Pricing has a huge impact on consumer buying behaviour. The obvious one is a consumer’s quest for good value and the best price. It’s estimated that 90% of people turn to the internet to find the best-priced product.
During an economic downturn, such as the current cost-of-living crisis in the UK, consumers are more price-sensitive than ever, with brand and brand loyalty becoming less significant. Price can help them decide between two products. Or decide if they can make the purchase at all.
Pricing can also shape the perceptions of a brand, product or service – and the value it provides. A product’s price point can give the brand a sense of prestige and desirability.
Changes to product pricing can create fluctuations in the market too. If one of your competitors drops their price or introduces promotional-based pricing, for example, consumers may switch brands, impacting your revenue. Understanding the pricing landscape can therefore be a big advantage. But how is that achieved?
In recent years, competitor insight (or competitive intelligence, as it’s sometimes referred to) has been adopted by businesses large and small as a way to understand what competitors are doing in the market and how they compare. One key element of that, alongside product development and marketing activity, is competitor price tracking.
What is competitor price tracking?
Competitor price tracking is the process of monitoring the price points and price changes of identified competitors and competitor products. Traditionally, this process was carried out manually. An organisation would ask someone in the team to visit competitor websites one by one to track and compile pricing. In recent years, this process has been transformed thanks to price monitoring software and automated competitive intelligence software.
The latter tools track competitor websites and other online activity in real time. They produce live data about competitor pricing, often presented in graphical form, that can be analysed and used to inform your own pricing strategies. In a previous article we compared both types of software within an enterprise setting.
The benefits of competitor price tracking
Here are 4 important benefits of competitor price tracking:
1. Understand how your pricing compares
Are you the most expensive? The least? Or somewhere in the middle? How does that compare to your direct competitors – those with products and services similar to yours? How does it compare with new entrants in the market? Or indirect competitors such as those who compete in different territories?
A clearer understanding of the market means where and how you set your price points are fully informed. This eliminates the potential downsides of guesswork and inaccurate data, which includes significant financial costs to businesses.
2. Respond to pricing changes quickly
If a competitor introduces a new price promotion or adjusts its price in some way, how soon do you normally find out about it? And as a result, how quickly are you able to respond? What impact has their change had on your sales in the meantime?
With automated, real-time competitor price tracking, you learn about changes as they happen and see a live picture of the market in real time. So instead of being slow to react, you adjust quickly. Maybe you have a promotion of your own you can bring forward. Or perhaps you can watch and learn from their success or failure before making your change.
3. Identify and plan for trends
It isn’t just about seeing what’s happening now. Having a complete record of price changes for individual competitors and the market as a whole means you can identify patterns.
Maybe certain competitors adjust their pricing or launch promotions at specific times of the year. Or there’s a growing trend for more price-based incentives across the market. Whatever it is, having the ability to view price changes at micro and macro levels will inform your pricing strategy. You’ll be able to get ahead of these trends – and the competition.
4. Gain a competitive advantage
While price tracking is growing in popularity, it’s still relatively early in its adoption. Those who haven’t yet often rely on their own past successes and failures – and sometimes outdated market data – to make their pricing decisions.
By signing up for a competitive intelligence tool and tracking competitor pricing, you can be a step ahead. You’ll be able to make data-driven decisions and adjust faster to grow sales and retain customers.
Getting started with competitor pricing tracking
Here’s an example of how price tracking works with WatchMyCompetitor’s leading competitive intelligence platform:
1. Clarify your goals and expectations
Being clear on what you want or need to achieve will keep your approach focused on what matters. That means more time to analyse and draw conclusions from the data and faster response times.
It’s also important to understand what your competitor intelligence tool (in this case WMC) can or even can’t do. You may learn about features that could provide you with additional insights.
2. Identify who and what to track
As part of the set-up process, you’ll need to define who and what to track. Depending on your wishes, this can be left to one of our market analysts or decided collaboratively. Your competitors will typically consist of:
Direct competitors – those with similar products or services who compete for the same customers in the same territory.
New entrants – those who may target other customers now but have the potential to become direct competitors
Indirect competitors – those that either compete for the same customers with a different proposition or have a similar proposition but compete for different customers, such as a sector specialist or an organisation in a different territory.
In terms of what to track, this can cover any relevant price points. In some sectors, this is straightforward – there may be a single price to track. For others, the pricing may be tiered or based on the number of users. In addition, you may want to track ad-hoc or seasonal price promotions and discounts for specific groups such as the police and NHS workers.
3. Access and analyse the data
WMC’s set-up typically takes five days, after which your pricing intelligence will start being collected. Your market analyst will make sure you only see the most relevant data, cutting through the noise and giving you more time to analyse.
You’ll need to decide who has access to your intelligence dashboard. We recommend keeping this limited but sharing intelligence with as many stakeholders as necessary. The dashboard presents the data in graphical form, allowing for quick conclusions to be drawn.
4. Sharing your pricing intelligence
Competitor price tracking is only valuable if the intelligence and the conclusions drawn from it are seen by the most relevant stakeholders. This could be people from product, marketing and sales teams as well as senior management and the board. Ultimately, the ones who’ll find it most useful will be those who make the key decisions on price and promotional activity.
WMC integrates with all major communication and data visualisation tools, including Outlook, Slack, Teams and Power BI. That means you can share the intelligence in a format that’s familiar to everyone in your organisation. You can set up period alerts or share manually from the dashboard.
You may also choose to build out periodic reports to keep key stakeholders aware of competitor pricing strategies, changes and trends. The key here is to tell a story that allows recipients to draw quick conclusions and make informed strategic decisions.