Competitor price monitoring is a crucial aspect of competition. With its help, you can set the optimal prices for goods and services.
Price monitoring is especially relevant for online stores, trading companies, and service providers. Market conditions are constantly changing, and it’s vital to adapt quickly to them. You are one step ahead and can dictate your terms in the market, manage sales effectively, getting the maximum profit by analyzing not the competitors’ activities but their prices.
Why Is It Necessary To Monitor The Prices?
First of all, it’s necessary to know the price offered by competitors and to understand by what criteria the customers will choose a product or service. Thus, the price doesn’t have to be the lowest on the market. For instance, if you offer free or the fastest shipping, extended warranty, or additional service, the buyer may overpay in order to get more than just one product.
For the company’s offer to remain competitive, it’s crucial to constantly monitor competitors and compare them — just like customers do.
Secondly, you manage your sales. The assortment structure always contains hot and seasonal products, low-demand items, specific offers, etc. You can maintain the maximum demand for certain goods by controlling the quantity of a particular product.
You can easily manage sales by lowering prices to avoid stockpiles of unsold items or increasing during periods of high demand or shortages of the same products from competitors. Competitor price monitoring makes sales management flexible and responsive to market changes.
Thirdly, the results of the analysis can be used to optimize cooperation with counterparties — to reduce supplier prices, provide additional discounts, and change the terms of delivery. It helps to reduce costs and get long-term benefits.
Fourthly, you quickly react to market changes. Monitoring provides up-to-date information on prices, and most importantly, it happens very quickly. The price change is one of the key indicators of changes in demand and availability of goods. Your business needs price comparison to monitor the state of the market and act in accordance with a particular situation.
Fifthly, competitor price monitoring allows you to improve contact with customers. The data obtained helps to build communication with buyers or partners. You can easily explain a higher cost of goods or services or, on the contrary, emphasize a lower price in comparison with competitors.
Competitor Price Collection Methods
To analyze the prices of competitors, you need to collect these prices in one of the following ways.
Manual price monitoring is possible for a small assortment of items and takes quite a long time. You only need to visit your competitors’ sites and manually collect the data, for instance, enter it in Excel.
If a competitor doesn’t publish price lists, you can get this information by contacting him like a potential client. In other cases, such information is obtained at exhibitions, conferences, and other industry events.
If prices are published on a competitor’s site, the simplest and most efficient way to do this is to use parsing — a technology for the automated collection of information. Using parsing, you can monitor prices for products of certain groups or the entire assortment.
Using parsers requires certain skills. You purchase a desktop version of any suitable service and parse the data yourself or pay for the parsing of each site as a service. In the first case, you need to be a bit of a programmer. In the second, you pay for the parsing of each particular site (the more there are, the more expensive the final price is).
Specific Software And Services
When using such services, the search for sellers and comparison of prices occurs automatically. The cost of checking one product is fixed regardless of the number of competitors. You decide for yourself whether to track or remove a potential competitor.
How Often Should I Monitor Competitors’ Prices?
Depending on the market size and the number of sellers, prices should be updated as often as possible. With a high rate of change in supply and demand, prices need to be changed several times a day. Let’s figure it out.
Here are the main factors on which the monitoring frequency depends:
- the size of the company and assortment;
- the market size in which the company operates, the number of competitors;
- the specifics of the offered goods or services.
Based on these factors, the frequency of price monitoring is determined. So large companies, online hypermarkets, and industry leaders can monitor competitive prices on a daily basis, instantly changing their price lists. For instance, Amazon optimizes prices every few minutes.
If the number of goods is small, and the company itself is a representative of small or medium-sized businesses (and competes with the same firms), you can monitor prices less frequently — every few days or once a week. It follows from this that the less a business size is, the less often it can analyze the competitors.
Let’s Sum Up
Competitor prices analysis is an equally essential task for the owner of a small online store and the head of a large retail chain.
Competitor price analysis is useful both for large online stores and start-ups that don’t know what prices to set. Moreover, it’s relevant for manufacturers who are going to launch a new product line, expand an existing one, or just want to stay ahead of optimal wholesale prices.
Thanks to competitor price analysis, you:
- find out the number of your competitors and leaders in certain product segments;
- determine the market saturation with competitive goods;
- you can choose the optimal pricing strategy for the growth of your business performance;
- increase the effectiveness of your advertising campaigns;
- get the opportunity to plan your assortment policy more accurately;
- you can react quickly in response to changes in the pricing tactics of suppliers and competitors.
Competitor prices can be monitored and analyzed at different intervals. If the market is rapidly growing and changing, you need to monitor the cost of competitive products daily or every few days. Otherwise, it can be done every 1-2 weeks. More often, you can compare the prices of products that generate the bulk of your profit. You can perform it yourself or contact professionals for help. In any case, it’s a crucial component of any business. Good luck!
Follow TodayTechnology for more!