31 Oct 2018
We want to break down the concepts of price monitoring and smart price monitoring for you, to enable you to understand what they are, and how they can help you make more money from your business.
So, what exactly is Price Monitoring/Smart Price Monitoring?
Simply put, price monitoring involves keeping up-to-date with your business competitors by monitoring how much they are selling their products for. Any smart business owner knows that without a comprehensive understanding of competitor behaviour, a business can lose profits very quickly.
Years ago retailers performed the task of price monitoring manually. They checked product prices elsewhere and adjusted accordingly. It was a painstakingly slow, but necessary task.
Then smart price monitoring emerged as the importance of price monitoring grew. Product sales were increasingly being made online and people wanted to know: “how can competitor pricing decisions be monitored most effectively”?
So marketing strategists started to develop quicker and easier ways to understand and track competitors’ pricing decisions and that is how smart price monitoring was born - as another evolution of price monitoring.
It took price monitoring to another level entirely, by using technology to scan the internet for competitors while tracking great swathes of pricing decisions, the world over, on a minute by minute basis.
Smart price monitoring tools usually take the form of software, plug-ins for browsers and apps that rapidly search the internet for information. Some have described these tools as “technology that puts the market in the palm of your hand”.
Now, smart price monitoring has become central to the business repertoire of the successful online retailer. Afterall, knowledge is power, right?
How can Smart Price Monitoring help online retailers?
When you advertise your product for sale at a certain price, you can be sure that your competitors are already thinking about how they can sell the same product or similar products for less.
If a competitor starts to sell the same product you are selling, for less, this will almost certainly result in a downturn in sales of your product. That’s a fundamental problem for your business, especially if you are an online retailer.
When your pricing is too high, you can lose customers very quickly. Let’s put this into perspective with the examples of Black Friday, Cyber Monday and Pre-Black Friday. These events produce a surge of online activity as shoppers are searching for the best deals and promotions, and if you are selling thousands of products every hour, even the tiniest window of time in which your competitors are selling their products cheaper can hit your profit margins hard.
Additionally, if a customer sees that you are selling products that are cheaper elsewhere they may be are less inclined to spend time browsing your other products.
Smart price monitoring strategy helps you solve these problems quickly, by notifying you that prices are lower elsewhere. With this knowledge, comes the power to act to protect your market share and keep your sales figures buoyant.
Moreover, if you had a less than satisfactory Black Friday, Cyber Monday and Pre-Black Friday, the previous year, smart price monitoring strategy can help you understand where you went wrong on your merchandising strategy and crucially, how to fix mistakes that previously resulted in mediocre sales.
The nuts and bolts of Smart Price Monitoring and how it works
Smart price monitoring is usually available as a software package and performs price monitoring at a very sophisticated level, even taking account of competitors who are selling products using different currencies and from different locations all over the world.
Vital information at a glance
Leading smart pricing software providers like Competitor Monitor allow you to access an online account where a dashboard gives you a bird’s-eye view of what competitors are selling the same products as you, their pricing decisions and their pricing behaviour, over time.
The software processes huge datasets and relays relevant information back to you in simple terms, using graphs and charts to enable you to understand your competitor’s pricing decisions, at a glance.
For example, if your competitor has recently run a promotion where products were available more cheaply for a given length of time, you get a complete picture of this. This information is good for understanding seasonal changes in pricing and how your competitors are promoting products that are similar to yours, over a given period of time.
Similar products highlighted
Smart pricing tools help you by identifying competitors selling products that are similar to yours as well as those that are exactly the same.
When competitor products sell out
Smart pricing tools also give you a host of information that you can use, not only to keep up with your competitors but also to gain a competitive edge that helps you sell more products, more strategically. For example, it tells you when certain competitors have sold out of a certain product, and also when your product is the cheapest product available, across all of your competitors.
Smart pricing software allows you to compare and contrast what your competitors are charging for shipping, so you can calculate the total cost that competitor customers are incurring.
Smart pricing software allows you to create reports on competitor pricing decisions so you can compare certain segments of market data to enable you to plan your own pricing and promotional strategies in relation to products.
Smart pricing software allows you to set up alerts so that you are notified each and every time competitors change their prices. Price Monitoring versus Smart Price Monitoring
So, that is a basic summary of how Smart Price Monitoring works and how it has grown from the roots of its predecessor Price Monitoring.
Despite the evolution in strategies available to the online retailer, it is surprising that many retailers continue to manage their pricing strategy manually, just as it was in the days before smart price monitoring software was available. This is beginning to change though.
As with any innovation that has become central to the repertoire of an online retailer, smart price monitoring software is becoming cheaper and more widely available than ever before.
Are you interested in price monitoring? Request a demo today to see how Competitor Monitor could benefit your business.