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Price monitoring becomes a more crucial strategy for companies as new startups make the global business environment more competitive. 70% (Figure 1) of customers consider competitive pricing as the most important reason for shopping with a retailer. By keeping an eye on competitors’ pricing, companies can make informed decisions and maintain a competitive advantage.
This piece of research is for businesses that are planning to leverage price monitoring for their competitive intelligence strategy. In this article, we explore:
- What price monitoring means,
- How it’s done
- Top 5 benefits of effective price monitoring
- Top 5 challenges businesses face while monitoring competitor prices
Figure 1. The most important factors that influence customers to shop at a particular retailer
What is price monitoring?
Price monitoring refers to the process of regularly tracking, analyzing, and comparing the prices of products and services offered by competitors. This information enables businesses to maintain their market position, optimize and adjust pricing strategies, and drive sales growth. Price monitoring is especially important in the e-commerce and retail sectors, where price fluctuations are common, and consumers are sensitive to even minor price changes.
Price monitoring vs. price tracking
Price monitoring and price tracking are often used interchangeably as both involve the process of observing and collecting pricing data from various sources, such as competitors’ websites, or online marketplaces. Although similar, there are subtle differences between the two terms.
- Price monitoring is more comprehensive and includes analysis
- Price tracking focuses primarily on data collection
However, these distinctions are often not significant in practice. Ultimately, both terms are used to describe the essential activity of staying informed about competitors’ pricing strategies, allowing businesses to optimize their pricing, maintain competitiveness, and drive growth.
How is price monitoring done?
Price monitoring can be achieved through manual processes or automated tools. Manual price monitoring involves regularly visiting competitors’ websites, marketplaces, or physical stores to gather pricing data. However, manual price monitoring tends to be error-prone and tedious, particularly for large-scale businesses with many competitors. Automated price monitoring utilizes software or automated tools such as web scraping tools to collect pricing information from various sources and present it in an organized manner for analysis.
Sponsored
Bright Data offers an AI-powered solution called Bright Insights that provides price monitoring features. The platform offers:
- Real-time price monitoring of competitor’s SKUs
- Data analytics of multiple competitors
- Track competitor pricing for their products and services
- Monitor competitor product catalogs to help you improve yours
- Monitor consumer sentiment toward your brand
Source: Bright Data
Top 5 Benefits of Effective price monitoring
1. Achieve an optimal pricing strategy
By keeping track of competitors’ pricing, businesses can make data-driven decisions to create a pricing strategy that attracts customers and drives sales.
For instance, an online electronics store may notice that its competitor has lowered the price of a popular smartphone. By adjusting its own pricing accordingly or offering a free phone case with the smartphone, the store can stay competitive and maintain its market share.
2. Achieve dynamic pricing
Price monitoring allows businesses to implement dynamic pricing strategies, which involve adjusting prices in real time based on current market conditions and customer behavior.
For example, an e-commerce fashion retailer may monitor the prices of winter coats and observe a sudden increase in demand. It can then raise its prices to capitalize on the surge and maximize profits.
The traveling industry is completely built on price monitoring and comparison. Companies such as Skyscanner and Hotels.com have built their whole business model on price monitoring and analytics:
3. Improve customer satisfaction
Price monitoring can help businesses offer better services to improve customer satisfaction. Here are some ways it can help:
3.1. Offer price comparison features
For instance, studies show that price comparison tools have gained significant importance among customers (Figure 2). Companies can offer price comparison features to their customers through real-time price monitoring. This can increase overall customer satisfaction.
Figure 2. Price comparison tools’ importance among customers in the Italian e-commerce market.
3.2. Achieve consistency
Understanding the competitive landscape enables businesses to price their products and services fairly, leading to increased customer satisfaction. When an online book retailer consistently offers competitive prices, it can build trust with its customers, who will return for future purchases and recommend the store to others.
4. Identification of market trends
Effective price monitoring can help businesses identify market trends and adjust their strategies accordingly. Suppose an online grocery store notices a trend of increasing prices for organic produce. In that case, they can respond by expanding their organic offerings, capturing the attention of health-conscious consumers, and driving revenue growth.
