An effective pricing strategy is essential to help a business set an offer price which is in line with competition and will maximize revenue and deliver a good profit. It can set a price to stop competitors from entering the market, or to increase its market share, or simply to stay in the market. The price is one of the first things that a consumer notices about a product and is one of the deciding factors when it comes to their decision to buy it or not. Businesses need to keep an eye on their competitor’s pricing strategy while setting prices to get the much-needed competitive edge in the market.
Comparing prices online is easy and customers are aware of the monetary value of a product. Many competitors are eschewing the various pricing models and methods in favour of competitive pricing but setting pricing strategies based on competitors’ behaviour is not an easy task. This blog post provides a glimpse of four major pricing strategies and deep dives into competitive pricing strategy, which is used by most companies around the world.
With the ever-increasing competition in the retail market, competitive pricing is fast becoming one of the most sought-after pricing strategies. When it comes to a competitive pricing strategy, the purchasing behaviour of customers is an important criterion. Once the product is part of a mature market and fighting with a relatively high number of substitutes and competitors, the pricing actions of your competitors could well be a factor driving your profit. This is where setting prices according to the competitors becomes one of the most popular pricing strategies, also known as competitive pricing strategy.
If you can increase the volume without affecting the production cost to a great extent, then this might be a good strategy for you. So, competitive pricing is a game to play. Competitive pricing intelligence demands that you have in-depth knowledge of your market and target audience. Competitive price analysis is essential to competitive pricing strategies.
The concept of competitive pricing is best understood when there are only two competing parties. Even big corporate giants sometimes resort to competitive pricing strategies when they want to increase market share. With almost 92% of shoppers comparing prices at some point or the other while shopping online, a lot of companies must resort to competitive pricing to ensure their consumers do not move to another competitor for their low costs. With these intuitive pricing tools, retailers can optimize their prices in near real-time to take advantage of market movements while maintaining profitable margins and get an edge over their competition.
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