“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” Sun Tzu, Art of War.
The quote, above, is my short reply to a couple of questions posed recently by friend Dale Furtwengler, about the need for competitor price monitoring.
Shortly after I wrote a recent blog post on competitor price monitoring: 6 Compelling Reasons Every Retailer Should Track Competitors' