Price analysis of participants in online stores, marketplaces and price aggregators

Porter method

The purpose of the Porter methodology is the competent formation of competitive advantages. The Michael Porter method allows you to analyze competitors’ prices based on 5 factors that have a direct impact on sales.

1. Threat of entering the market of a substitute product;
2. dependence of industry development on the level of competition;
3. danger of new players entering the market;
4. increase in customer requirements;
5. increase in purchase prices.

After analyzing all the points, it is possible to determine the directions from which the greatest threat can be expected. This will allow the development of a USP and a specific action plan in advance.

Conduct competitive analysis using the Porter method at least once every 3 years.

Algorithm for analyzing competitors according to the method of Michael Porter

STEP 1. Determining the level of threat of the emergence of new product analogues.

You need to understand how likely your customers may prefer a substitute product. To do this, it is necessary to study the price-quality ratio of competing products.
The main goals of this stage:

• Increasing customer loyalty.
• Development of competitive advantages by products.

STEP 2. Research the level of competition in the industry.

Determine the presence of fierce competition in the field, the number of strong rivals, their share and the overall growth rate of the market. (The data in the table is given as an example)

To understand trends and make a correct forecast, collect data for at least 2 years, ideally use information for 3-5 years.

STEP 3. Determine the likelihood of new players entering the market with “your” product.

Rate:

1. what is the density in the niche, is differentiation possible;
2. payback periods (the smaller the initial capital, the higher the chance of new competitors appearing);
3. the level of uniqueness of goods (the higher, the less opportunity to buy it from others);
4. is there a chance of optimization and cost savings;
5. what channels are used for advertising and promotion (the higher the cost, the less chance for new players);
6. the existence of restrictions at the legislative level (the need for a license, limits, state price control).

STEP 4. In order to assess the increase in the level of consumer requirements, it is necessary to look at the uniformity of the distribution of sales across the main areas. If the bulk of sales is concentrated in 1 segment, then it will have to match.

Step 5. An increase in purchase prices can be predicted using the table

Before starting to analyze the prices of competitors, you need to clearly know your buyer, advantages, disadvantages, opportunities and threats for the company.

Benchmarking table.

When competitors are identified, it’s time to get down to analytics. One way would be to compile a comparative table on the characteristics of the product and the company.
Competitor price analysis table – a tool for researching objects by highlighting and reviewing their individual parts, obtained as a result of collecting prices and further comparing data presented in the form of a table.

Pay close attention to the sites and social networks that are used for promotion. Analyze point by point:

1. quality of content and design;
2. clarity of the unique selling proposition (USP);
3. availability of interactive elements (calculator, feedback, online consultant);
4. whether there is an advertising mailing list, a blog, whether the news is updated.

Next, enter the information in a table in which you will see all your benefits. To conduct an effective competitor analysis:

1. compare 10 or more opponents;
2. rate all items on a 5-point system, where 5 is the best offer and 0 is the absence of a feature parameter..

The identified benefits can form the basis for the development of a USP.

Display the identified benefits in the company’s trigger block, on the first screen of the site, use in presentations and advertisements.

Competitor price analysis program checklist Completo

This method was developed by Completo marketing agency. According to him, any research must begin with the definition of rivals and their capabilities.

Compare profit shares by analyzing competitors and enter the data in the table  (Provided as an example)

Find out if potential customers are familiar with your online store..

Show the target audience a list of online stores to identify real niche leaders. Those who are recognized first of all are the undisputed favorites.

1. Evaluate the positioning of competitors through their texts, slogans, headings, on what resources they are advertised.
2. Check the positions of competitors in the ranking of online stores according to the opinions of customers.
3. Whether video content is used for promotion and advertising.т.

Based on the data obtained, determine the optimal strategy for competition:

• • Search for suppliers with lower purchase prices.
  • Differentiation of product offerings and creation of USP.
  • Active work with a single target audience.

At least 1-2 times a week, monitor competitors’ prices. Track substitute products and promotions of other sellers for a similar group of products.

The ultimate goal of competitive analysis is to increase sales and improve profitability. Let’s look at what can be done to leave the competition behind.

Сompetitor pricing analysis to increase sales

How to analyze competitors’ prices?

