Let’s face it. It is a competitive world out there and today’s customers are more sensitive to pricing than ever before. The ability to compare prices using a smartphone has led to showrooming among customers. Nowadays shoppers can compare in-store and online products easily to check and see if there is a better price available to them.
Price products too high, and the customers are happy to take their money elsewhere. Price products too low, and it loses its value and struggles with brand degradation. So, optimum pricing of the products becomes all the more important. But deciding on the right price is not an easy task. Furthermore, ecommerce’s speed and scale mean online prices are constantly fluctuating.
According to a McKinsey report, Amazon and other ecommerce leaders reprice the most popular products up to 12 times a day and actively react to changes in competitors’ prices in a matter of hours or even minutes. Your prices must generate profit and support your sales. That’s no small feat, which is where pricing intelligence enters the picture.
Understand the basics of Pricing Intelligence
Pricing intelligence is nothing but the ability to track, monitor, and analyze competitor and market pricing data to make informed pricing decisions for your business at speed and scale. Simply put, pricing intelligence refers to the awareness of market-level pricing for a particular product. It helps a retailer understand who their competitors are and at what prices they are selling their products.
For instance, say you’re an emerging clothing brand. When you’re competing with big, established brands, any bit of intel is a big deal for you. You want to know which of your competitors sell branded jeans, when, and with what promotions and shipping options. This insight creates opportunities for you to offer something similar — or more creative — and try to persuade consumers to make the switch to your brand instead. You can understand the pricing of your competitors and make educated decisions on pricing your products. You can achieve this through pricing intelligence.
In today’s fast-paced world where a minor change in price has a direct impact on the overall sales and profitability, pricing intelligence is very crucial for every business.
Four major benefits for your business with pricing intelligence
Offering irresistible prices would surely lure your customers towards you. Using pricing intelligence, you can make timely comparisons with competitors and analyze their strategy and finalize your product’s pricing within minutes so that it is the most appealing one among the other prices.
Lower your pricing alone won’t guarantee you more sales. Using pricing intelligence, you will know which products you have underpriced and need an increase based on market standards. Using these price insights intelligently, you can still be the cheapest amongst your rivals while maximizing your margins.
Improved Customer satisfaction
If you were to remember your most joyous shopping occasion, it would most probably be the one where you spent little and bought more. Customers are happy with purchases that go easy on their wallet and tend to make repetitive purchases from the same seller. That’s customer satisfaction in short. With effective use of pricing intelligence, you satisfy your customers and retain them for a long time.
Effective stock management
When a particular product’s prices are reduced in the market, nobody wants to maintain unwanted excess stocks or even run out of stocks. Having the optimum amount of product stock is vital for a retailer.
Let’s say you are a mid-level departmental store. Before the festive season, you stock up on sweets and cookies predicting more sales, but due to the ongoing pandemic customers don’t want to buy from outside and prefer homemade food. Naturally, the market price reduces, and you would have to considerably reduce your selling price to sell out your stock.
With pricing intelligence, you can offer competitive pricing, ensure you have the optimum stock quantity, and maximize your stock turnover.
How to go about with pricing intelligence?
Here comes the tricky part. How can I do pricing intelligence for my products? Thankfully, this is not rocket science.
With three simple steps, you can go about doing pricing intelligence to your products.
Step 1: Tracking your competitors
This is the first step involved in pricing intelligence. You must understand who your competitors are and how they are pricing their products. Competitors may vary from channel to channel, and so do the prices.
If you sell your products on an ecommerce website, then Amazon might be your competitor. Whereas if you sell your products in a brick-and-mortar store, Walmart may be your competitor. You may sell on a single platform, but you must know all your competitors.What you must know is to prioritize your competitors as not every competitor is created equal.
You must prioritize your competitors based on importance and influence over your business. Simply selling the same or similar product doesn’t make a retailer a competitor. Track the most influential ones first to ensure that you market insights that matter most.
Step 2: Monitoring pricing data from competitors
Once the competitors are identified, you can start acquiring and monitoring their pricing data. But, isn’t data accumulation a tedious task? Not if you can have it automated. With the world moving towards complete digitization, automation has made pricing intelligence much more efficient and scalable. In fact, advanced analytics could result in customers getting a fairer price.
While performing manual data collection is doable to a certain extent, finding a software solution is the best option. There are some crucial factors you need to keep in mind when monitoring pricing data.
Frequency – In a retail landscape, price changes happen daily and you need to make sure that you collect the data as often as possible
Volume – More the competitors, the more is going to be the volume of products that you need to monitor.
Authenticity – Not all data is good data. You need to make sure that the data you collect is the correct data, as false data may lead to a waterfall effect on your margins.
Ecommerce platforms like DigiSense360 can help automate pricing intelligence, track and monitor competitor pricing, provide crucial pricing insights as and when the changes happen and enable you to stay ahead of the competition.
Step 3: Analyzing the data
Collecting the data is a job half done. It is what you do with the collected data that matters.
The final step in pricing intelligence is analyzing data. Getting insights such as how often price change happens, why competitors change price, and why your competitors feel a specific price is the right one for the product helps you gain the necessary edge over your competition and helps you price your products advantageously. You can have the acquired data as a benchmark or an index so that you know your position relative to the top competitors across channels.
All things said and done, to stand ahead of the competition, you would require all the edge that you can get. Automating pricing intelligence is surely one such edge that helps you beat out your competitors in the retail landscape. It allows you to confidently adjust your prices, protect your reputation, and increase your margins.
Check out our platform DigiSense360 that can enable your business with pricing intelligence. It’s high time to take the leap towards automation.