A recent study performed by RSR Research, a market research company which is actually run by retailers who know the ins and outs of business, examined the value of competitor monitoring in the retail marketplace. Their findings demonstrated a number of direct advantages for retail businesses who take the time to establish a competition monitoring strategy, ranging from more effective responses to competitor pricing changes to a 50% boost in measuring promotional effectiveness.
Additionally, RSR Research highlighted a number of supplementary pricing strategies that proved most effective for retailers trying to capture the attention of today’s price-conscious consumers:
Look at the big picture. There’s a great deal more to pricing than the traditional ‘costs plus mark-up’ method. Be sure to consider customer demand, product availability, and lifestyle demographics in addition to the competitor pricing information from your competitive tracking solution.
Try to be consistent. Often when retailers gain access to competitor pricing data, the first temptation is to change prices too frequently, which can create a negative shopping experience for potential customers (especially those who aren’t impulse buyers).
Don’t hit bottom. Retailers can often become locked in a cycle of price-matching that artificially depresses the market price and hurts everyone. Remember that customers calculate value differently than retailers, and stick to rational policies.
Channels, channels, channels. Again, consistency is essential here. Having multiple channels with variable pricing will quickly aggravate your customers. Vary your promotions across your various channels, but not your pricing.
Analyse and improve. This final strategy is absolutely crucial, and is usually the one that gets overlooked. In order to verify the effectiveness of your implementation of these strategies, it’s important to track all the data that you possibly can to determine which changes you’ve made created the best results. Without this, you might as well be changing things at random – so analyse your efforts, and continually improve them to stay at the top of your sector.