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?
Many years ago, gathering price intel was much easier than it is today. Merchants could simply stop by their few local competitors and conduct a manual price check. This ensured that their pricing was in-line with with their local market competitors’, and all that was left to do was to develop a strategy for creating perceived value to build a competitive advantage. However, technological advancements have changed the way consumers buy and merchants sell in both ecommerce and traditional brick-and-mortar environments. Geographical barriers that once separated markets have been broken down. This makes the need for a comprehensive pricing intelligence strategy even more important than ever before. The following three steps is an excellent start for developing a pricing intel plan:
1. Identify Competitors to Benchmark Against
The old adage, keep your friends close and your enemies closer rings true in the world of commerce. Businesses must be completely aware of their competitors’ operations, products, and prices. Understanding at what price your competition is selling their product, even if it isn’t an “apples to apples” comparison, will help you in building out your own pricing strategy.
The first step to a price intelligence program is to identify the competitors you want to benchmark against, and then monitor their prices on a regular basis.
Pick competitors with similar products and audiences, and benchmark yourself against them.
2. Develop Your Strategy for Perceived Value
Now that you have identified the companies that you’ll benchmark against, it is important to determine how your pricing strategy will create perceived value in the marketplace.
Perceived value is what drives consumers to make purchases. For example, shoppers go to Wal-Mart because they think they’re getting the best deal in town. In many cases this may be true, but even if it isn’t they still come back due to the perceived value.
Building perceived value in pricing can be somewhat complex and requires the analysis of tremendous amounts of data to truly understand which option is best. In it’s simplest form, think about how your target market will respond. Are they likely to respond better to lower prices (ie. bargain hunters), or are they willing to pay more because they feel they are getting better quality at a higher price? Perceived value is difficult to master, but once you do, you’ll experience tremendous success in sales and profits.
3. Implement a Competitive Pricing Tool to Manage Your Pricing Intel Program
Keeping track of your all of your competitors’ pricing can be challenging. Couple that with dissecting copious amounts of data to truly understand where your pricing fits and what your perceived value is and the development of your pricing intelligence plan looks daunting.
Thankfully, there are platforms out there (like Inoptimizer) that put real-time competitor pricing and positioning data right at your fingertips. Not only will a pricing intelligence tool allow you to create your strategy, but it ensures that you’re constantly able to access the data and trends that allow you to make crucial pricing decisions.
With a competitive pricing platform you will be able to monitor your competition in real-time, and implement what you learn in order to give your organization the upper hand. Insights that used to require a team of analysts to create, are now available in real-time, right at your fingertips. Watch the video below to learn more about how Inoptimizer is helping firms develop successful pricing intelligence programs:
If you’re ready to get started on your own pricing intelligence strategy, or you want to learn how you can improve your existing pricing program, request a free demo of Inoptimizer and discover the true power of price intelligence.