Competitive Pricing Intelligence: Definition, Examples And Strategy

Did you know that 60% of consumers say that pricing is the very first criteria when making a buying decision? Or that 90% invest time hunting down the best deals online? Yet only 26% of businesses consider the competition or the market when setting their prices.


Introduction to pricing and consumers

In the book Thinking Fast and Slow (2011), author Daniel Kahneman discusses two ways consumers think when it comes to a choice: System 1 and System 2. System 1 is about intuitive, automatic and emotional decisions that require almost no time at all to make. While System 2 is far slow and requires reasoning, logic and consideration.

System 1 is in operation when buying cheaper, everyday products. While System 2 is needed for expensive and one-off purchases. In both scenarios, pricing matters. Pricing for System 1 products immediately communicates to consumers that they can make their decision based on instinct. As such, brand and message have a big part to play in creating emotional resonance.

For System 2 products, pricing plays a key part of the evaluation process. If the price point is wrong or competitor pricing is more favourable, it could have a big influence on the final decision. It is a key part of both your proposition and the consumer buying decision.

In competitive marketplaces, the perception of your product’s price point will be directly influenced by that of your competitors. If you’re unclear on how competitors price their products or when changes to price occur, it could set you on the back foot. They could be changing the way consumers think, feel and act towards your brand without you making a move.

competitive intelligence strategy


Competitive pricing intelligence explained

Competitive pricing intelligence refers to real-time, analysed data on your competitors’ price points It offers a live, accurate and complete picture of pricing in your market as well as the ability to see changes in price that reveal your competitors’ overall pricing strategies.

 

It can be used to compare and contrast specific competitors – maybe those you compete against most often – or the market as a whole to see where you fit. It enables you to identify where and when changes to your pricing need to be made in order to remain competitive or gain a competitive advantage. 

 

The process of gathering competitive pricing intelligence requires specialist price or competitor monitoring software that automatically tracks competitor websites and other online sources in real time.


Examples of competitive pricing intelligence

Here are some of the most popular examples of competitive pricing intelligence used by organisations large and small:

1) Product price comparisons

Whether it’s head-to-head with competitors you’re up against for a lucrative new contract or ongoing monitoring of the competitive landscape, product price comparison is incredibly important. It provides transparent, real-time data of how competitor products (and services) are being priced at any given time.

You can identify which competitor products are lower in price and which are higher. Where pricing plays a significant role in the consumer’s buying choice, this intelligence can help you identify threats and opportunities you need to act upon.

2) Competitive pricing history

Competitive pricing history is extremely valuable for providing additional context to what’s happening today and the ability to predict future changes. It can reveal patterns in a competitor’s pricing over several months or years that gives you an indication of what they might do next.

Pricing history will also provide insight into market trends. For example, are prices going up or being driven down? Are all competitors following that trend? What conclusions can you draw?

 

3) Competitor pricing changes

Another form of pricing intelligence are real-time alerts of when changes occur to your competitors’ prices. Without monitoring pricing, you might not find out about that change for some time.

By then, you could see your sales affected and be forced to take more drastic action to recover the situation. With this form of pricing intelligence, you can draw conclusions quickly and respond proactively to protect and improve your position.

4) Competitor promotions and incentives

In many sectors, pricing will be subject to promotions and incentives, such as sales, time-bound discounts and discounts for particular types of customers such as NHS workers or the Police. All of this data is available online yet difficult to gather and collate without the right software. Having this data in real-time can help you to understand sudden changes in sales figures and take preventative or counter measures to minimise the impact.

Enterprise software for competitive intelligence pricing

Naturally, you would presume that a standard price monitoring software should be sufficient, but this isn’t necessarily the case. One of the biggest advantages of using competitive intelligence software over price monitoring technology is that your pricing intelligence only tells one part of the story.

Pricing intelligence gives you cold, hard facts that you can analyse and draw conclusions from. But further investigation is required to understand why competitor pricing is the way it is, what market factors have influenced any changes and how those changes are impacting on the market and your position. By monitoring your competitors across a broader range of criteria, such as product development, marketing activity, personnel changes and investments, you can build up a richer, fuller understanding of your competitors’ pricing strategy. 

 

You’ll be able to identify potential threats and opportunities as well as understand competitor strengths and weaknesses – all of which can help you make decisions that lead to a competitive advantage.

How to build competitive pricing intelligence strategy

 

Before you can decide what monitoring software you intend to use, you need to be clear on what you’re looking to achieve and what types of intelligence will help you do it.

1) The goals

Your goals will inform your choice of technology and how your intelligence dashboard will be configured. Some competitor monitoring tools will handle the set-up on your behalf once they understand your goals.

They’ll use market analysts to identify which competitors you need to monitor. This can include direct competitors you compete against every day, emerging competitors and indirect competitors that operate in different markets or compete with different types of products.

2) Intelligence required

The next step is to identify what types of information you need and the sources you need to track to get it. Plus, the way you need the intelligence to be presented to make it useful. Again, a market analyst and a flexible competitor monitoring tool can take care of this on your behalf. They’ll also strip out any data that’s not relevant to your goals, so you can access the pricing intelligence that will be most useful.

3) Sharing pricing intelligence

You can also set up alerts for when changes occur – vital in pricing intelligence – for yourself as well as key stakeholders across the organisation. This will often be done using integrations between your chosen software and the communication platforms you’re using currently. 

 

Sharing intelligence is key to becoming a more data-driven organisation and getting the most value from your investment. As well as alerts, you may want to create intelligence reports that collate the key findings and allow you to tell a story that leads to actionable conclusions.