Over the past few years, low-price giants have become major players in all distribution markets, including online. They operate using a business model that allows them to survive, even with lower profit margins, by minimising overheads. As a result, the fight over prices is undoubtedly one of the factors that generate the most headaches, especially when it comes to preserving your profit margins.
Keeping track of the competition with a monitoring tool is a must for any business that doesn’t want to lose its market share, allowing you to monitor the pricing strategies used by your competitors, analyse tendencies, and overcome them. But, how should you act to ensure that you won’t lose customers and that the profitability of your business remains unaffected? In one way or another, a price monitoring tool will offer a lot of support when it comes to setting your strategy.
✔ Emphasise your strengths.
Highlight those areas that your clients really value about your business and make them known. The customer should understand why your business sells a product at a higher price than your competitors. The idea is to create brand value that makes up for the consumer paying a higher price. In the end, you’re selling value, not price, and this will make you stand out in a sea of cheaper competitors.
✔ Adjust your prices.
While it may be difficult to narrow the price gap with your competitors, ensuring that the gap is as narrow as possible is vital. You can do this more selectively by focusing on the products with higher elasticity, for example. Above all, avoiding falling into a constant trend of downward prices is essential, which is one of the most frequent errors in pricing strategies and can affect your profitability. Another good idea would be to back up this price reduction through cross-selling other, related products, helping to improve the sales margin of the main product and compensating for the change in price.
✔ Redefine your market.
One specific niche will rarely be an attractive alternative for a large company. Focusing on one sector, in particular, in order to create the appearance of a specialty shop can be very profitable. This will allow you to direct your efforts towards potential customers that meet all of the prerequisites for being ideal customers.
✔ Anticipate the future.
Developing an effective defence against the low-price competition can be long and arduous. The time that we’ve spent studying the competition to put a strategy in place will be crucial to ensure its effectiveness. Having a competitor price monitoring tool will clear the way and assist you in your decision-making process, allowing you to study different variables related to your competitors to decide which would be the most viable and profitable solution for each case. As with so many other issues that may arise in a business, planning ahead will be the key to success.