5. Faster decision-making
In the current business environment, resiliency is very important. Your business should have the ability to quickly adapt to changing trends. Price monitoring can equip business leaders with the data required to make faster, more accurate decisions in response to market changes.
A brick-and-mortar toy store, for example, may observe that a competitor has suddenly slashed the price of a popular action figure. By quickly matching the competitor’s price, they can maintain their sales and prevent customers from flocking to the competition.
Top 5 challenges & solutions of price monitoring
This section highlights some challenges attached to price monitoring.
1. Data accuracy and reliability
One major challenge of price monitoring is ensuring that the collected data is accurate and reliable. Incorrect pricing information can lead to misguided decisions and potential losses. Businesses must invest in reliable price monitoring tools and processes to mitigate this risk.
2. Resource constraints
Price monitoring can be resource-intensive, especially for businesses conducting manual price checks. To overcome this challenge, businesses can consider investing in automated price monitoring solutions to save time and increase efficiency.
3. Adapting to rapid market changes
Some sectors, such as fashion retail, face rapidly changing prices and market dynamics such as changing trends, seasons, etc. Businesses must be prepared to adapt quickly to these changes to stay competitive. Implementing a robust price monitoring system with real-time tracking can help companies react promptly, but it requires constant vigilance and flexibility.
4. Legal and ethical considerations
Many companies do not wish to openly share their pricing information. Price monitoring can raise legal and ethical concerns, particularly when it comes to web scraping and data privacy. For more on web scraping ethics, check out this quick read.
Companies must ensure that their price monitoring practices comply with applicable laws and respect the privacy rights of competitors and consumers. This may involve seeking legal advice and implementing some best data collection or usage ethical and legal practices.
5. Balancing price competitiveness and profitability
While competitive pricing is essential, businesses must strike a balance between attracting customers with low prices and maintaining profitability. Excessive price wars can lead to decreased profit margins and harm long-term business growth.
See how the British supermarket price wars can create challenges for retail giants like Tesco:
Effective price monitoring helps businesses find the sweet spot between staying competitive and preserving profitability.
5 Best practices of price monitoring
This section highlights some best practices that can help marketers master price monitoring and successfully incorporate it into their competitive intelligence strategy.
1. Define clear goals and objectives
To effectively implement price monitoring, businesses must establish clear goals and objectives for their pricing strategies. This may include maintaining a competitive edge, maximizing profits, or increasing market share. With a clear path, a company can use price monitoring data to offer the best prices for its products while maintaining a healthy profit margin.
2. Utilize reliable data sources and tools
Accurate and timely data is crucial for successful price monitoring. Businesses should invest in reliable data sources and tools, such as automated price monitoring software or web scraping services, to collect pricing information from competitors.
For instance, a brick-and-mortar electronics store may use a web scraping tool to track the prices of similar products on e-commerce platforms and adjust their prices accordingly.
3. Monitor competitors strategically
Rather than monitoring every competitor in the market, businesses should focus on their main competitors and those with similar target audiences. This ensures that the collected data is relevant and actionable. For example, a high-end boutique may choose to monitor prices from other luxury retailers, rather than mass-market brands, to maintain their premium positioning.
4. Analyze and interpret data effectively
Collecting data is only the first step in price monitoring; businesses must also analyze and interpret the data to make informed decisions. This may involve identifying pricing patterns, trends, or anomalies and understanding their underlying causes.
An online bookstore may notice a sudden surge in demand for a particular genre and adjust its pricing strategy to capitalize on the trend.
5. Respond quickly and strategically
Price monitoring enables businesses to react swiftly to changes in the market. However, it’s essential to make well-informed and planned decisions rather than reacting impulsively to competitors’ pricing moves.
Companies should consider their overall pricing strategy, profit margins, and customer expectations before making adjustments. Suppose a furniture retailer observes a competitor offering a significant discount on a popular item. Rather than matching the price drop, it could offer a value-added promotion, such as free delivery or assembly, to maintain its profitability while staying competitive.
For more on data-driven lists on analytics solutions, check out our analytics hub.
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