you manually keep up with the frequently changing dynamic prices? Collecting pricing data should be performed on a regular basis, not just when pricing strategy is revised.
By automating your competitive price analysis, you receive accurate pricing data daily without the need to spend valuable resources on manually extracting data. Automating the process eliminates possible human error and provides relevant pricing information.
2. Data is Easier to Analyze
When retailers manually conduct competitive price analysis, they also must manually interpret the data. Raw data is useless, if you don’t know how to interpret it. An advanced software will provide you clear visuals – not just Excel sheets and numbers. You can easily analyze data and spot trends when shown in pie charts, line graphs, and bar charts.
Additionally, your data needs to be scalable. As your company grows, that means more SKUs, more channels, and more competitors in the marketplace. Instead of having to repeat processes and waste time, retailers should consider automating their competitive price analysis to support their growth.
3. Maximize Margins
The goal of competitive price analysis is to compare where your price sits in comparison to the market. By making use of it, you’re able to uncover your competitors’ pricing strategies and use the knowledge to outsmart them.
Competitive price analysis gives you insights on which products are priced higher but are still winning in the market. This is where you command a price premium. By capitalizing on this, you maximize your profits and create long-term growth. On the other hand, some of your products may be more elastic, or price sensitive, this is where you need to be priced competitively to win shoppers over.
With competitive price data, it is easy to determine how to change prices to maximize margins. Taking it a step further, automate repricing by using algorithms and taking into account the conditions of the market. Your prices will adapt to marketplace changes in real-time to maximize your margins and revenue.
4. Easily Test Pricing Strategies
Utilizing automatic pricing provides retailers with the ability to easily test pricing strategies. With a software, you have options to set customizable repricing rules to A/B test strategies to optimize product pricing and maximize sales.
Since the market is always changing, finding the perfect pricing strategy is a continuous process. Automating it makes it easier to continuously stay on top of the industry and know what your consumers desire.
5. Access to Historical Data
Automating competitive price analysis opens the opportunity to create extensive historical data sets. Over time, you’ll be able to see trends that provide insights on how often your competitor runs promotions on which products and when. By monitoring brands’ previous pricing performance, you’re able to identify pricing trends, and markdown patterns. Historical data gives you an inside look to learn from the success of competitors, such as when they began promoting back-to-school sales, or Black Friday deals.
While retailers can conduct their competitive price analysis manually, the benefits of an advanced software outweigh the cost. By automating their competitive price analysis, retailers can have access to accurate, easy to analyze data on a recurring basis. Furthermore, retailers will also have access to historical data, and easily be able to test pricing strategies. Together these benefits lead to maximizing revenues, with minimal manual work.
Contributing writer: Patricia Montenegro
Need better data to inform your decisions? Whether in-store or online, Wiser has you covered from pricing to assortment to promotions. Schedule a meeting today to learn how to turn retail data into action.