fbpx

Launching Your Competitive Price Monitoring Strategy: A Step-by-Step Guide

Launching Your Competitive Price Monitoring Strategy A Step by Step Guide 1

In today’s digital age, customers often turn to the internet in search of the best deals. Therefore, setting competitive prices is essential for capturing and retaining customers. However, pricing products too aggressively can compromise profit margins and threaten the long-term viability of your business. The key to success lies in having accurate information that enables you to establish prices that strike the right balance—maximizing profits while still appealing to customers.

 

3

 

Monitoring competitor prices is a valuable practice that provides insights into when to adjust your own pricing strategy. It helps align your prices with customer expectations, determine when price increases are warranted, and identify instances where maintaining the status quo is preferable.

Based on our extensive experience collaborating with major retailers and brands, we’ve identified common challenges and best practices to guide your competitive price monitoring strategy.

  1. Determining Categories and SKUs to Monitor: Selecting which categories and SKUs to monitor depends on your business identity. Consider products closely associated with your store in customers’ minds and identify categories where you aim to excel or play a defensive role.
  2. Identifying Competitors of Interest: The number of competitors to monitor varies based on your industry and categories. Focus on competitors that customers are likely to turn to for price-sensitive items. Typically, it’s advisable to concentrate on six to eight competitors closely resembling your business. Additionally, minimal online traffic for a specific competitor may suggest that their price changes don’t necessitate an immediate response.

 

5

 

Determining the frequency of monitoring is crucial for an effective pricing strategy. Major retailers employing dynamic pricing often scrutinize competitors’ prices for all their offerings regularly. However, the frequency of monitoring varies based on the product’s significance and price sensitivity. Key value items (KVIs) are typically reviewed every two hours, while other products may be reassessed weekly or monthly. This decision depends on how much sales are influenced by an item’s price and the frequency of price fluctuations among competitors.

Establishing matching rules for product comparison is essential to ensure accurate analysis. When comparing prices with competitors, it’s imperative to evaluate identical products. Define the product features or attributes most important to your customers, regardless of the category. For example, if your specialty is furniture sales—a complex product category—you may prioritize attributes such as material (fabric, wood, glass, leather) when comparing items.

Monitoring prices for millions of products manually can be overwhelming. Fortunately, there are price monitoring tools available that offer reliable pricing information in real-time. These tools streamline the process, providing the data needed to make timely adjustments to your prices and maintain competitiveness in the market.