Pricing is the main goal of any monitoring! Business is such that not all sellers are honest and decent to their competitors and often even to their customers! Some of them deliberately lower their prices in order to "just feel the market" or sell at a minimal markup, thinking that "not for naught, and that's good". There are also sellers who lure the buyer with a low price, but offer related expensive products in a telephone conversation.
You can and should fight fake product information!
The basic guidelines in building an effective profit-building strategy are:
- Don't be overly underpriced. Working for the sake of working is not our choice!
- Make an emphasis on those items that are missing or in short supply from your competitors.
- Abstract away from unscrupulous competitors and offer your customer a more loyal and comfortable terms of service lower price tag (free delivery to the door, promotions and discounts on everyday items, gifts, etc.).
- Monitor prices on the market regularly. It is important to stay aware of all the ups and downs in your field in order to intelligently shape your price offer.
What is the most workable pricing strategy today?
In order to be able to answer this question, it is necessary to understand what options even exist:
- Maintaining a policy of high prices. The goal in this case is to maximize profits at the expense of those customers who are willing to pay more than the market value for original and high-quality goods. Then it becomes a matter of finding such a customer.
- Neutral pricing (average market value). This strategy is the most typical and implies an average, but constant profit (the work according to RRC).
- Price breakthrough (low prices). In this case the price tag is set to the lowest on the market. This is done to increase sales (product turnover).
- Following the leader. This strategy assumes to monitor only one store, which acts as a leader in the segment.
- Dynamic pricing is the most progressive and effective method of pricing, taking into account the price tags of all players.
Dynamic pricing. What is it and what is it?
Dynamic pricing is one of the strategies for generating value for a product, which differs from the others in the following points:
- Fluctuations in price on all competitors' sites are taken into account.
- Dynamic pricing involves automatic price monitoring on a mandatory basis.
- This strategy can work without human intervention. All adjustments are made automatically and depend on the algorithms prescribed by the store owner at the setup stage.
Efficient pricing is a scenario that takes into account the maximum number of variables in the question of price changes and automated maneuvering (without human intervention). Maximum competitiveness can only be achieved under these conditions.
Competitive pricing - another technique of forming a price list for goods/services
It is a comprehensive approach to price formation for the goods you offer. Both manual and automatic monitoring can be applied here, but it should be present on a mandatory basis. It is important to cover as many competitors as possible in order to form an optimal pricing policy on your product pages!
What is a competitive price?
In any market, many online stores sell the same products. On this basis, the concept of competitive price can be interpreted in several variations:
- It is the price tag already set by other manufacturers with little variation.
- It is a marginal cost with a minimum profit markup for the seller.
Companies that are just entering the market tend to set prices exactly like their competitors or close to them. The main mistake in this decision is to ignore the expense side, because each seller will definitely have different costs! This includes production costs, transportation costs, hiring employees, and more.
Advantages of the competitive price method:
- Simplicity. Competing companies' prices are publicly available. All you have to do is use the right search engine and you have the price at your fingertips.
- Virtually no risk. As a rule, prices set on competitor sites are already proven and working. All you have to do is gather enough data.
- The result is a complete balance on the market. This is only possible if all market players will observe the solidarity in pricing. Practice shows that this is rarely the case. It is all the fault of dumping!
Online price monitoring system as a tool against dumping
It is a deliberate underpricing of a product in order to increase the turnover of the store. Most often small and medium-sized dealers are interested in this. The result of constant artificial underpricing of the product leads to a complete collapse of the market. Yes, the price will be competitive, but the profit for the seller will be "zero"!
By using Helecos, it is possible to:
- Determine a competitive price in the market.
- Continuously monitor the price policy of competitors.
- Keep track of promotions and product discounts offered by competitors.
- Take timely steps to combat dumping - the number of daily inspections can be measured in hundreds!
Not willing to pay for a product "without feeling it"? Helecos' RTK and MRC control system offers you an opportunity to use a trial demo version to test all basic functions.
Dumping. What is it and how to fight it?
Dumping is the deliberate reduction of the cost of goods below the level of the manufacturer's recommended price (RRP). What are the options for dealing with such competitors:
- Wait it out. A sharp and unreasonable decrease in value is detrimental to the store itself, especially if the business processes of the managers of such markets are not fully debugged. The main thing here is to have enough resources for the waiting period, because you will definitely have fewer orders, and accordingly profits will fall.
- Establish friendly relations. The most loyal method is to agree with a competitor to keep the same price range.
