Analytics and analysis are important tools to help build a truly profitable business. Let’s look at what methods of price analysis there are, what professionals use, and how to build a strategy for diagnosing the market or a specific sector.
Why do you need a competitor price analysis?
Knowing the prices of competitor companies helps the owner of an online store to set an optimal price for their goods, which will make the product as attractive as possible to the consumer.
In addition to finding a reasonable price for their goods, conducting research on competitors’ offers will help:
- predict sales;
- know what strategies competitors are using;
- allow to control sales volumes;
- monitoring the prices of competitors will increase the efficiency of assortment planning;
- in the process of analysis you will be able to make a diagnosis of market volumes, to know the number of your competitors in different product categories;
- visual analytics of competitor prices helps to make optimal business decisions;
- conducting a price analysis will allow you to determine the optimal pricing strategy to maximize profits;
- knowing what prices your competitors are offering will help you to sell off leftovers in a timely manner, increase your sales and return on investment in advertising;
- you will also be able to get discounts from suppliers and replace them if wholesale prices based on the results of competitors’ price monitoring will not allow you to set the level of margin you need.
Price analysis is also necessary because choosing the right pricing strategy will allow you to get the maximum number of customers and increase customer loyalty to the store brand in the long run.
Where to get data for your analysis
You need raw data for your competitive pricing analysis. You can collect it manually or use an assistant service.
The manual collection is only suitable if the variety of goods will not be too large. But it will still take a lot of time because the entrepreneur will have to monitor a large number of sources:
Analyze queries in Internet search engines. The consumer, choosing the product or service he wants, is looking all over the Internet. The first page of the output will show which stores and products will attract the buyer’s attention. People rarely go to the second page and beyond, so this can be skipped when manually generating a list of competitors.
Conduct surveys among buyers, purchasing managers, and experts. In this way, the businessman can not only learn about the companies that are considered top of the market but also why they are in demand by the consumer.
Study the point of sale (the store’s website). Here you can see the full assortment and prices.
Study news sites, and periodicals. They often publish industry reviews, and ratings, where they list particularly significant market players. In addition, you can find entire articles about a competing firm from them.
Attend all the events of the market segment – exhibitions, seminars, and conferences. There the entrepreneur will not only learn about the competitors but also get to know them better. Particular attention should be paid to the list of participants, this will simplify the process of gathering information.
The information obtained can be systematized in a table, which should include all the companies operating in the segment of interest.
The most important competitors can be singled out in the list, i.e. those who can influence the level of sales both in the direction of decrease and increase. These may be not only large enterprises, but also small companies that can lure customers, and then work with the prices set for the goods of these firms.
- This option has its disadvantages:
- only a limited number of competitors can be analyzed;
- it takes a long time to collect information and do the analysis.
Conclusion
Without the analysis of the market and the specific target sector, there is nowhere to go. We hope that this article will help you to do the right research and get a lot of profit from it. Let’s consider the main points:
The analysis is mandatory, and it is detailed and detailed;
not to miscalculate the price, you must take into account all factors, including seasonality;
two absolutely identical firms can sell the same product at a different price and have different profits from it.