Deciding the prices of products is one of the most difficult yet important decisions that a business has to make. Prices can affect everything from your sales, profits, brand identity, and growth. To decide the most suitable prices, businesses have to consider factors like market demand, market supply, customer expectations, features of the product, and the competitors in the market.
What Is Price Positioning?
In simple words, price positioning means selecting the best price for your products to make your position strong in a market. Through price positioning, businesses select the best price based on their competitors, their market positioning, and the customer demand. Today, markets have become highly competitive, and the factors affecting prices have become very volatile. Businesses often use artificial intelligence tools and automated software programs to collect and analyze data and get insights for setting prices.
The Influence of Competitors on Price Positioning
Every decision that your competitors make also affects your pricing decision. For example, if a major competitor starts selling their products at 60% off on Diwali, your pricing decisions will be affected by this information. Your response will depend on what your customers expect and how price-sensitive they are. But you will have to rethink your pricing decisions for sure.
In the e-commerce industry, most competitors are selling similar products to the same customer base. For example, almost the same products are listed for sale on Flipkart and Amazon. Because of this, price becomes the only distinguishing factor. When one website reduces its prices, the customers will likely move towards it.
What Is Competitor Pricing Analysis?
Competitor pricing analysis means analyzing how your competitors are making their pricing decisions. You can compare this strategy with your business, and make adjustments wherever necessary.
To perform this analysis, you need to gather data about the prices set by your competitors, the discounts given by them, and the details about their sales and market share. Especially in competitive industries like e-commerce, you must know the pricing strategies of your competitors to make the right pricing decisions.
Thanks to technology, competitor pricing analysis can be automated to a great extent. Various tools use Artificial Intelligence to provide real-time insights about your competitors and their prices. For instance, pricing intelligence is an AI tool that can analyze the price positioning of competitors, perform Seller Level Analysis, and match one-to-one products with Discount and Stock Analysis.
3 Ways To Use Competitor Pricing Analysis for Price Positioning
But how can you use competitor pricing analysis for your price positioning decisions? Here are some ways in which this analysis can help you:
1. Using Low Pricing Strategy To Gain New Customers
When businesses want to attract new customers, they often use the low pricing strategy. Under this strategy, the prices of products or services are kept extremely low to catch the eye. For example, you may have seen introductory offers launched by new restaurants where they sell coffee or other popular products for extremely low prices. This strategy is often used by brands who want to make space for themselves in a cluttered and competitive market.
If you want to follow this strategy, you must know the pricing strategies used by your competitors. You need to have data about the current prices in the market so that you can set your prices below that level. Competitor pricing analysis can be a game-changing tool for this. You can get insights about your competitors and their pricing to make more informed decisions.
2. Protecting Your Market Share
Existing market players can use competitor pricing analysis to protect their market share. Businesses often play with pricing to improve their market share. For example, giving discounts and putting up sales frequently is a great way to attract new customers. If your competitor is using this strategy, you could lose your market share to them if your customers are price-sensitive. You must know what your competitors are doing so that you can respond to their moves by changing your own prices.
For example, imagine that you have a company that makes makeup and cosmetic products. You find out through competitor pricing analysis that a new brand is offering similar products at a lower price than yours. You will have to find ways to reduce the costs of your products by reviewing production costs, marketing costs, and overheads to protect your profits while matching the lower prices set by your competitors. AI tools can help you with this by providing real-time information about price changes.
3. Making Decisions About Increasing Your Prices
Brands sell their products at low prices when they want to penetrate a new and competitive market. However, when they start to gain customer loyalty and market share, they have to rethink this strategy. Eventually, the business wants to become profitable, so it will try to gradually increase its prices. Existing brands also need to increase their prices to match the inflating costs of production. Competitor pricing analysis can help brands decide whether they can increase their prices without affecting their market share.
Competitor Pricing Analysis With AI Tools
Markets have become very volatile and fast-paced today. You have to keep track of new developments in the market daily and respond by adjusting your prices accordingly. Similarly, your competitors could be changing their strategies more often. You need powerful automation to keep track of these changes. AI tools like pricing intelligence can help you stay informed about what your competitors are doing without spending too much time on it. You will get ready-made accurate insights about their prices, strategies, discounts, and other pricing information. These tools use smart algorithms to gather data, detect patterns, and convert the data into useful information. When you know what your competitors are doing, you can respond quicker by changing your own pricing strategies.
Summing Up
In today’s fast-paced world, businesses need to make more informed decisions faster. This can be done effectively by using AI tools. If you are not familiar with AI or are afraid of using it, you must rethink your approach. When PWC performed a Global CEO Survey, they found out that 85% of CEOs believe that AI will change the way of doing business in the next 5 years. Instead of fearing artificial intelligence, you can use it to make your pricing decisions faster and more effective.
Tools like Pricing Intelligence by Rubick.ai can help you find out more about your competitors within a shorter period of time. You can make your price positioning stronger through the accurate data about your competitors that AI tools can provide. When you make your price positioning stronger, your growth can become exponential.
