In today’s highly competitive business landscape, competitive pricing intelligence has become a valuable tool for companies striving to protect and grow market share. Here’s some industry stats to consider.
86% of consumers think it’s important to compare prices from different sellers. While 90% invest time hunting down the best deals online.
Price sensitivity is exacerbated by the UK cost of living crisis with 24% of UK adults saying their spending has changed ‘a lot’ and a further 59% saying it has changed ‘a little’. How a business sets its pricing can therefore have a big impact on a company’s sales.
Yet just 26% of businesses consider the competition or the market when setting their prices.
Contrast that with the considerable growth of competitor intelligence and it’s clear that competitive pricing intelligence is still an underutilised opportunity.
Competitive Pricing Intelligence Explained
Competitor pricing intelligence is the practice of gathering and analysing information about the price points and pricing strategies of your competitors.
It involves monitoring and evaluating the prices they charge for their products or services, as well as any pricing changes or promotions they implement.
Competitor pricing intelligence provides valuable insights into the competitive landscape, enabling businesses to make informed decisions about their own pricing strategies.
By understanding how your competitors price their offerings, you can gain a deeper understanding of the market dynamics, customer perceptions, and your own position within the industry.
It helps you identify pricing trends, pricing gaps, and opportunities for differentiation. With this knowledge, you can optimise your pricing to attract and retain customers, maximise profitability, and achieve a competitive edge.
4 Examples Of Competitive Pricing Intelligence
1) Price monitoring
This involves regularly tracking and documenting the prices of your competitors’ products or services. It may include monitoring their websites, online marketplaces, or physical stores to gather data on their pricing strategies.
2) Promotional analysis
Examining your competitors’ promotional activities provides insights into how they adjust their prices during sales, discounts or special offers. This allows you to evaluate the effectiveness of their promotions and determine if you need to develop similar strategies to remain competitive.
3) Dynamic pricing analysis
Dynamic pricing involves adjusting prices in response to market demand, competitor pricing changes or other factors. By monitoring your competitors’ dynamic pricing strategies, you can gain insights into how they react to market fluctuations and adjust your own pricing strategies accordingly.
4) Price positioning analysis
Analysing the price positioning of your competitors helps you understand where your own offerings stand in comparison. Are you positioned as a premium brand, a budget option or somewhere in between? Understanding your competitors’ price positioning allows you to make strategic decisions about how to position your own offerings to attract the desired target audience.
The Benefits Of Using Competitive Pricing Intelligence
A) Competitive advantage
Competitive pricing intelligence gives you a competitive edge by helping you set competitive prices that attract customers while maximising profitability.
B) Pricing strategy optimisation
By understanding your competitors’ pricing strategies, you can identify gaps, opportunities, and potential pricing adjustments to optimise your own pricing strategy.
C) Increased profitability
Effective competitive pricing intelligence allows you to set optimal prices that maximise your profit margins and revenue.
D) Improved customer perception
By monitoring competitor pricing, you can ensure that your prices are perceived as fair and competitive, enhancing your brand’s reputation and customer trust.
E) Enhanced Vvalue proposition
Analysing competitor pricing helps you identify areas where you can differentiate your offerings based on price, quality or additional value, strengthening your value proposition in the market.
F) Better pricing decision-making
Competitive pricing intelligence provides data-driven insights that facilitate informed pricing decisions, reducing the risk of underpricing or overpricing your products or services.
G) Market positioning insights
By understanding how your competitors position their prices, you can position your own offerings strategically, targeting specific market segments and customer preferences.
H) Pricing agility
Monitoring competitor pricing allows you to adapt quickly to changes in the market, adjusting your prices to remain competitive and capitalise on emerging opportunities.
I) Customer retention
By offering competitive prices based on competitor pricing intelligence, you can retain existing customers who might otherwise be tempted by lower-priced alternatives.
J) Pricing transparency
Competitive pricing intelligence helps you maintain transparency in your pricing practices, ensuring that customers view your prices as fair and reasonable, which can lead to increased customer loyalty
How To Gather Competitive Pricing Intelligence Effectively
1) Clarify your competitive pricing intelligence goals
Your goals will inform your choice of technology, who and what to track and how to share intelligence with others and how frequently to do so.
One-third of IT investments are wasted. Setting clear goals before you start tracking – or early in your competitive pricing journey – can ensure your activity is efficient and effective and that all key stakeholders are aligned.
If you want to track your competitors’ pricing but need help understanding the full potential of competitive pricing intelligence, speak to the team behind an established competitor intelligence platform. Ask questions during the demo.
Once you get started with a chosen platform, the person managing your account should be able to advise you on how to get the most value out of the process. This will help you to clarify or refine your goals, maximising your return on investment.
2) Decide which competitors to track
Determine the scope of your competitor tracking efforts by deciding which competitors to monitor. Identify direct competitors offering similar products or services, indirect competitors addressing similar customer needs, market leaders dominating the industry, challengers disrupting the market, and any other relevant players.