You should analyze the prices of competitors using special methods, services and marketing tools. Analytical study of competitors’ prices is a system process that includes collecting information about prices, promotions, discounts, gifts and delivery conditions in online stores, monitoring prices on marketplaces, as well as further analysis and identification of the most characteristic features of competitors’ pricing strategies to increase the level own sales and profits.
To sell more and better than your competitors, you need to study all aspects of their business. Adopt positive experiences and avoid mistakes. Properly monitoring and analyzing competitors’ prices, and using the data obtained, you can increase sales in an existing online store, as well as develop a strategy for the successful launch of a new project.
One of the main criteria for evaluating an increase in sales is an increase in conversion. This is the ratio of the number of active buyers to the total number of store visitors.
To increase sales, increase revenue and profits, and attract new customers, use these tricks to increase conversions:

– development of an effective pricing strategy and regular price adjustments;
– increase in thematic traffic;
– fast page loading, attractive interface and main page view;
– the ability to order without registration;
– the presence of a “hot line”;
– the ability to adapt the site for mobile devices
– cross-browser compatibility;
– the possibility of advanced search and the presence of filters;
– intuitive site structure;
– the presence of a customer loyalty program;
– high-quality content filling of the site and product cards;
– Carrying out sales, discounts and promotions.

The techniques mentioned above will attract and help retain customers. Remember that there is no universal solution, the effectiveness depends on the specifics of the store and its audience.

To increase sales in an online store, display the “order” button in a prominent place, start a review page, pay attention to customers, “accompanying” at different stages, post selling content with “catchy” headings on the resource.

Increasing the conversion rate is not a separate process and will not give a noticeable increase in sales. It should go in parallel with the work on the pricing system. It is in this connection that the desired results are achieved.

Analysis of market prices to create optimal pricing

For an objective look at the pricing tactics of your products in a niche, you need regular competitive analysis. This will give an understanding of the situation, for example, is it permissible to increase prices? Or the main advantage of the store is the cost is lower than others?
Information about the assortment and prices of competitors is the starting point for developing your own pricing system. This makes it possible to effectively resist the competition, promptly responding to the actions of opponents and conducting a prompt re-evaluation of their own products.

In essence, competitors’ competitive price analysis is proactive for unexpected situations that require urgent pricing action.
Taking into account all factors, sellers need to form a balanced offer (МАP) within the boundaries between a low price, which will not bring profit, and an overprice, which will scare away buyers.
Depending on the company’s strategy, pricing policy can be formed according to two scenarios: focusing on purchasing power or based on the level of expected profit. Let’s consider both options in more detail.

Costly pricing methods

In this group of methods, the sale price is calculated as follows: cost price + specific value.

“Cost plus”. Widespread method used in all industries. The cost of goods is calculated as follows

selling price = costs + desired profit amount.
Costs = purchasing costs + shipping + storage + implementation costs

The main difficulty of this method is to determine the desired amount of profit. There is no exact formula for its calculation, it depends on many factors. Many companies set a high markup to recoup their initial costs as quickly as possible, and as sales increase, the cost decreases.

Minimum costs. This pricing technique is used when the market is saturated to keep sales at a certain level or when a new product is introduced.

Selling price = the sum of the minimum costs..

This method, despite the low profit, justifies itself if the prospect of scaling sales is real. Otherwise, this approach threatens with serious losses.

Target pricing. The price calculation is based on the interests of the seller and consumer attitudes are not taken into account. It is based on the calculation of the unit cost of production relative to the volume of sales, providing a target profit.

When transforming the cost price, it is necessary to adjust the price, which, under the given conditions, would provide the expected profit.

Sale price = A + B / C, where
A – the cost of purchasing a unit of production,
B – target profit,
C – the number of units of products that are planned to be sold.

Using this technique, it is important to focus on demand, the level of competition and purchasing power, otherwise it may lead to failure to fulfill the company’s financial plan.
Formation of prices with a focus on the average market. The selling price is in a certain zone and sellers, using this method, comply with the traditions of the market and prevailing prices.
Examples of this method are the prices of “prestigious” goods: jewelry, black caviar, sable coats, premium cars. A significant reduction in prices for such products will lead to the fact that the goods will become affordable consumer goods and lose their attractiveness in the eyes of buyers.
However, if you slightly reduce the price, but stay within the average market offer, then you can count on an increase in sales. Also, prices in this niche are formed under the influence of the image and prestige of brands.

Marketing Pricing Methods

At the heart of marketing methods of pricing lies the focus on consumer needs and the possibility of acquiring goods. The starting point in the calculations are the requirements of the market, and not the cost. A combined pricing approach is used.
Market breakthrough. A new product is being sold at a low price in order to create a mass market in the shortest possible time. This allows you to quickly generate a high volume of sales. Thus, the investments made are returned in a short time period. An error in competitor price analysis and calculations can cost a company dearly, so extreme caution is required.
Extrusion method. The price of goods is set high and targeted at wealthy consumers. This technique is used by monopolists or companies with a low level of competition in a niche.
The initial high price is formed from the assessment of investments in the purchase and promotion of goods, ensuring their reimbursement. This allows you to increase sales and accelerate the return on previously invested resources. After the level of sales has peaked and froze, the store begins to reduce prices, attracting new customers.
At the same time closely monitoring the market situation. By gradually reducing the price of the company, they apply the “squeezing out” of all consumer demand, which was originally included in the product.

