What is Price Intelligence?
Price intelligence is the ability to track, monitor, and analyze competitor and market pricing data to make educated pricing decisions for your business. Intelligence is often gathered using data mining or other automated software solutions.
Why is Price Intelligence Important?
Price intelligence is important because retail pricing is a fast-paced, competitive, and ever-evolving world where the right or wrong price has a direct impact on sales and profitability.
Today’s consumers are more sensitive to price than ever before. The ability to compare prices via smartphones has given rise to “webrooming”, as shoppers are able to view products in-store or online and check to see if a better price can be had from a different channel.
What’s the Big Deal about Pricing Intelligence
The volume of data generated by the retail industry is growing exponentially, and this data is being used for price optimization among other things. According to a McKinsey report, one of the biggest e-commerce leaders reprices the most popular products up to 12 times a day and actively reacts to changes in competitors’ prices in a matter of hours or even minutes. There is a close relationship between Price Intelligence and Dynamic Pricing Software. Once you understand what your competitors’ prices can tell you about your business, you can take steps to improve your own pricing strategy and better serve your customers.
Here are some of the Major Benefits of Pricing Intelligence:
Boost your Sales
To pump up your sales and for your customer to choose you over your competitor, you need to offer an appealing price. This is possible through price monitoring service – timely comparisons and analysis of the prices, deals, offers, and discounts of your competitors. Pricing intelligence will also help guide you through marketing and sales strategies.
You may want to create a successful promotion for a specific product and need to know the impact of a percentage off, a price decrease, or BOGO on your margins and sales projections. See where you are more expensive or less expensive than your competitors and create promotions accordingly. Or, turn to your Marketing Dept. to determine where to allocate marketing spending for better ROI.
Therefore, the end goal of pricing intelligence is to ensure prices always meet a core business objective: either to be competitive, protect a margin, establish a reputation, or something else. Pricing intelligence is important because it helps you achieve your goals.
Protect your Margin
Monitoring your competitors can give you a ballpark estimate of how you should price your products. It also gives you a reference to how you want to position your products and brand in the market for the same or similar products.
Price is all relative to the types of items your competition is selling. Measure their prices against your costs, and you can get a basic understanding of your margins. If you don’t think you can carry healthy margins, you may want to look for different products to sell.
Go beyond the prices and take other competitive factors into account. Study their product assortment to see where your inventory overlaps with theirs and to look for opportunities to expand your inventory. If they all have ridiculously low prices on the product, and you can’t obtain it at a decent price from a supplier, it’s better to let it be and save your profits.
If you see that you’re the only seller of a certain product, you know you can increase your prices to capitalize on the high demand and low supply.
Improves Customer Satisfaction
Customer satisfaction is based on various factors, pricing and promotions are an important pieces of the puzzle. Sometimes customers aren’t looking for the cheapest products, because a low price can be associated with low quality. Optimizing pricing and promotions can be a win-win situation by boosting sales and creating loyal, happy customers. Successfully pricing products will create happy customers that are content with their purchase and the amount paid for the value received, making them more excited to return to shop with you again. Furthermore, providing personalized and relevant promotions can lead your customers to feel important and catered to, causing customer satisfaction to increase.
Prevents Piling up of Old Stock
The better you observe, the better you foresee.
A good way to manage stock more effectively is by watching your competition. Regarding how they behave and having under control their prices will allow you to improve your stock management and optimize your acquisition investments. Proper inventory management, as well as helping you optimize your pricing, can also imply a reduction of unnecessary costs. When you know the market in-depth, you can foresee the amount of inventory you need; thus, you can spare maintenance costs, damaged goods, and a much more efficient internal organization.
Are my prices competitive? Is my reputation protected? Can I grow my margins? With pricing intelligence, the answer is yes, yes, and yes.
It is evident that an effective system of competitive intelligence and pricing will help you stay in the race and gain a business advantage over your rivals. Nonetheless, it is necessary to mention that all this turns out to be much more efficient if you ensure that you have Premium Quality Data in hand.