What is a Competitive Pricing Analysis?Competitive analysis is the process of researching competitors to better understand their strengths and weaknesses, then comparing that research to your own business to improve your operations. This type of competitive intelligence is important because it allows businesses to understand their place in the retail environment and can provide a competitive advantage, highlighting possible business opportunities. Analyzing competitive pricing in-depth will identify where you fit into the retail landscape based on price point: are you a bargain brand or retailer, premium or luxury, or somewhere in the middle? Where can you decrease prices to gain a competitive edge? Increase them to grow margins? Furthermore, tracking your competitors will highlight their existing pricing strategies. Are they like Amazon, which reprices by the minute? Or do they change prices much slower? You can optimize your prices once you know what the competition is doing.
Competitive analysis is the process of researching competitors to better understand their strengths and weaknesses, then comparing that research to your own business to improve your operations.
How to Perform a (Price) Competitor AnalysisYou know you need to compete when it comes to price. What you may not know is who your competitors are and how they stack up in the pricing department. Moreover, your competitors may not be who you think—your true competitors are the ones that are stealing your customers. Follow these seven steps to identify, evaluate, and understand your competitors so you can price properly.
Step 1: Identify Your True CompetitorsBegin with Google. It’s where your customers start their shopping, and it’s where you should start your primary research on competitive pricing. A quick Google search will help you narrow down the list of potential competitors. Type in the name of your product, service, or industry. See what comes up. Whether you recognize any or not, jot down the companies that pop up. Google is such a powerful tool for consumers that you should absolutely use it to help with competitive analysis. Search your product, and Google will tell you the most important, relevant companies for that product (in their eyes). Those are the same results your prospects will see. You can also use SEO analysis tools to narrow down the list of companies depending on a specific keyword—again, your products make a good starting point. Some tools include SEMRush, Moz, and Ahrefs. All of these can provide competitive intelligence insights, leading to actionable opportunities for your company’s improvement.
Step 2: Categorize the CompetitionSpeaking of SEO tools, keep in mind that your “search” competitors—those that rank highly for your product keywords—may not be your business competitors—those that are taking your customers. However, both are important to track for various reasons. For example, you want to know your search competitors so you can beat them on Google, rank higher, and drive more visitors to your website (and thus more potential prospects). You naturally want a competitive advantage over your business competitors so you can beat them in sales and profit. Expanding on this idea, your next step should be to categorize the competition. Segment your list into main competitors and secondary competitors. Dig deeper and break them into search competitors, or price competitors. You can also create a list of new competitors, or those who have products you want to develop one day. These lists help you customize your strategies depending on how they compete (on Google, in real life, based on price, product, or something else).
Step 3: Read Competitor ContentHow do your rivals talk about themselves? The products you have in common? Find out by reading all the content they post on their websites or share inside their brick-and-mortar stores, if relevant. Start with the easy ones, such as their blog posts. Their target audience is likely the same as yours. See how they describe their products or solutions, as this will help you narrow down more search terms for Step #1 and could illuminate additional competitors. You should also download any gated content like whitepapers and eBooks if they have any. Better yet, download their brochures or product guides. See if they have any videos and watch those or subscribe to their newsletters. Don’t forget to visit their social media profiles as well, as their social media presence can be informative. All of this web copy is great insight into their processes and products.
See how competitors describe their products or solutions, as this will help you narrow down more search terms for Step #1 and could illuminate additional competitors.