В In 2004, Motorola releases its legendary flagship phone RAZR V3 with an initial cost of about $300. Despite the far from the top-end characteristics at that time, from the very first days there was a huge consumer interest.
Everyone wanted him. After 2 months, when the initial excitement subsided, the price of the gadget decreased by $50. At all points of sale, he was again Sold out. A few weeks later again – $ 50 to the price and the phone is sold out everywhere. 8 months after the start of sales, the phone was freely available in most stores, and its price was about $150.

Any competitor price analysis or pricing strategy looks great on paper, but the difficulties begin when moving from theory to practice. Therefore, cases, examples from practice, and advice from professionals are especially valuable.

How to analyze competitor prices: an algorithm from practitioners

Starting to analyze the prices of competitors, it is necessary to prepare in detail. Clearly define the goals and online stores to monitor, as well as the needs and requirements of the target audience.

Assessing the level of competition within the industry

It is most convenient and fastest to analyze the prices of competitors in the table. (see above)

Forming a competitor profile

The map of competitors will help to highlight the main “locomotives” of the niche, which set trends and are an example of successful strategic decisions.

Use competitors with negative growth rates as a source for developing your own business.

We analyze the portfolio and “anchor” products

Collect information about the range of competitors and highlight the “anchor” positions – products that provide the lion’s share of sales and profits.

After that, we proceed to the analysis of bestsellers. 5 points is the highest rating of the property, and 0 is its absence.

Conduct competitor price analysis

Sort them by price sectors:

• economy price;
• average price category;
• high price level;
• premium prices.

Designate average and boundary values of the prices of competitors.

Defining positions in the market

Here we are not talking about the positioning of a particular product, but about the image of the online store that has developed in the perception of buyers as a whole. Analyze according to the following criteria:

As additional factors, analyze data on the main promises of opponents, the level of popularity of your company and customer loyalty.
A comparative table will help to indicate the current position and indicate the vector of movement to achieve the desired positions.

Conduct an analysis of promotion and advertising channels

In order to form an effective competitive media strategy, it is necessary to collect the most detailed information about the costs of advertising and promotion, the intensity of support and audience coverage.
Analyze direct promotion according to the following parameters:

— budget,
— regional TV (budget, SOV),
— direct TV (budget, SOV),
— Internet (type of presence, coverage, budget),
– outdoor advertising (type of presence, coverage, budget),
– press (budget, SOV),
– professional events (exhibitions, seminars, congresses) (type of presence, coverage, budget),
– regions of promotion.

We analyze the competitiveness of offers for customers:

• stock example,
• the frequency of promotions,
• bonus program,
• loyalty program,
• % min and max discounts.

Collect examples of flyers, layouts and billboards from other stores. This will allow you to study the key brands of competitors, the strategy for attracting an audience and not use them in your own advertising.

We draw up a portrait of a key consumer among competitors

1. age;
2. gender;
3. marital status;
4. income level;
5. field of activity;
6. main criteria for product selection;
7. psychographic characteristics: activity, life views, values and priorities)..

With a limited budget, such research can be done through a survey on social networks and by examining the registration data of your registered customers in the store.

 Assessing technological possibilities

When developing competitive strategies, the level of manufacturability of rivals plays an important role. It is necessary to understand their access to resources, financial reserves, the level of professionalism of the personnel and the opportunities to achieve cost reductions. We analyze on the following points:

• the level of professionalism of personnel;
• the level of technical equipment;
• probability of additional investments;
• Access to limited resources.

Understanding what a competitor can do and what resources it has will reduce the number of its privileges in the market.

Deprive opponents of the element of surprise. By regularly monitoring prices and a complete analysis of competitors’ activities, you can predict their actions in advance and prepare a response plan.

Competitor Price Analysis Program as a Method of Competitive Struggle. Conclusions.

When every customer counts, the competition is reminiscent of hostilities. Therefore, in order to retain customer interest and loyalty, online stores develop a variety of promotions, USPs and work hard on pricing.

These strategies are not just creative ideas, but prepared campaigns based on a thorough competitor price analysis program.  Just as the quality of a building is determined by the soundness of the foundation, competitive analysis depends on price monitoring, which is the basis for all further actions.

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