5 Reasons Why You Need Competitor Price Monitoring
Competitor Price Monitoring - To boost profits by 20%
There are many things to be considered when running a retail store; some things may be worth your time; others not.
Monitoring your competitors is one of the things that you have to consider if you want to succeed in today’s marketplace. Gone are the days when upfront startup costs were your biggest obstacle.
In yesteryears market, to set up your business in a prime location meant that you had a monopoly, if not few competitors.
However, in a world that is continuously closing the gaps between market places employing online shopping, we see less and less of this.
Instead, retailers are turning mainly if not entirely over to e-Commerce, which means little to no startup costs but heavy competition.
Competing online means competing with the whole world.
So it is becoming increasingly difficult to hide your prices until your customers have already made a commitment. For example: driving to the store, investing the time to find a specific product, etc.
With that said here are 5 Reasons Why You Need Competitor Price Monitoring:
1. Higher Conversions
"eCommerce growth is growing at 8-12% per year and online consumer spending is predicted to hit $632 billion by 2020."
With the rise of online shopping, we are seeing a shift occur in the average shopper's priorities.
The loss of a physical market place makes it more difficult for retailers to establish a personal connection with their customers.
Although there are still ways to establish brand loyalty as we see with companies such as Apple , Nike, and Adidas . Even for trusted retailers such as Amazon, Walmart, and eBay it has become a more significant challenge when there are platforms like Google Shopping and Shopbot who are continually putting their prices side-by-side with their competitors for all the world to see.
"59% of the online population is making more informed decisions about what to purchase now versus a few years ago."
That is why it is essential to maintain competitive pricing when contending with other businesses selling the same online products. Remember, often the first thing your prospects are seeing about your business is your price. So when you consistently offer competitive pricing to your market, shoppers won’t be turned off right away when they see your price next to those of your competitors.
Moreover, that’s Great for converting traffic!
2. Maximize Profits
" Over 60% of advertised prices end in the digit ‘9’."
- Philip Gendall, Professor and Head of Department of Marketing, Massey University
Just as a customer wants to get the best deal for their money, a retailer wants to get the best deal for their product/service.
Now if you are a merchant of any sort if you were to ask yourself;
"Am I making the most of every sale?"
Could you confidently say that you are?
How do you know that your prices are at, or as close to the consumer's perceived value of your products as possible?
Competitor price monitoring can help you determine this. As a retailer, you know the wholesale cost of each of your products, when you price track you will be able to see exactly how much other businesses are currently charging on top of that.
That is one way of determining your products perceived value.
Many businesses calculate their margin based on cost, so you end up with prices like $4.56, and its proven that a customer usually doesn't notice the difference if the price is slightly raised (by small amounts) to numbers like .56 and .99.
An experiment conducted by the University of Chicago and MIT, consisted of using psychological pricing for women's clothing with the left-digit effect. First, all prices were marked at $34, $39 and $44. To the surprise of researchers, items sold better at $39 even though other more economical options were available.
Little numbers can make a big difference!
Smart Price considers many things such as your price, cost, margin, competitors prices, seasonal trends and psychological pricing to automatically provide you with the most lucrative price that your consumers will go for.
"There is a noticeable drop off in my sales moving from pricing at $2.99 to pricing at $3.99 / $4.99 – around 45% loss of volume. Upping prices to $4.99 almost makes up for this. Surprisingly, there is no appreciable drop off in sales moving from $3.99 to $4.99."
- Nick Stephenson
3. Increase Sales
"8 of every 10 people is now shopping online."
- PriceMole TechCrunch
In sales & marketing, you will notice three types of consumers; high spenders, low spenders, and average spenders. It’s quite simple, but essential to understanding because you can not successfully market to them all with the same approach.
"Don’t sell a hat that doesn’t fit"
- Shari Levitin
Competitor price monitoring will give you much-needed information as to what type(s) of a consumer(s) are interested in your products.
When you know who is buying your products, then you know what price strategy will work best.
For example, you wouldn't market a luxury car like a Lamborghini to a high spending consumer using an economy pricing tactic.
Affordability isn’t their highest priority when buying such a product. Your target consumer might be willing to spend more just for the bragging rights!
On the flip side, you wouldn't market an economical Toyota Prius to a low spending consumer using a prestige/premium pricing tactic. These are just some extreme examples.
For your price strategy flaws that might not be as obvious, we can use competitor price monitoring to gather data and observe how your competition might be marketing better.
If you would like to know more about how to find the right price strategy for you, check out The Price Strategy.
4. Builds Your Brand
30% of consumers consider the brand and or the website they are visiting before making a purchase.
- KPMG International
Competitor price tracking strategies can actually help build your brand!
Whether your goal is an economical price strategy, or a prestige/premium price strategy, you can build your brand according to your needs. Be affordable (as we see with the Toyota Prius), or draw your customers in by focusing on affordability.
Alternatively, you can focus on being a high-quality brand (as we see with Lamborghini); your higher prices can give the impression that your products are of more value.
5. Stay Up-to-Date
"Amazon changes product prices 2.5 million times a day, meaning that an average product's cost will change about every 10 minutes."- Business Insider
The constant price changes have annoyed some consumers when they see the price of an item drop right after they buy it, but they've also helped Amazon boost profits by 25%.
There are many reasons why markets change, and they change daily especially in our online world where there are so many factors at play, and they take effect faster than ever before.
Massive companies like Amazon have the resources to do their competitor price monitoring and automated pricing, but the majority of companies aren’t on the same page as Amazon , which explains why they have done so well.
For the majority of businesses who don’t have the time, know-how or resources to develop their price tracking & automated pricing software; they tend to track their competitors manually (if at all).
Manually tracking competitors can be done with some success, but it comes at a pretty high cost.
"Checking competitor prices and repricing 20-50 products takes about an hour of your time, and 100-500 products can take 2-3 hours every day."
PriceMole Dashboard always keeps you up to date.
The good news is, is that if you do not have the time or energy to stay up to date with your competitor's prices manually, there is a solution!
PriceMole provides online retailers from all niches the ability to be automatically informed when their competitors change their prices and to respond with a price strategy best suited for them automatically!
See for yourself our clients success and how their business has benefited from competitor price monitoring with PriceMole.
Competitor price monitoring has proven itself to be an essential tool in the toolbox of successful e-Commerce businesses. Not only have big self-sufficient market giants like Amazon reaped the benefits but small to large companies that have partnered with us to stay relevant in an ever-changing market.
With these 5 new reasons to consider competitor price monitoring for your business, we wish you happy price monitoring!
have any questions or ideas regarding competitor price monitoring? Leave us a line in the comments down below, and we’ll be sure to get back to you.