- Dumping back. Your opponent sells French perfume for 100 USD cheaper than you? Negotiate with the supplier for a larger purchase, to be able to lower the price even more. Yes, the market from this will not be tighter, but you will reach yours - sales will go. Another question - what your profit will be and whether there will be at all!
- Abstract away from the price wars at all. Find your own unique offer for the buyer so it does not make sense to compare you with anyone else by price.
- Offer two prices for one product. Offer the customer the minimum price of the product, as well as higher, but with the additional services (gifts). For example, sell the product at the minimum price with the condition of pickup, etc.
Add value in addition to the product offered - this is the best method to combat dumping. Such bonuses and benefits can include:
- Free shipping, loyal and extended warranties. Offer the customer the best possible quality and low-cost service.
- Related merchandise with a high percentage discount.
- Updated packaging - sell a unique product!
- Supplement the goods you sell with new features, if possible.
- Work with the website, make it easier and clearer for the consumer.
Combating dumping in Ukraine - what are the methods of regulation?
A dumping price is a price set below the MRC (minimum recommended price). In this case the seller's earnings are either minimal or non-existent, which cannot be done to attract a client.
Methods of dumping regulation in Ukraine
- Better quality and service defeats the low price! 87% of customers are willing to pay more for a quality product! So dumping your competitor can be a step towards your own development:
- add new and unique features to the products you offer;
- Work on packaging and product appearance;
- Ensure a personalized approach to customers.
- Profit is more important than quantity! Increase your profitability from one customer. It's much better to have one regular customer willing to pay than to have 20 customers who don't make any money!
- Move in parallel to dumping - provide temporary promotions to the customer. This method of fighting can help in several situations:
- A temporary measure responding to a competitor's dumping - preventing a quick drain on your customers and giving you time to develop a response pricing strategy.
- Incentive for a test purchase.
- Revise your product range - add a low-price offering! You can add a product or service to your product list that will still meet the consumer's requirements, but with fewer features than the main product. That way you can explain the cost difference.
- The inability to compare prices. It will be easier for the customer to "switch" to a cheaper product if he has the opportunity to compare it with a similar one on the market. And if he doesn't have one? Solution:
- Create a "Set 31" or similar package offer.
- Include features that are difficult to price.
All these methods are practical and will definitely lead you to the desired result! Another question - how to detect dumping in Ukraine in time to maneuver?
Service to monitor the prices of competitors on the Internet - a fully automated solution to find dumping in a few minutes! Helecos is a service that takes into account all trends of such programs and offers maximum functionality for you!
Your competitor's prices are lower. What to do?
Dumping is the most pressing problem of all retailers operating in a competitive marketplace! When one store lowers its price, all of its players suffer. A few effective steps to even things out and synchronize the prices of all retailers in a particular niche:
- Research your competitor. Find out as much as you can - how long he's in the market, what purchase price he serves, profit, scale of operation, where he localizes his store. Assess all the downsides of working with customers!
- Make a partnership with competitors - make an agreement on universal compliance with the RRP, established by the manufacturer.
- Reduce the price tag even lower! The goal in this case is to make the cost as competitive as possible and interesting for the customer.
- Raise the price. As a result you will move to another price segment. The number of sales will decrease, but the margin from each of them will be several orders of magnitude higher.
- Reduce the cost of running your business by cutting salaries, introducing a bonus system, or the like.
- Work on strengthening marketing. Here, it will be effective to connect all kinds of channels of content marketing. Among them: video reviews on YouTube, mailings, ads on social networks, reviews on forums, etc.
- Conduct a customer survey. Call your customers and ask what you could be better for them.
- Form a package offer. Get your customer interested in related products to your main product. Depending on the segment you are in, bath or beauty kits, fruit baskets, etc. could be relevant here.
- Work on service and improving product features.
- Arrange promotions and drawings. If a competitor has exactly the same product, sell it on bonus programs. For example, if you buy X amount of UAH you get a Chupacups as a present, etc. It is important to quickly and timely notify the potential customer about the promotion. Methods:
- Texting
- Advertising on the site
- Banner ads around town
- Flyers on the streets, etc.
- Contact the manufacturer/supplier if you can't resolve the situation yourself.
- Gather evidence and report violations to the antitrust office. If the pricing policy is already too low, there is a chance that your competitor is using gray supply/production schemes.
So how do you identify this dumping, which is the subject of all of the above material? Yes, you can manually monitor each product on the sites of your competitors and spend long hours every day or use the automatic monitoring system Helecos.
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