Find out how your competition reacts to your pricing by using Incompetitor

Competition is the norm by which a pricing is often defined. Recognizing your customers’ needs and demands and acting on them quicker than your competitors can give you a pivotal advantage in an increasingly tough market. In addition, you must understand your competitors’ strengths and weaknesses and know how they will react to all the things you are reacting (it’s a closed circuit, really) so you can be one step ahead.

We’ve already talked about what your competition knows about your pricing. They already know what you charge, what are your bestsellers and how you deal with customers both directly and indirectly. Just like the truth in X-Files, they’re out there, looking and scooping around. Now, it’s time to turn the tables and let them worry how to react to your standards. We wanted to begin by saying that we’ll use our Incompetitor product for this experiment. Only, we’d be wrong as this is not an experiment but rather a proven, scientific method to determine the competition’s reactions and moves to your pricing. Silly us. Anyway, let’s proceed.

What is Incompetitor?

Incompetitor, if the name didn’t give away a little bit of the mystery, is a competitor tracking tool that helps businesses spot opportunities and market trends to stay on top. It provides quick and timely competitor insights about pricing, promotion, and catalog movement. Its large product database delivers benefits of a comprehensive and accurate, not to mention affordable data feed.

Now that we’ve sorted that out, let’s move on to the main question at hand.

How does it help?

The short answers would be – a lot or greatly. Both would be right and both would be wrong as they are true but don’t really show the nuances that make the tool so useful. These include:

  1. It has one of the world’s largest product databases

When we say large product database, we mean gigantic. Our proprietary database covers more than a billion products. That’s nine zeros. The tracking is done across 800,000 e-commerce websites and over 1100 retail categories. With that kind of data at your service, you’ll have no trouble finding out your competitor’s offerings and track the changes they make. On top of that, Incompetitor performs these actions across 29 different languages with the ability to convert the data back into English for a uniform dashboard.

Incompetitor dashboard

Incompetitor dashboard
Incompetitor dashboard
  1. It provides real-time data

There would be very few benefits of having a truly global volume of information at hand if it didn’t come with insights into actual developments during the process. Real-time insights allow you to see momentary developments in a shifting market and respond on the fly. You can receive instant reports at the time of your choosing on the newest price and product changes and trends, so you know precisely when your competitors make a change and know just how to react.

It also means there is no longer the need to waste (not spend) time browsing through competitor’s websites. Incompetitor does that for you by automatically monitoring products and their prices. As a direct result, this retains the highest levels of accuracy as it eliminates the human error. Speaking of accuracy…

  1. Incompetitor is very accurate

Through our proprietary categorization algorithm, we are able to deliver unmatched 95%+ accurate granular insights. We achieve these super-high levels of accuracy thanks to our attributes similarity feature which is plugged directly into our comprehensive database of attributes and a technology overlay that deliver near exact-match visibility. It’s not perfect but it’s very, very close.

How does it work?

Ah, you want to know about the inner machinations. Smart. As you already know, every brand or retailer has their own SKUs (unique URLs with product code) related to each product. Incompetitor tracks these SKUs and all other parameters or attributes of these products, such as price, product description, color, style, material and so on. From there, our own proprietary algorithm finds similar and exact matches and sorts them out according to a number of parameters you choose.

After you are done mapping all products for your competitors, the monitoring begins. Usually, price tracking is the first and foremost practice is such occasion but it can be sometimes misleading as sometimes retailers list products that are out of stock in reality, but keep their price tag on. That is why at Intelligence Node, we also focus on catalog gaps (product availability) and product visibility to get a complete picture.

It works like this – you enter your website, choose the category you want to cover and identify any number of competitors you want to track. And that’s it, Incompetitor does the rest of the work for you. It provides a real-time display of your and your competitor’s pricing, products, and their attributes. Customizable by nature, Incompetitor allows users to view data by a number of different parameters, including price range, product performance and assortment, internal feature offerings like shipping and much more. Trust us, it’s really that easy.

Conclusion

In today’s retail space, market research is an essential means to gain insight into your competitors’ prices, as well as the price customers are willing to pay for your products and services. It is crucial to set your pricing strategy at a level that makes certain your business remains profitable while preventing your customers from looking elsewhere and fleeing the ship. However, to do that, you need to have insight into how your competition reacts to your pricing.

