Price intelligence: collecting & analyzing the data
Think about everything you know about your competition, their price points, and product offerings. This knowledge is a valuable asset to any business, allowing for informed decisions on how best to stay competitive in the market. Having it consolidated into one easy-to-understand report would be a major benefit.
Price intelligence is exactly what it sounds like: the action of collecting and analyzing data about the prices of products and services offered by competitors. However, while it sounds quite simple, it may get complicated in the process. Companies need to have access to the right data sources and be able to interpret them in a way that adds value to their pricing strategy.
Yet, there’s much more to price intelligence than just checking competitors’ prices and stock availability. Let’s take a closer look at what it is, how it is different from price monitoring, and why businesses should care about it.
What Exactly Is Price Intelligence?
Price intelligence, as mentioned above, refers to everything related to monitoring and analyzing the prices of products and services offered by competitors. It is a process that helps businesses understand their competition better, allowing them to make informed decisions on how best to stay competitive in their market.
It involves gathering data from various sources, like competitor websites, public databases, or even their own internal price tracking systems, provided they are open to sharing the data. This information is then analyzed to identify trends, pricing strategies, and other insights that can help businesses make better decisions about their own prices.
Price Intelligence, Pricing Strategy, and Competitive Price Monitoring
There are many terms related to price intelligence, and it may get too confusing to understand the differences between them.
The most important distinction is that price intelligence is the umbrella term for all activities related to gathering and analyzing data about competitors’ prices.
- Price intelligence – all the data gathered and analyzed about competitors’ prices, acquired both with pricing intelligence software and human intelligence.
- Pricing strategy – the process of setting and adjusting prices to maximize profits based on internal costs, customer demand, and pricing intelligence, among other factors.
- Competitive price monitoring – the process of tracking competitor price movements to identify changes and trends in order to inform pricing decisions.
Price Intelligence and Market Trends
To a certain degree, tracking competitor prices allows you to identify market trends and developments. For instance, if you notice that certain products or services are becoming more expensive, it could be an indication of growing market demand. On the other hand, if prices remain stable over time, it could suggest that the market is saturated or that it’s not growing at a rapid rate.
This is where price intelligence goes beyond competitor analysis – competitive pricing data, followed by market developments, gives you a broader view of the competitive landscape.
Price Intelligence and Big Data
When speaking about using shopping information to gain a competitive advantage, Big Data is a term that often comes up. It refers to the collection and analysis of large sets of data collected from multiple sources, often with the help of sophisticated software.
Big Data analysis can be used to identify patterns and trends in virtually any industry, but it comes with a certain price – it requires a lot of data and resources, which may render it inaccessible to small businesses.
But how pricing intelligence relates to Big Data? To put it simply, pricing intelligence can be seen as a subset of Big Data. It focuses on the collection and analysis of data related to competitors’ prices and product offerings, while Big Data is much broader in scope. As such, it concerns everything from customer data to social media analytics and beyond.
Why Does Price Intelligence Matter?
Suppose you’re a small business entering a new market. You probably have some idea about its inner workings, but without accurate pricing information and other key metrics, such as stock availability, you may find it difficult to create a proper business plan.
And so, you’ll need to gather some business intelligence to make sure you’re taking the right steps. It includes everything from product and resource availability to consumer behavior and competitor pricing strategies. A substantial chunk of this information can be found in the form of price intelligence.
Having access to accurate and up-to-date price intelligence lets you decide how you want to approach the market. For instance, you can identify competitors’ loss leaders and their pricing points to create a unique positioning for your own product. Or, if you notice constantly changing prices, you can adapt a dynamic pricing strategy yourself.
The more price intelligence data you have, the more you know about your competitors. This, in turn, makes it easier to predict their moves and counter them in a timely manner. After all, the pricing you go with greatly affects the sales of your product. If you get it right, you can quickly increase conversions and, with that, profits.
The Process of Price Intelligence
Your price intelligence strategy can be as complex as you want it to be. Sometimes, it may be enough to gather a few actionable insights, yet more often than not, your data collection efforts will require a more comprehensive approach.
In general, the process of acquiring price intelligence involves three main steps: competitor identification, data matching, and pricing intelligence report. Each will bring you closer to your goal of acquiring an accurate pricing data set.
The first step of the process is to identify competitors that are selling products or services similar to yours. This usually requires using a combination of manual and automated methods, such as utilizing web scraping or a price intelligence tool.
The data you collect should include basic information about your competitors, such as their product range, pricing structure, number of stores and distribution channels, as well as geographic presence.
