The age-old question "Does price matter?" is more and more compelling in today's world of Ecommerce and online retailing. Should retailers compare prices with all the online competitors they can find? Should they wonder if their competitors know what they're doing with their own pricing? Most important, how does an online retailer determine the most "correct" pricing for doing business? A lot of online retailers are not even aware of the amount of sales they're losing. The answer: Use Competitive Price Monitoring. Here's my take on a recent blog, "Competitive Pricing Intelligence," (Does Price Matter?) by marketing consultant Dale Furtwengler:
#1. Contention: Gathering your competitors’ pricing information is not worthwhile.
Answer: We know that most consumers start with a Google search or Comparison Shopping Engine search. This, in turn, leads them to the products and prices they will consider -- and on which they will make their buying decisions. The consumer has told us again and again that he/she is buying by price. You might be losing sales unless you know where you're priced in relation to your competitors. You need to know if you’re priced higher or lower. You need to know if you can charge a large enough difference in price to win the sale. For example, a one percent difference in pricing might not make a difference at all, but pricing ten per cent lower could be the difference in your selling success. So pricing matters very much.
#2. Contention: Online retailers who do competitive price monitoring are just playing follow the leader -- and the leader might not know why he/she is pricing that way!
Answer: That’s simply not the case. Online retailers must look at many competitors across the board to get an idea of what the real market looks like -- and to judge and price wisely and competitively. Online retailers are experienced, savvy, and competitive (and getting more so). These are serious businesses, like yours. They know how to quantify value in dollars and cents; they're looking at their competitors' prices just as you are, to find the right price points to make the sale. Are you losing sales to your competitors without even knowing it? You can only know this if you see what products they have and how they're pricing them. And yes, you may need to follow several giant retailers who are the leaders to know what to do with your own pricing.
#3. Contention: If you have an effective business strategy, your competitors’ pricing is irrelevant.
Answer: Ecommerce doesn’t work that way. When you start up an Ecommerce site, even the best business strategy must be price-based. You have to know what your competitors are charging and how they’re charging, says Consultant Lincoln Murphy in Competitor Pricing. If you're going up against an entrenched market leader or if there is no clear leader but everyone in the market has the same pricing model and similar prices, you will need to know what everyone else is doing, so you can defend your different model.
#4. Contention: Gathering competitive pricing intelligence puts the focus on the seller’s price, instead of value.
Answer: Low price doesn’t mean it's not a value! Today, the buyer's decision comprises pricing, brand, credibility, ease of using your site, and what additional features, promotions or specials you may have to keep the buyer interested. But price is the attraction du jour until online buying behaviors evolve. If you don't meet some of the low prices of retail giants (who can afford to price low because of economies of scale and deeper pockets), think about the alternative -- no sales. Compete on price on a few items that you can afford until the customer gets to know you better. Use loss leaders, focus on particular products, niche selling, etc.
It's becoming increasingly difficult to sell online without taking price into account and being aware of your competitors' prices. Because of today’s transparency, everyone can see how each one prices in relation to the others. If you have a similar price or are priced incorrectly, you’re going to lose the sale. That's why competitive price monitoring makes the difference between making a sale and getting a new customer -- or not getting a chance to sell your products in today's ultra-competitive Ecommerce marketplace. The best news is that competitive price monitoring takes just seconds. In the case of, "Does Price Matter?" my answer is: Focus on competitive price monitoring to insure that you will stay a step ahead of your competitors.
Does price matter? Let me know what you think. Gilon