That is where competitor price tracking tools enter the fray. Using these tools is no longer a hassle for thriving e-commerce businesses as automated solutions like Incompetitor ultimately save loads of manual labor hours and resources and ensure that customers don’t leave your store for better prices of your competition. By having access to Incompetitor’s vast library of data and accurate real-time insights, you’ll be able to balance competitive pricing with satisfactory profit margins while being one step ahead of everyone.

How AI Is Helping Retailers Predict Prices

It safe to say that artificial intelligence (AI) is changing every aspect of modern living. From our phones to cars to healthcare and every other industry, AI is slowly becoming a common part of today’s environment, deeply embedded in everything we do. Retail is no exception, entering a new era of predictive commerce. Thanks to AI, retailers are able to cater to their customers to the tiniest detail possible, while also leveraging the technology to improve their business operations.

For this post, we’ll focus on how AI helps with one retail aspect that often troubles retailers the most – pricing. The tech behind AI, how it uses it to predict prices and what are the results – it’s all there in the following lines.

Inside AI

At the heart of AI is machine learning (ML), a process that has the ability to learn on its own without being explicitly programmed. Machine learning uses data to detect patterns in data and adjust actions accordingly so that, when it’s exposed to new data, it develops programs that adapt to that information. ML algorithms are closely related to a number of computational methods, such as computational statistics and mathematical optimization.

While this may sound rather boring, especially for those that never really liked math that much or were garbage at it, the reason why we are mentioning all the math babble is because ML is a standard method used to create complex algorithms that possess predictive powers. You might know this as predictive analytics, a number of analytical models that uncover insights through learning from trends and historical information in the data set.

Predicting prices

Machine learning has many approaches that constitute it – different types of learning if you will. It’s in your Facebook’s News Feed. It’s making Tom Cruise’s life a living hell in Minority Report. It can even predict when you are going to buy soup. Thus, we’ll spare you the nitty-gritty of it and focus on how the technology helps with price prediction.

In a nutshell, you have analytics software whose machine learning component is using a technique based on a certain statistical model (Gaussian process regression, Bayesian linear regression, multi-task learning and a number of other models) to create algorithms that automatically identify patterns from the data and predict prices based on that information. Patterns from huge data sets range from competitors’ pricing and inventory, purchase histories, product preferences to product demand and anything closely related to pricing.

As you can imagine, these parameters are constantly in flux, which is where machine learning comes in and adds a bit of nuance to the whole process that goes beyond simple price history. Suddenly, you have an accurate prediction of customer behavior, a whole system built around the individual and its needs. All of this is followed by high levels of automation, where the execution of produced data-driven insights is instantly applied.

It’s actually a practice that has been around for a few years. Back in 2014, Amazon was granted a predictive stocking patent that allowed the online retailer to cut down on delivery time and cost by predicting what buyers are going to buy before they actually buy it. That’s just one of the ways the company is deeply integrated with AI. For instance, sophisticated sorting algorithms are in charge of its warehouses. When an order comes through, the system almost immediately works out where the item is in its inventory and then dispatches a human worker to go fetch it.

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With prices, it’s a bit more complicated than that as there are more factors to consider. However, the basic principle is the same due to the highly complex and sophisticated nature of the technology. You have a pricing engine that helps you monitor competitor prices real-time. It then sorts them out and compares them to similar products, depending on the wide range of attributes selected, and ultimately optimizes prices.

What’s in it for the retailers?

For once, they get price predictions and optimizations according to numerous market fluctuations that go in line with their pricing and volume goals, among others. Thus, the ever-elusive pricing is no longer a problem. There is no Indiana Jones-like adventure to find that pricing sweet spot that will attract and retain the customers whilst raising the level of profit margins. In a way, retailers get an effective guide for their retail life cycle decisions.

Also, they get precious time back. Automated solutions are the future of retailing, even if they are still on the margins. They handily reduce the enormous amounts of time need for manual labor regarding tracking the prices of your competition. By leaving everything in the hands of automated analytics software, retailers, both online and offline, have more time to focus on other important and time-demanding aspects of their business.

However, the benefits of technology don’t stop there. With the scope of modern technology, it would be foolish to think that there is only a single layer of this cake. Retailers also get to center their operations around customers and deliver them a personalized experience which matches their browsing history and wish lists with cross-sell and up-sell recommendations as it’s all part of the package. They get automated re-orders whenever certain product stocks fall below minimum required levels. Assortment optimization? Check. Various adjustments according to the occasion, competitor Intel, product, category, season and consumer behavior? Check.

