Data Blog by Lizeo
Give your pricing strategy a competitive edge !
In a mature and highly competitive market, your competitive pricing strategy is a powerful tool to increase sales volume and achieve sustainable growth. In this context, from a consumer’s point of view, competitive products have similar features, so focusing on a dynamic competitive pricing strategy is an efficient method to stay ahead.
Competitive pricing : set the price of your products through a precise knowledge of the market
How do you guide the consumer’s choice to buy your products rather than competitor’s products, without systematically falling into the lowest price trap? Part of the response lies in implementing an efficient competitive pricing strategy, a concept based on a daily detailed analysis of the offer and competitor’s prices.
It is one of the four main strategies to set the price and proves to be low risk and very efficient – but only if it is based on representative and high quality market data.
For a distribution activity where multiple players distribute the same products, this strategy may be adapted. However, be careful not to cross the line into outright plagiarism. It is not because your competitors set a price that you need to match it. Nor is it a rupture strategy – it will keep you afloat but it will not allow you to penetrate your market.
Lizeo’s advice
- Do not blindly follow competitors – decipher their offering strategy instead. Among other things, study the price level and the products available for consumers. Bring prices in-line with them when the offer is rich, but optimize your margins when it is weaker.
- Take re-pricing frequency into account, particularly high in the e-commerce field (up to several times per day), to be sufficiently reactive in response to the competition.
Market data to promote your pricing strategy
The key factor to successfully implement a winning competitive pricing strategy consists in having the highest quality market data possible. This data should not only be as complete as possible to allow you to analyze the entire market, it should also be granular and unified for product descriptions. Without this, it will be difficult to compare offers and precisely develop your pricing strategy.
Another important factor concerns the frequency at which your price lists must be readjusted. In certain e-commerce fields, players are now engaged in such a price war that they are implementing algorithms to re-price products up to several times per day. Depending on your business and available resources to supervise your algorithms, you can also try to gain relevance by being as dynamic as possible.
Re-pricing is a strategic line on highly competitive markets, particularly for online retail. Automatically monitoring your competitor’s prices will allow you to set an appropriate price, a prerequisite for your success in the race for a competitive edge. Would you like to receive a demonstration of the Lizeo Price offer?