Analysing your competitors’ pricing strategies is important to understand your market position. And then shape your pricing approach. Here are eight actions you can take:
Market Segmentation Analysis: Segment the market to understand the different customer groups they are targeting. How do their pricing strategies vary across these segments?
Competitor Selection for Analysis: Identify key competitors for a more focused analysis. Include direct competitors and broader market players who may be the price trendsetters. Don’t look and assess, and you won’t know.
Gather Pricing Data: Collect data on your competitors’ pricing. That includes list prices and any discounts, bundle offers, and seasonal pricing changes. Use obvious and not-so-obvious sources. Competitors’ websites, industry reports, purchasing from them and customer feedback. And by talking to them.
Analyse Pricing Structures: Look for patterns in how they tier their prices. Assess the criteria for different pricing levels (feature-based or volume-based etc.). How do they bundle their offering? Compare these structures to your own to identify gaps or opportunities.
Assess Discount Strategies: Look at the nature and frequency of competitors’ discounting practices. Isolating their customer retention strategies and how they drive short-term sales.
Customer Perception and Value Analysis: Research how customers perceive the value their competitors offer. This can involve customer reviews, surveys, and focus groups. It helps assess whether you or your competitors are overpriced or underpriced in certain areas.
Financial Impact Analysis: Analyse the financial implications of competitors’ pricing strategies. Look into their financial reports for margins, revenue trends, and profit breakdowns by product lines or services.
Continuous Monitoring and Dynamic Analysis: Establish a system for monitoring competitors’ pricing strategies. Track real-time changes (if needed) and alert you to significant shifts.
Analysing Your Competitors’ Pricing Strategies In Eight Points
The goal of this analysis is not to copy what they are doing but to:
Understand the pricing landscape
Find your unique value proposition
Strategically position your pricing to gain a competitive advantage.