There is no doubt pricing is the central factor determining the competitiveness of the companies. With most retail stores offering similar types of products the main deciding factor has become pricing. In this article you will read about how competitive pricing can help retail businesses in boosting their profit and sales. Also, the ways in which brands can make use of this pricing strategy.
With changing times of severe competition, it has become increasingly important for retailers to keep upgrading their business strategy. As compared to brick and mortar systems, the online retail industry is complex. With difficulties comes the opportunities. Starting an online business can be as easy as it sounds but surviving the market is the real challenge. Business brands that understand the market, constantly update their strategies win at the end of the day.
What is competitive pricing?
A process of setting a strategic price by taking the advantage of product and market. Usually businesses selling similar products need competitive pricing. While pricing is a clear choice that the seller has to make, competitive pricing offers more scope for business brands to survive in the long run. Before choosing the competitive pricing strategy, it is essential to know the three ways under which this method works.
This is when the company sets the price lower than that of their competitors. Usually this type of strategy is taken by the new entrants. Generally these brands are called the loss leaders because they try to reduce price to capture larger market share.
Low price is also set by companies that have very similar high value added products. They usually target new customers who are very price sensitive to their products. For example, an e-commerce brand selling iphones can set the price lower than that of their competitors. This way they can get more downloads of their app and can push more sales by being the most affordable in the market.
This is suitable for business brands selling premium products with many features that make them distinct from their competitors. The rationale behind this strategy is that the brands want to price their products higher so that the customers research to find out why they are.
Also, when the demand for products is extremely high then the companies can take advantage of the market to charge higher prices. This method of charging the maximum price the consumer is willing to pay can help the business to make optimal profit. This is called price skimming.
For example, if your e-commerce website is selling high quality premium home decor furniture. You can charge the maximum the consumer is willing to pay rather than what your competitor is setting.
When setting the same price as the competitors, companies match it to balance profit and market share. This requires dynamic repricing specifically suitable for e-commerce stores products. For example, when a multi brand retail offers a particular brand shoe as their main product they have to set their price same as their competitors.
Advantages of competitive pricing
There are many advantages of competitive pricing strategy, but the effectiveness depends on the type and objectives of the business. Irrespective of setting high, low or same some of the major advantages competitive pricing are
Simple to set
It is extremely simple as the strategy can be dynamically changed depending on the objectives of the company. With price monitoring software, it is possible to use competitive pricing at ease. Companies can integrate their business with softwares that can track prices so they can simply make business decisions based on assessing their competitors strategy.
pricechecker essentially simplifies this task for retailers to track their competitors products with a few steps.
The risk of losing customers or profit is low as companies can swiftly change from low to high depending on the market conditions. A SaaS solution such as pricechecker would help in ensuring that businesses are pricing their products within their threshold.
Increased profit margin
Another interesting advantage is the fact there is a huge potential for retailers to increase profit margin by not just matching the prices but also the stock. With pricechecker you can monitor the competitors stock and price positions. So there is a good opportunity to increase the price and set it higher when the competitors are out of stock for those products.
Optimum market share
There is little chance to lose customers. When you are aware of what your competitors are charging it is easier for the business to price it just low enough to attract customers. pricechecker, with advanced pricing intelligence and AI analytics, gives the price and stock details of the competitors so that the retailer can immediately take advantage of the market and set the right price.
The advantages of competitive pricing strategy can be fully utilised only when there is a tool to enhance data to make the best business decisions. Pricechecker offers the best deal for any retailer looking to adopt a competitive pricing strategy.