In summary, they get real-time market intelligence with all bases covered – a detailed understanding of human behavior coupled with large-scale automation and data integration.

Conclusion

As witnessed, the technology has come so far that not even retail giants are immune to the raging AI evolution. On the contrary, they are actively developing machine learning algorithms to further improve their businesses and receive actionable insights that were formerly almost exclusive to human intuition. In that term, retailers should take the cue and start thinking and acting like tech companies, utilizing artificial intelligence to not just predict prices and recommend products, but to take care of their customers, as well as their business, in an all-encompassing way.

 

If you found this useful and you’d like to learn how to take your pricing strategy to the next level, we invite you to download our free 20 secrets to designing the best pricing strategy eBook. Click below to take advantage of this opportunity.

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How to Use a Dynamic Pricing Strategy for Your Shopify Store

If you have a Shopify store, then you likely already know that the market is forever changing, especially in the online marketplace. Therefore, to keep your sales at their highest, your pricing strategies have to change along with the prevailing market conditions. Dynamic pricing strategies will allow your store to be at the forefront, and still make profits, no matter the conditions of the market at that time.

Not a lot of people know how to use dynamic pricing strategies for their Shopify stores, however, and this can lead to a bit of confusion in how to see returns on their investments. In an effort to take that away confusion, let’s break down dynamic pricing strategies, so you can learn how to use them in your Shopify store successfully.

Dynamic pricing basics

In dynamic pricing, a price is never firmly set. Instead, it is constantly changing to suit the current market conditions. It is similar to the law of supply and demand in that when the demand is up the prices go up, and when supply is up the prices go down.

The difference between supply and demand and dynamic pricing is that dynamic pricing relies on more than just whether or not the customer wants the product. In this case, the customers already want the products but the amount of profit you make depends on more than just demand.

Time the purchase is made

Knowing what time of year your products are in the most demand is the first factor to consider in your pricing strategy. In the season of highest demand, your price will go up to maximize profit. Typically buyers will pay more for products at certain times of the year. For example, during the holidays. It’s not uncommon for consumers to pay above average for products to get that perfect gift for their loved ones. Conversely, if your store specializes in football accessories, odds are your sales will not be going up during basketball season.

Time it takes for you to deliver

When consumers pay more for a product, they expect fast delivery. If your Shopify store delivers items quickly, then it stands to reason that you can get away with charging a higher price. The cost of convenience generally justifies the higher price. However, if you take longer than the expected delivery time, your customers could be left feeling duped by your higher price and next time may go to your competitor.

Targeting of particular groups

This is one element of dynamic pricing strategies that has been seen as controversial to some, and that is because some groups will be given different rates than others. The idea is that the standard of living is higher in some parts of the country, so charging more for those products won’t be as big of a deal. In lower standard of living areas, the prices will be lower so that they can still purchase the product, but your store can still make a profit. It’s important to note that the key here is not to change pricing solely based on race, gender, or sexual orientation. Although difficult to prove, you don’t want to open your online store up to that kind of scrutiny.

Peak user pricing

Similar to time of year pricing, if the demand is high, the price can go up. The difference here, however, is the sudden surge may have nothing to do with the time of year. For example, if you have a product in your Shopify store that Kim Kardashian happens to promote randomly on Instagram, you could see a spike in sales. During this peak time you can maximize your profits by adjusting your price.

Quantity of goods being purchased

If there is a customer that buys your products in bulk, or they are always there to buy from you, then it is good idea to make an exception for this customer, and reduce the price for them. It may be risky for first time bulk buyers, as they may not be a return customer. On the other hand, they could become exceptionally loyal allowing you to not only recover quickly from the discount, but make a higher profit overall.

Hint: You can utilize technology from software like IntelligenceNode’s Incompetitor to analyze these price peaks in real time and adjust, automatically.

Pricing your store

These are just a few of the factors you can use in your dynamic pricing strategy in your Shopify store. Be flexible, keep an eye on demands, and be sure not to focus solely on exploitation of customers. By pricing your goods based on the market conditions, your store should be able to make a consistent profit all year long.

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Competitive Pricing Strategy – See How Products Are Priced

Effective pricing is essential for a business. That’s the only way they’d know at what price they should offer a product, while maintaining a good profit margin and keeping up with the competition. A business can pick from a variety of pricing strategies and the selection depends on different factors.

A business can set a price to maximise profitability on each unit sold or on the overall market share. It can set a price to stop competitors from entering the market, or to increase its market share, or simply to stay in the market.

