The market develops only in a competitive environment. However, working in such conditions is not easy since you have to constantly study your competitors. The main thing in marketing a product is deciding on its price as it is the key indicator that a buyer is primarily guided by when making a purchase decision.
If owners of online stores want customers to give preference to their products, then they should offer a competitive price. To establish it, an analysis of prices for a similar product from other companies is carried out. This can be done in several ways. But before doing the actual exercising, let’s start with the basics.
One of the main marketing tasks of price monitoring is studying the prices of your key competitors, which is just crucial for business development. In addition, a properly conducted cost analysis can attract buyers and significantly expand a customer base.
How does it work? Everything is easy. For example, companies specializing in the production of electronic gadgets, reduce the cost of old devices before the release of a new model. There is no shortage of such goods, so the buyer will make a choice in favor of stores where the price of these devices is lower. The sales volumes of these sellers will grow. Therefore, it is important to track changes in competitors’ prices in order to achieve high profits and a large turnover of goods.
Researching competitor prices will help in the opposite situation as well. For example, when a manufacturer stops supplying previous models of gadgets and the demand for this product is still high due to the quality of the product, then monitoring will establish a decrease in the number of offers. A store that still has a number of gadgets of the desired model can raise the sales value.
Competitor research not only provides information on product prices but also helps to:
- Forecast sales;
- Recognize the strategy of competitors;
- Select a reasonable price for your product/ service;
- Control sales volumes.
Price monitoring is needed in any business area with a competitive market.
You do not need to study the prices of all stores and companies in a row. Instead, you should keep your radar on:
- Enterprises operating in a similar market segment and selling their goods at a similar price;
- Businesses operating in a similar industry;
- Those who meet similar customer needs.
It is necessary to collect information about all enterprises that meet the above criteria. So it will be possible to highlight the main competitors and at the same time to look for new development options.
To conduct the analysis, you need to have some initial data to work with. They can be collected manually, or you can use any services.
This option is only suitable for companies that are just entering the market or have a limited assortment of products. But it will still take a lot of time because it is necessary to monitor a large number of sources:
- Analyze queries in Internet search engines. When looking for a product or service, a consumer goes to the Internet. The first page of the search results will show which stores and products will most likely attract the attention of a buyer. People rarely visit the second page and further, so you can skip this information if you manually create a list of your competitors;
- Conduct surveys among buyers, purchasing managers, experts. Thus, you will learn not only about the companies that are considered the main ones in the market but also about the main reasons why they are in demand among buyers;
- Study news sites. They often publish industry reviews, ratings, and list especially significant market players;
- Attend all the events of the market segment – be it exhibitions, seminars, or conferences. It is where entrepreneurs not only learn about competitors but also get to know them better. Particular attention should be paid to the list of event participants; this will simplify the process of collecting information.
The information obtained from the above “channels” can be systematized into a table, in which you need to enter all enterprises operating in the segment of interest. In this list, you can easily figure out your most significant rivals – those that can influence the level of sales. These can be not only large enterprises but also small companies that can entice buyers and then work with the prices set for the goods by these firms.
Although manual data collection is accurate, it still has a couple of significant drawbacks. Only a limited number of competitors can be analyzed. Gathering information and conducting analysis is time-consuming. So if you are up for more effective approaches, then it is better to resort to online price monitoring tools.
When using online price monitoring services, you can process a large amount of information. So it is easier and much faster to identify competitors in this way. This will allow you to quickly identify trends, make informed predictions, compare, contrast, and evaluate your current prices in relation to those of competitors.
Research shows that only about a quarter (25.6%) of businesses take competition into account when pricing. This is very small, but for you, it is a great opportunity to become better than 74.4% of other companies by adding one simple algorithm to your competitive strategy. This is easy to do when having an automated tool at hand.
Special services will allow you to quickly analyze competitors’ prices, study the basics of your own pricing policy, and generate reports based on various data. Their main advantages are speed and automation of processes.