Finding a sweet spot between â€œtoo lowâ€� and â€œtoo highâ€� prices can be quite tricky. Thatâ€™s why price intelligence exists: It can help retailers come up with the correct pricing strategy to beat the competition and build value for their products. Here is price intelligence for startups. What is price intelligence? Do you need it? How to get started with your price intelligence.
In this article, we will take a look at this marketing approach and how you can develop a pricing intelligence system.
What is price intelligence?
Price intelligence is a marketing approach that includes gathering, tracking, and analyzing the prices of competitors to gain a better understanding of a current situation on the market and make data-based decisions on prices.
It is also a crucial part of the startupâ€™s overall financial strategy. As retailers often change prices on their products and services, monitoring and analysis of these prices become a constant activity.
Why do you need price intelligence?
If your competitor lowers the prices, it doesnâ€™t mean you should follow this example. So whatâ€™s the point in monitoring this activity then? The answer is, to understand how to act. For example, you can create a special offer or implement temporary discounts to get your customers excited and, perhaps, entice some of your competitorâ€™s customers to switch to your offers.
So first of all, pricing intelligence will let you come up with a dynamic and efficient pricing strategy that will let you improve your reputation and attract more buyers. Wrong pricing has significant consequences.
Wrong pricing means prices that are too low will make your clients underestimate the products you offer, and too high prices will scare everyone away. Therefore, itâ€™s vital to find the sweet spot between the two extremes.
Also, price intelligence will provide you with useful insights that will let you understand the plans of your competitors. Moreover, you will be able to predict certain trends as you begin noticing patterns.
How to create a sustainable price intelligence strategy
Itâ€™s not enough to just gather information about prices. You need to understand your goals, competitors, and target audience first. And only then you can start monitoring prices and making decisions based on the data you acquire.
Outline the goals
The aim of every business is self-evident â€” to make more money. However, itâ€™s not as simple as it seems. This overall goal should consist of more feasible smaller sub-goals that will define your strategy. For instance, you can aim for:
- Improving the cash flow,
- Obtaining a larger market share,
- Beating the competition,
- Introducing a new product,
- Increasing revenue per buyer,
- Improving your market penetration,
- Reaching a new segment, and more.
By doing this, you will make bringing your retail business to success easier for yourself and your team. Once you have a clear picture, you can move to the next step.
Understand your target market
Obviously, to succeed in retail you need to know your target market. But when it comes to price intelligence, you also need to know how your customers will react to the change in prices — their price sensitivity. To figure it out, you need to research:
- The ability of your clients to search for alternatives. How easy it is for them to find another option and compare prices? And are there products similar to yours that are cheaper? If yes, will the customers switch to it?
- Is the buyer the one who will use the product? For example, youâ€™re selling toys for kids. Even if a child likes the toy, parents might not buy it because of the price. Or some of your buyers resell your products.
- Whatâ€™s the customersâ€™ view of competition? Do they only focus on the price, so theyâ€™ll buy from you simply because itâ€™s cheaper? Or do they have some other criteria that make them choose you or your competitor? Perhaps, they value your fast delivery, for example, and they will buy from you even if your prices are higher than those of your competitors.
Who are your competitors?
Knowing your competitors is at the core of pricing intelligence: You canâ€™t monitor the prices correctly if you arenâ€™t aware of your rivals. Being an online retailer, you have both pros and cons of your position when it comes to studying your competitors.
The advantage is that you can easily find all theÂ other online stores that sell the same product as you â€” just search for this item on Google.
However, there is a complication â€” the number of your rivals might be quite large as there are a lot of online retailers, and you should also consider offline stores. But it might be hard to gather the prices of brick-and-mortar stores if they donâ€™t have a website.
If youâ€™re selling, for example, printed t-shirts, your rivals are:
- Other stores that sell printed t-shirts
- Stores that sell some other kinds of t-shirts
- Clothing stores
- Printing centers that offer printing on t-shirts
Once you gather all the competitors you find, you can proceed to the next step.
Automate the pricing intelligence process
When we were talking about competitors, you might have thought, â€œHow am I supposed to gather prices from so many shops?â€� The answer lies in automation. In this section, we will introduce you to web scraping and proxies that will become your reliable tools in building a sustainable price intelligence strategy.
With automation, price intelligence becomes more advanced and can be considered a feat of the best FinTech products.
What is web scraping?
Web scraping (also known as data scraping) is a process of gathering data from the Internet. As this industry evolves, scrapers become simpler — and today you can find truly straightforward tools that will be easy for you to use even if you never had experience in data gathering. But, of course, itâ€™s better to trust this process to professionals.
A scraper will go through websites you provide it with and gather the price data. Then this tool will process, structurize, and return it to you in a convenient format. Thatâ€™s how price intelligence is made easy — by automating the data gathering and processing.
What are proxies and why do you need them?
Proxies are remote servers or devices to which you can connect to reroute your traffic through them. As you do so, you pick up the IP address of a proxy masking your real one with it. Therefore, you can remain anonymous, pretend that youâ€™re located in a different place, and avoid restrictions.
You will need proxies for data gathering because e-commerce websites donâ€™t want anyone to scrape their content. You can understand why: Their owners donâ€™t want their competitors to easily access prices and other valuable information that can be used for gaining a competitive edge.
Thatâ€™s why they implement different anti-scraping techniques on their sites. Such protection can detect bot-like behavior and block the IP address where the bot-like traffic comes from.
Scrapers gather data by sending requests to the website. And such activity looks very suspicious to the anti-scraping protection. By default, a scraper sends all the requests from the same IP address. But youâ€™ll fool the anti-scraping system easily by applying proxies to your scraper.
Residential proxies, (infatica dot io) are the best choice for scraping as theyâ€™re harder to detect, and you can rotate them to prevent getting blocked. Infatica offers flexible pricing plans so that you can get what you need without overpaying. You can also ask us to create a unique plan that fits your needs.
Create your pricing strategy
Now that youâ€™ve acquired price data, you can begin building your pricing strategy. The pricing intelligence youâ€™ve gathered will let you see the strategies of your competitors. As you will spot certain patterns and trends, it will be quite easy for you to come up with the strategy that will let you reach the goals youâ€™ve determined in the first step.
Remember to always stick to your unique aim â€” donâ€™t just blindly copy the strategy of your competitors. Even if several e-commerce websites sell the same product, theyâ€™re still different when it comes to certain details. If you know your target audience well, youâ€™ll understand how to tailor the pricing strategy to its expectations and needs.
Pricing intelligence became much easier with scrapers and proxies that allows retailers to automate this effort-demanding process. Although the setup process will require some time and energy, the payoff will be absolutely worth it.
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