Imagine how much easier a game of poker would be if you could see your opponents’ cards. As if the ability to do so came in the form of a lifeline from the game show Who Wants to be a Millionaire. You would know if bluffing or folding would be a good idea, and could prevent you from making a mistake that would cost you quite a bit of money.
While price intelligence in of itself sounds like a simple concept the process of gathering all of your competitive intelligence can certainly be a daunting one. Monitoring your competitor networks’ prices is nearly impossible to do manually, but the acquired data can be imperative to building pricing strategies and more.
Price intelligence obviously says a lot about your competitive landscape, but it can also say plenty about your own business and your own products. Using price intelligence to measure your products’ elasticities is a great way to understand how consumers will react to your price changes.
Price intelligence can also be beneficial for your product assortment. If all of your competitors were carrying a product you were missing, you’d make an effort to sell that item, correct? Now what if they were all selling it at a price that you knew you couldn’t afford? Price intelligence prevents you from making the mistake of acquiring an item that is too competitive for you to sell.
Price intelligence is a great tool when it comes to making decisions for your business. But how exactly do you collect and implement it into your business plan? Here’s a quick step by step list on how to implement price intelligence in your online business.
Get to Mining
As mentioned earlier, manually monitoring your competitive landscape in hopes of gathering price intelligence is inaccurate and ineffective. This is because of the turbulent nature of the eCommerce industry. A price that is noted one hour can be entirely different later in the day. And due to the sheer size of product assortments, scanning every product is impossible.
Comparing Competitor Prices with Your Own
Are you more or less competitive than other retailers? Understanding your products’ price elasticities can help you figure out how you want to stand out from your competitors. This is because if you can estimate demand, you can learn how consumers react to your prices and which of your products holds pricing power over your competitors.
With this knowledge, you can figure out where to lower prices to win sales, and where you can increase prices to have better margins. Price intelligence gives you the best of both worlds.
Test Prices against competitors
Was it right for you to increase the price of that product? Or was your demand estimation a little bit off? Measure your price changes in accordance with competitive prices. You might be surprised to learn you have more pricing power than you previously thought. Continuously optimize your prices using your competitive intelligence to get ahead.
Contributing writer: Brian Smyth