what it is and why it’s important
Prices have a direct impact on your bottom line, of course, as the price you charge should provide a margin and return
on investment that keeps your business in the black. Beyond that, your prices are also your reputation:
how shoppers perceive your business. Are you premium? Budget? Something in between?
Your prices must generate profit and support your sales.
That’s no small feat, which is where pricing intelligence enters the picture.
Keep scrolling to find all you need to know!
Price intelligence is the ability to track, monitor, and analyze competitor and market pricing data to make educated pricing decisions for your business. Intelligence is often gathered using data mining or other automated software solutions.
Price intelligence is important because retail pricing is a fast-paced, competitive, and ever-evolving world where the right or wrong price has a direct impact on sales and profitability.
Today’s consumers are more sensitive to price than ever before. The ability to compare prices via smartphones has given rise to “webrooming”, as shoppers are able to view products in-store or online and check to see if a better price can be had from a different channel.
The volume of data generated by the retail industry is growing exponentially, and this data is being used for price optimization among other things. According to a McKinsey report, one of the biggest e-commerce leaders reprices the most popular products up to 12 times a day and actively reacts to changes in competitors’ prices in a matter of hours or even minutes. There is a close relationship between Price Intelligence and Dynamic Pricing Software. Once you understand what your competitors’ prices can tell you about your business, you can take steps to improve your own pricing strategy and better serve your customers.
To pump up your sales and for your customer to choose you over your competitor, you need to offer an appealing price. This is possible through price monitoring service – timely comparisons and analysis of the prices, deals, offers, and discounts of your competitors. Pricing intelligence will also help guide you through marketing and sales strategies.
You may want to create a successful promotion for a specific product and need to know the impact of a percentage off, a price decrease, or BOGO on your margins and sales projections. See where you are more expensive or less expensive than your competitors and create promotions accordingly. Or, turn to your Marketing Dept. to determine where to allocate marketing spending for better ROI.
Therefore, the end goal of pricing intelligence is to ensure prices always meet a core business objective: either to be competitive, protect a margin, establish a reputation, or something else. Pricing intelligence is important because it helps you achieve your goals.
Customer satisfaction is based on various factors, pricing and promotions are an important pieces of the puzzle. Sometimes customers aren’t looking for the cheapest products, because a low price can be associated with low quality. Optimizing pricing and promotions can be a win-win situation by boosting sales and creating loyal, happy customers. Successfully pricing products will create happy customers that are content with their purchase and the amount paid for the value received, making them more excited to return to shop with you again. Furthermore, providing personalized and relevant promotions can lead your customers to feel important and catered to, causing customer satisfaction to increase.
The better you observe, the better you foresee.
A good way to manage stock more effectively is by watching your competition. Regarding how they behave and having under control their prices will allow you to improve your stock management and optimize your acquisition investments. Proper inventory management, as well as helping you optimize your pricing, can also imply a reduction of unnecessary costs. When you know the market in-depth, you can foresee the amount of inventory you need; thus, you can spare maintenance costs, damaged goods, and a much more efficient internal organization.
Are my prices competitive? Is my reputation protected? Can I grow my margins? With pricing intelligence, the answer is yes, yes, and yes.
It is evident that an effective system of competitive intelligence and pricing will help you stay in the race and gain a business advantage over your rivals. Nonetheless, it is necessary to mention that all this turns out to be much more efficient if you ensure that you have Premium Quality Data in hand.
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