By selecting the right competitors to track, you gain insights into the competitive landscape and ensure a comprehensive understanding of pricing dynamics.
3) Decide what pricing intelligence to track
Define the specific aspects of pricing intelligence that you will monitor. This can include price points, pricing changes over time, promotions and incentives, discounts, and any other relevant pricing information.
By focusing on these factors, you can gather valuable data on your competitors’ pricing strategies, positioning, and market responsiveness.
Depending on the nature of your products and services, and that of your identified competitors, there may be multiple price points to track and analyse.
4)Choose a competitor intelligence platform
Selecting a reliable and feature-rich competitor intelligence platform is crucial for gathering and analysing pricing intelligence effectively.
Look for platforms that offer real-time data, advanced analytics, and customisable tracking options. Consider factors such as user-friendliness, data accuracy, and integration capabilities with existing systems.
Another important consideration is how collaborative and supportive the team behind the platform will be. Some platforms serve up large volumes of data that takes time to curate and analyse. Other platforms provide a market analyst who can do this job on your behalf, saving you a lot of time and effort. It can even save you needing to recruit and build your own data analysis team.
Evaluate different platforms and choose the one that best aligns with your goals and requirements.
5) Determine how the pricing intelligence should be used
Define the purpose of the pricing intelligence you gather. Will it primarily inform your pricing decisions, aid in product positioning, support marketing strategies, or guide sales negotiations?
Understanding how the pricing intelligence will be used ensures that the data you collect directly contributes to actionable insights and informed decision-making.
6) Identify stakeholders within your organisation
Identify the key stakeholders who will benefit from the pricing intelligence. This may include pricing managers, product managers, sales teams, marketing personnel, and executives.
By involving relevant stakeholders, you ensure that the gathered intelligence is effectively utilised and shared across departments.
7) Map the ways you’ll share the intelligence
Consider the most efficient ways to share the pricing intelligence within your organisation. Use existing workflows and communication tools like Slack, Microsoft Teams, or email to share the information. This will typically be sent as alerts with the opportunity for stakeholders to dig deeper into the intelligence.
Additionally, explore data visualisation tools such as Power BI, which can help create visually appealing and easy-to-understand reports and dashboards for sharing insights.
Give thought to the frequency of the alerts you share. You don’t want to lose buy-in by bombarding people with too many pieces of intelligence, so ensure what you do send is relevant to them and the part of the business they’re responsible for.
8) Create a process for ensuring the intelligence is used
Establish a process to ensure that stakeholders act on the pricing intelligence and that the gathered data drives meaningful actions.
Define accountability measures, set timelines for decision-making and encourage regular discussions based on the intelligence gathered. This ensures that the gathered intelligence directly influences pricing strategies and supports effective decision-making.
9) Measure the effectiveness of your competitive pricing intelligence investment
Regularly evaluate and measure the effectiveness of your competitive pricing intelligence efforts. Assess whether the gathered intelligence has positively impacted pricing decisions, market positioning or overall business performance.
Use relevant metrics and key performance indicators to gauge the return on your investment in competitor pricing intelligence.
10) Evaluate and optimise your approach
Continuously assess and refine your approach to gathering competitive pricing intelligence. Collect feedback from stakeholders, analyse the outcomes of pricing decisions, and stay updated
Competitive Pricing Intelligence FAQs
Q: What is competitor intelligence?
Competitor intelligence is the process of gathering, analysing and using information about your competitors to gain insights into their strategies, strengths, weaknesses and market positioning. It helps businesses understand the competitive landscape, identify opportunities and threats and make informed decisions to gain a competitive advantage.
Q: What is competitive pricing intelligence?
Competitive pricing intelligence refers to the specific aspect of competitor intelligence that focuses on monitoring and analysing the pricing strategies of competitors. It involves gathering data on competitors’ price points, pricing changes, promotions, discounts and incentives to gain insights into their pricing tactics, positioning, and market responsiveness.
By leveraging competitive pricing intelligence, businesses can optimise their own pricing strategies and remain competitive in the market.
Q: Is competitive pricing intelligence ethical?
Competitive pricing intelligence is considered ethical as long as it is conducted through legal means and respects industry standards and regulations. It involves gathering publicly available information, monitoring competitor activities and analysing market dynamics.
However, it is important to ensure that the gathering of pricing intelligence does not involve unethical practices such as industrial espionage, hacking, or illegal data acquisition. Businesses should always prioritise ethical conduct and comply with applicable laws and regulations in their competitive intelligence efforts.
Q: How do organisations that don’t use competitive pricing intelligence set their prices?
Organisations that do not utilise competitive pricing intelligence may set their prices based on other factors such as production costs, desired profit margins, industry norms, historical pricing data, or customer demand.
They may conduct internal cost analysis, market research or rely on their own business expertise to determine the optimal pricing for their products or services. However, it’s important to note that not utilising competitive pricing intelligence may limit their ability to assess market dynamics and competitively position their offerings against industry rivals.
