Competitive Price Intelligence is the practice allowing a company, a retailer or a brand, to track competitor’s prices on a permanent or regular basis, in order to monitor its position within the market relative to competitors.
1- COMPETITIVE PRICE INTELLIGENCE: WHAT IS IT?
Hence, a retailer can get insights into the market it operates in and adapt its distribution strategy so to gain competitiveness. On the other end, a manufacturer can control its retailers’ actual pricing strategy for its own product range. That is why the use of competitive price intelligence tools is essential to develop an efficient sales strategy and constantly help secure its position on highly-developing markets, or to optimize the profit margin, on busy and competitive markets.
Given the increasing demands from the market, companies are now struggling to perform this practice manually. Indeed the quantity of data to process and the booming e-commerce market prevent them to do so. Therefore they now turn more and more to external solution providers, who bring them the intelligence they need whenever they need it.
2- WHO IS USING COMPETITIVE PRICE INTELLIGENCE SOLUTIONS?
This method is mainly used by retailers seeking to position themselves on their market, but also by manufacturers seeking to monitor their products’ sales performance, as well as the respect showed by their distribution network for their trade policy. Some retailers may also use conversion rate optimization tool to optimize their performance, such as Omniconvert.
For example, in Europe, the main players of the volume retailing industry actively use competitive price intelligence to monitor constantly their market position: CDiscount, Dixons, ShopDirect, Fnac, Bosch, Sony, Samsung and many others…
3- COMPETITIVE PRICE INTELLIGENCE: WHAT IS IT FOR?
The use of competitive price intelligence tools allow to better understand the pricing strategy of the different players on a target market. Made aware of the market’s evolution and trends, the company is empowered to adapt its sales strategy accordingly, so to increase its product mix and product range’s competitiveness, and monitor the performance of its pricing and sales policy.
Technological advancements make the competitive price intelligence process much easier, thanks to new specialized software. They allow companies, brands and retailers, to take a deep dive into analyzing their own positioning on the market, as well as their competitor’s, at different levels: mix, range, products, etc. This way, companies are provided with a clear vision of their market’s state, their competitiveness and positioning relative to the competition.
Therefore, competitive price intelligence allows the players of volume retailing industry to always stay aware of markets moves, especially during periods of intensive promotional activity (sales, New Year etc.), and optimize their prices accordingly. This help them maintain, nay increase their margin ratios. Finally, companies are also able to ensure consistency.
4- THE DIGITIZATION OF COMPETITIVE PRICE INTELLIGENCE VS THE BOOM IN E-COMMERCE.
Over the last few years, the boom in e-commerce activities has deeply transformed the retailing industry. In 5 years, the number of online retail stores has been increased by more than 3, and the French online business industry has, by itself, more than 100,000 retailing websites, more than 75% of distance selling industry. On top of that, Internet forces the retailing industry to be constantly more flexible and responsive, which increases the brands and retailers’ needs for an efficient price intelligence strategy, especially against their fellow e-commerce players.
In an interview dated November, 24th, 2014, Bernard Euverte, President of WorkIT Software, a software provider specialized in competitive market intelligence, states that at first:
“Nobody cared about online prices, e-retailers were contenting themselves with being the least expensive as possible, and brands were hardly paying attention to e-commerce. Internet has quickly established itself as THE market reference for pricing strategies, even in brick-and-mortar retail stores”.
In fact, e-commerce empowers consumers to easily compare e-retailers’ products, offers, and prices, leading to an increased market’s dynamism and volatility. Faced with increased competition, price has become a key-element in buyer’s decision-making process. That is why it is now necessary to track market prices changes in an efficient way, so to respond quickly and stay competitive; this makes the use of price intelligence software quite crucial in volume retailing industry, especially when it comes to e-commerce.
5- HOW DOES IT WORK?
Price Intelligence software track and collect market prices on the internet, on a frequent basis, and reflect them back to the user through the interface, providing him with a real-time vision of its positioning compared to the competition.
6- FOR WHICH RESULTS?
This way, the Price Intelligence software user can get insights into his own positioning within the market, but also his competitors’, through the analysis of the reported data according to some specific criteria of his choice, and then conduct a market survey which allows quick and well-considered strategic decisions.
The user is then able to optimize his offer at different levels. In the example of a retailer:
- To monitor the market aggressiveness and adapt its sales strategy accordingly, in order to secure profit margin with regards to competition.
- To optimize its product mix for special events (Christmas, Valentine’s Day, Back To School, Black Friday, …) so to answer its market’s needs.
Brands, on their end, can monitor their products’ positioning within the market, by comparing them with similar items offered by the competitors’ and measure their retailers’ efficiency and performances, or even their products’. This process also allows them to make sure, regarding exclusive distribution agreements, that only authorized dealers are selling the products in question.
- WorkIT’s price monitoring software