It’s not easy to keep your prices competitive, especially since the time that competition arose within the retail industry. In fact, figuring out how not to sell at a price that’s too high or too low in the market is something many can only dream of.

Over time, retailers have understood that whatever is happening in the market in actual time can assist in the process of establishing more stabilized prices. During the past few decades, retail businesses have turned into technological centers that are able to establish prices automatically through their pricing systems. They select a group of competitors to track both their prices and promotions, incorporate market information together with the internal ERP systems, and then based on that, they figure out the right prices.

Despite how easy and breezy it sounds, even in the case that you boast an impressive pricing software, a lot of retailers will continue to find it difficult to ensure that their prices are competitive. If you dig deep into the core of the problem, you’ll unearth the fact that data is really what it is all about.

Internal vs External Data Gathering Systems

The head of Cross-border Projects at Northern European omnichannel retailer RD Electronics, Bogdan Nesterenko, states that “If you do not collect and analyze high-quality competitive data, and you offer a big number of SKUs, your price will be completely off the market.” Thankfully, there are a lot of different ways to collect information.

One way you can do so is by creating an in-house price monitoring system. Retailers typically work alongside their IT departments to build the competitor price monitoring solution; however, due to all of their KPIs and various other jobs, having to build yet an entirely new item in an area that they lack quite a bit of knowledge in ends up making things worse. In addition to the fact that working with IT teams can be costly and, with time, simply impossible, whatever they come up with can actually end up taking the retailer back a few steps. For instance, utilizing an in-house created data gathering system can cause all or a few of the firm’s IP addresses to be blocked for weeks at a time on their competitor’s or even on some price comparison sites. As a result, the data would be warped causing the set prices to be all wrong, which would be detrimental to the amount of revenue made. Not to mention, the retailer will also need to put in a bit more money to ensure that the system doesn’t crash and instead, is adaptable to the continuous changes that occur on the sites that they monitor.

Another way you can do so is by collaborating with an outside data provider that offers turnkey competitive information, thus decreasing the amount that is usually spent on validating data. Bogdan Nesterenko from RD Electronics mentioned that “We have saved 70% from the IT budget for the data scraping and validation with Competera’s pricing software which helps us get reliable, timely and accurate competitive data.”

The secret to this is to find a company that you can depend on and that is flexible enough to offer data that works hand-in-hand with the retailer’s inner system, regardless of the format, as well as that works at the right time, all while ensuring confidentiality. Coming across a solid contractor can help save you some money as they work on making sure that the system continues to stay up and running while also helping save time when gathering data. In this case, the retailer’s managers would need to put competitive data into the in-house pricing system and then concentrate on creating either a refined pricing or promotional strategy.

In the end, it doesn’t matter which method you choose to collect data, but rather you just want to make sure that the information is new, complete, and correct or else it is just unusable.

Why is analyzing competitive data so great?

Keep reading to learn how you can ensure optimal pricing via both competitive data and in-house pricing systems.

Competitive prices are all over the place

Various markets and selling channels need different types of marketing and pricing strategies. A few markets are a lot more sensitive to the brand, while you’ll find that others think that the only thing that matters is the price of the item. Whenever you are going into a new market, it is difficult to forecast how you should price at the beginning. In order to figure out what buyers want and at what price, companies often have to pretend to be investigators and scientists simultaneously. They first gather intel on both their competitors and their customer preferences, then they analyze it, and finally, they create their pricing and promotional strategies based on the analysis.

Special offers without them being detrimental to the profit margin

Which products should you drive forward? Is it alright if you sell at a price that’s lower or will it end up taking up the profit margin? Is there a middle ground where the price is one that benefits the retailer and yet, at the same time, is a convincing enough offer to the customers? Whenever retailers gather and analyze competitive data, they have to figure out which of their items boast the most optimal market prices and then advertise them in a way that they won’t lose profit margin.

Improved product managers

It’s no secret that you would enjoy someone doing your dull, everyday jobs for you. This can actually be turned into a reality through automated pricing systems, which use competitive data in order to make prices based on rules without the need to utilize the help of people. For instance, in order to set prices that are 0.5% lower than the prices of certain competitors, data is collected, analyzed, and established through automation. As a result, retail managers can instead, focus on more strategic jobs such as creating a competitive pricing strategy, offering improved customer services, and making sure that both delivery and procurement is successful.

Enhanced negotiations with manufacturers

Negotiating deals is no easy feat with vendors. For instance, vendors often ask thorny questions such as, “Why are your prices higher (or lower) than we agreed?” Retailers don’t have much to say in the case that the manufacturers had been unsuccessful in figuring out the right retail price (RRP). That being said, companies that gather and analyze competitive data are always able to utilize it as a reference to validate their pricing decisions since data-driven processes act as an objective reflection of the market situation.

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