The price of a product can make or break its performance on the market. Go too high and nobody will buy it, go too low and it won’t generate a profit. And on top of that, the price always has to be competitive when compared to the competition.
A thought-through, well-planned pricing strategy is crucial to any business. That’s where competitive pricing intelligence comes in. By utilizing competitive pricing intelligence, a company can stay ahead of the competition and always price its product the best way possible.
So how does competitive pricing intelligence work? And what automated ways can a company use to speed up the process? Learn the answers to these questions (and more) in the article below and find out how to create an effective, competitive pricing strategy.
What is Competitive Pricing Intelligence (and Why is It Important)?
One of the most important factors when deciding a price for a product is the benchmark provided by the market it operates in. That benchmark stems from the prices competitors ask for their products.
Competitive pricing intelligence (sometimes called competitive price monitoring) is the process of reviewing those competitor prices to gain valuable insights. It’s the manner of tracking all relevant product prices across the market landscape to help inform a company’s own product pricing strategy.
Although this can be done manually (more on this further below), the term competitive pricing intelligence generally refers to the automated practice of checking competitor prices. That’s because the automated version is the driving force behind the importance of this intelligence.
Let’s illustrate this with the famous example of Amazon. Their automated pricing intelligence software updates the prices of products on their site as often as every 10 minutes. By doing so, they always offer the optimal price for a product when compared to the whole market landscape.
It’s one of the reasons Amazon has been able to dominate the marketplace. It’s also one of the main reasons why businesses nowadays can’t survive without using competitive pricing intelligence to inform their strategy.
So how does it work?
How Competitive Pricing Intelligence Works
As mentioned, it is possible to manually monitor competitor prices. Simply visit the website of the competition, note down the prices they offer for their products, and adjust one’s product price accordingly based on this information.
The problem is that the market fluctuates so rapidly (again, see Amazon’s example) that one would have to repeat this process every day. If done manually, this becomes incredibly labor-intensive and, in the case of a large company, simply unmanageable. That’s where automated solutions come in to help.
Automated Competitive Pricing Intelligence
This form of pricing intelligence uses a web scraping tool to automatically gather large amounts of pricing data, which can then be analyzed.
1. Define the Competition
The first step is to identify the competitors within the landscape that will form the benchmark. The more competitors one can add to the analysis, the better informed the pricing strategy will be.
Once the competitors have been determined, it’s time to decide what data points one wants to analyze alongside the price. After all, no two products are identical and there will be defining factors that influence and justify the price of a product.
2. Determine Where to Gather the Information From
The competition is all over the web. How to determine where to gather their pricing data from?
Probably the easiest and most convenient place is Google Shopping. Google Shopping offers a wealth of information and the fact that the data is already structured and organized by Google’s Shopping search engine makes it easier for the web scraper to extract the right data.
Since there is no official service that one can use, to gather the right data from Google Shopping one needs to either build a scraper or use a third-party tool. Unless one has a lot of know-how (and time) the better option is almost always to invest in a third-party tool. For example, you can use SERPMaster’s Google Shopping API – it delivers Google SERP data based on one’s preferred location, device, and browser. If you’re interested to find out more about how SERPMaster works, please visit the site here.
3. Feed the URLs Into the Web Scraping Tool
Once the competitors and relevant Google Shopping URLs are identified it’s time to feed this information to the web scraping tool. The tool will then crawl the URLs and extract the required information.
The gathered data is stored in a database of choice (whether a tracking tool or something as simple as a spreadsheet) after which the data is ready for analysis.
4. Analyzing the Data
Again, this is a step that can be done either manually or automatically. Some web scraping tools extract the data but don’t analyze it. By checking the competitors’ prices and other data points one can make informed decisions regarding one’s pricing strategy.
Much easier is to let the tool do the analysis. Some of the more sophisticated web scraping tools can automatically process all the information, decide on the best pricing strategy, and even automatically adjust the pricing of one’s product directly on site.