When you do a great job of competitor price tracking, you should have an idea of what your direct competitors are charging for their goods and services. You can then use this information to come up with a strategy to best brand your business. While having the lowest prices in the industry is one method of attracting customers, it is not necessarily the best methods. The key is to use the information that you collect to form part of the puzzle, rather than focusing exclusively on undercutting your competition.
Do Not Copy
Just because you see a competitor doing something does not mean that you have to do the same thing. If one company has a 2-for-1 sale, it could attract new business. It could also cost the company more money than it will make back, despite the new customers that it has found. In addition, you have no way of knowing if every pricing tactic that you see will be effective, as many of these sales fail to generate a buzz. While you can use the information that you gather from your competitor price tracking to analyze the effectiveness whether a similar strategy would work for you, do not automatically go with a similar strategy unless you know that it will work for you.
Avoid Price Wars
Never use your competitor price tracking to initiate a price war. If you have done the proper research and set your prices at a sustainable level, you can be confident that your competitors do not have enough of a profit margin to survive long-term. Of course, you can lower your prices if you are prepared to lower your expenses as well. Remember that it is much easier to lower prices than it is to increase them again. Therefore, if you plan to use lower prices as a strategy of attracting new customers, you should be prepared to live with a lower profit margin indefinitely.
Don’t Wrongly Identify Competitors
Perhaps the worst mistake that you can make when monitoring competitor pricing is misidentifying your competition. Just because a company sells similar products does not mean that it is a direct competitor, as you must look at things like market share and quality to make a determination. For example, a company that is based in China will have less overhead in terms of worker salaries and material costs, so you cannot be expected to compete with that company’s prices. At the same time, you can offer higher quality goods, for which some customers will be happy to pay.
PriceManager software helps businesses of all sizes keep track of what their competitors are charging for similar goods and services.