As you gather the data, you can assess the market position of each of your competitors. With this, you’ll be able to pick your main competitors – typically, the ones that are closest to you in terms of pricing and product range. However, you can also target retail giants if you want to benchmark yourself against the industry standard.
You can’t talk about making pricing decisions without first analyzing the data. This is where data matching comes in.
Data matching consists of finding, collecting, and formatting all the data related to a product. With this, you shouldn’t just match them according to price – you should rather check how each product matches your offer in terms of production costs, perceived value, and other factors that influence the pricing.
Needless to say, this data should be evaluated both by your automated pricing tools and through a manual process. Proper data matching will give you an accurate picture of how much margin your products have and what kind of pricing strategy will bring you the most benefits.
Pricing Intelligence Report
Finally, it’s time to build a complete pricing strategy. With a proper report, you’ll be able to see the big picture.
A pricing intelligence report will tell you everything about your competitors’ offerings and how they match up to yours. It should also provide you with insights into the pricing practices of your competitors and what kind of competitive advantages they have over you.
In addition, it should also allow you a look into the historical data related to competitor behavior. Rarely does it happen that their pricing stays the same. Therefore, it’s important to collate the data regarding their pricing changes and evaluate the impact dynamic pricing had on customers.
And then comes the analysis. With the data gathered, you can start making sense of it. Identify trends and opportunities that your competitors have missed or haven’t taken full advantage of. With this, you can create a pricing strategy that’s designed to capture those opportunities and turn them into profits.
Having a comprehensive price intelligence report will finally allow you to create your own pricing strategy. Go through your offering and adjust prices to match the market and your target. At this point, it is a good idea to set certain goals related to the pricing strategy you’ve created and measure its performance over time.
Monitoring Competitive Prices
Although your pricing strategies should not rely only on analyzing your competition according to price changes in your target market, it doesn’t mean you should abandon it altogether after outlining initial optimal prices.
This is due to the fact that your price intelligence strategy benefits from frequent monitoring. For instance, surveying your customers’ price sensitivity can be done on a regular basis, and when complemented with data gathered by your price intelligence system, it will give you the ability to further optimize your pricing.
On top of that, modern pricing tools allow for automated repricing – meaning they can automatically adjust your prices according to changes in the market. While such a dynamic pricing system should never be the only component of your pricing strategy, it can help you stay competitive in highly volatile markets.
Picking the Right Price Intelligence Software
At this point, it should not come as a surprise that your price intelligence software plays a crucial role in the success of your pricing strategy. With that, it’s important to have a clear understanding of what you need from your software.
- Competitor price tracking – the very basis of any price intelligence software. Make sure your tool can track competitor prices both at the product level and across entire categories;
- Product feature tracking – apart from prices, you should also track product features and descriptions. This way, you can compare your competition’s offering to that of your own and match it in terms of features, not just price;
- Analytical insights – your software should also provide you with analytical data and insights. This can include competitor market share, discounts offered and accepted by customers, and more;
- Automated repricing – if you want to automate your online store, you should look for software with automated repricing capabilities. Depending on your needs, you can choose to have it update prices automatically or set it to trigger certain thresholds;
- Featured product monitoring – the way products are ordered and presented on your competitors’ websites can influence customers. Having a tool that monitors featured product placements and discounts will help you maintain a competitive edge;
- Product review monitoring – you can also have your price monitoring tool scan customer reviews and feedback. This way, you’ll get a better understanding of what customers think about your competitors’ products and how you can adjust your own offering to meet demand.
In addition to that, you should take the convenience factor into consideration. Long gone are the days when all the metrics were presented in the form of a spreadsheet. Today’s price intelligence software should be able to provide you with all the necessary metrics via a simple user-friendly dashboard.
The tools should also be able to integrate with your existing systems, such as your e-commerce platform or ERP, in order to streamline your business strategy planning and execution.
Even though many small and large businesses incorporate similar systems and tools, there isn’t a one-size-fits-all solution. The requirements for your own price intelligence software can vary depending on the size and needs of your company, so it pays to do your research and find a solution that fits you the best.
If you are not sure where to start, you can always contact our experts, who will be more than happy to provide you with an in-depth analysis of your business needs and help you choose the best solution.
To Sum Up
Price intelligence is a crucial part of any pricing strategy. It helps businesses understand their competition better, allowing them to make informed decisions on how best to stay competitive in their market.
The process of acquiring price intelligence involves three main steps: competitor identification, data matching, and pricing intelligence report. With the right tools and processes in place, you can create an effective pricing strategy that will help you capture opportunities and turn them into profit.
Manager with experience in leading team of software developers and testers during implementation of internal and external IT projects. Ceo of Brandly360.com.