Pricing is one of the most important components when it comes to creating marketing strategies. The price is one of the first things that a consumer notices about a product and is one of the deciding factors when it comes to their decision to buy it or not.

Needless to say, the competition in the market is on a constant rise, especially with the ever growing popularity of online shopping. This means that businesses need to keep an eye on their competitors’ behaviour while setting prices in order to get the much needed competitive edge in the market. Comparing prices online is easy and customers are well aware about the monetary value of a product. These factors are also important considerations while setting the price for a product or service.

Among the various models of pricing, competitive pricing is one that has caught the fancy of many businesses. Having a monopoly is one thing—you can set the price the way you want (of course there are few government norms) but setting pricing strategies based on competitors’ behaviour isn’t an easy task.

Here’s an insight to competitive pricing theory, used by most companies around the world.

What Is Competitive Pricing Strategy?

When a product is priced in accordance with what the competition is charging, it’s known as competitive pricing. It is one of the four major pricing strategies adopted by most companies. The other three include, cost-plus strategy, where a prefixed profit margin is added over the total cost of the product, demand pricing, under which the price is set by establishing the optimal relationship between volume and price, and markup pricing, where a percentage is added (as profit) over the wholesale price of the product.

When it comes to competition based pricing strategy, the purchasing behaviour of customers is an important criteria. Some of the factors that companies take into account are costs, competition, and price sensitivity. In order to ensure profitable sustenance of the business, managers have to set the price such that it covers the production cost, company overheads costs, and also offers suitable profits.

In order to establish the right competitive price for your product, you need to take into account the product life cycle and the stage your product is in. Competition is one factor that you can ignore if your product is in the developmental stage. However, if it’s a part of the market, and fighting with a relatively high number of substitutes and competitors, then considering the actions of your competitors might be one factor driving your profit. You have three choices—price your product lower, higher, or same as your competitor. The most common tactic is to set the price according to the competitors, also known as competitive pricing strategy.

As already mentioned, there are three things that you can do in order to set the right price for your products:

1. If you’re planning to set the price above the price of your competitor, then you’d need to bring in new features and improvements in your product that would justify the increased price.
2. Pricing below your competitor’s price depends on your resources. If you can increase the volume without affecting the production cost to a great extent, then this might be a good strategy for you. However, there’s the risk of diminishing profit margin and you might not be able to recover your sunk cost and even face bankruptcy. So, it’s really important that you evaluate each step of your competitor while establishing the price for your product.
3. When you set a price equivalent to your competitor, then the differentiating factors cease to exist. The focus shifts to the product itself, and if you can offer more (and better) features at the same time, it’s a win-win for you, and your competitors will fall behind.

So, competitive pricing is a game to play. Competitive pricing intelligence demands that you have in-depth knowledge of your market and target audience.

A lot of effort goes into the process of establishing the price based on competition. According to a recent survey, minor variations in prices can lower or raise profit margins by more than 20-25%. Competitive price analysis is essential to competitive pricing strategies. Let’s look at some competitive pricing examples, to get a better understanding of this process.

Competitive Pricing Examples

The concept of competitive pricing is best understood when there are only two competing parties. Suppose, two companies manufacture detergent for washing clothes. Both will charge the same price and if one company wants to compete with the other, will advertise saying why it’s product is better.

Even big corporate giants sometimes resort to competitive pricing strategy when they want to enter a new market. They have to set the price almost equivalent to their competitor, even if the production cost is high. In case the production cost is higher, they’d have to play around and adjust prices of packaging, advertising, and distribution.

Some companies have to use competitor based pricing, as often price is the only factor customers consider while buying a product and the switching cost for buying a product from two different stores is very low. However, in many cases like software, competitor’s behaviour or data shouldn’t be the central factor for determining prices. There are numerous other variables that need to be considered in this case.

While keeping the competition factor is important while setting prices, it shouldn’t be made the central pillar.

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3 Steps for Starting a Pricing Intelligence Strategy

Pricing intelligence is absolutely vital to being successful today in business. As part of the “Marketing Mix,” price has always been top of mind for marketers and business leaders. Ineffective pricing strategy truly hinders an organization’s ability to grow and be profitable. It can even derail success despite having an exceptional product-market fit. One could make the case that price is the most import part of the Marketing Mix. So how can marketers and executives ensure they’re optimizing their pricing strategy and setting their business up for success in a competitive pricing landscape?

Continue reading “3 Steps for Starting a Pricing Intelligence Strategy”