Monitoring prices is a competitive advantage for any ecommerce. Intelligence technology and price monitoring is an indispensable tool to understand the digital ecosystem and develop a pricing strategy. These solutions allow you to track competitors, detect their prices for historical analysis or forecast trends, and even understand their catalogue movements (in stock, new references, renewal of items, etc.).
It is not about reacting to the competition only by lowering prices, as many suppose. Monitoring competitive prices allows, in addition to fine-tuning the long-term pricing strategy, to take advantage of opportunities and launch short-term actions. And these repricing actions (modification of the prices of the products) can be of a rise in prices, of a drop in prices and, even, actions related to the existences.
1.- Opportunities to raise prices and position themselves better than the competition
A competitive analysis tool allows you to detect opportunities for smart price increases.
Generally this situation occurs with products in which the price is already in the low section of what the market offers, but through competition comparisons it can be detected that the difference is too broad with respect to the closest competitor. This is an interesting price increase opportunity, since it allows you to increase the price and still have a competitive position.
The price increase actions can be direct, increasing the price per unit, as some ecommerce do. Other ecommerce, to avoid immediate reactions from the competition, generate indirect actions in the form of offers or packs, which combine the product with its new price along with another product or service. An intelligent form of indirect and temporary price increase, which also avoids alerting competitors.
2.- Opportunities to lower prices and attract new customers
With the same monitoring tool, analysing the competition can detect products that competitors have with lower prices. If this situation occurs with overvalued products in which the purchase price and profit margin allow a somewhat lower price, this is an opportunity to equalize prices, generating promotional actions or discounts for a limited time.
In these cases, the long-term strategy and short-term actions must be balanced. Although the price is the most important variable for the purchase decision of the clients, this must be treated with care, since it can affect the perception of the brand.
A very favourable situation that occurs when discount prices are offered is that people compare less to make a purchase decision when they encounter discounted products. Many psychological studies on the reaction of consumers to prices, such as the one carried out by the Max Planck Institute (Discounts and consumersearchbehavior: The role offraming), describe this situation as very favourable to get new customers.
3.- Opportunities to raise prices due to the movement of stocks and increase sales
The monitoring technology allows you to have very valuable information about the competitors' catalogue, as, for example, to find out how many units of a product they have in stock.
If the monitoring of the competitors' stock of products reveals that a product is sold out in its ecommerce, this is an opportunity to modify prices upwards and attract new customers. The interesting thing is that, if you analyse the history of movements of that product of the competition from which there are now no stocks, you can understand the replacement period and launch an action directly with the same term. Throughout that period of time, there is an opportunity to offer a product that the competition does not have, with a higher price and, in addition, with the possibility of attracting new customers and having a more relevant positioning in the market.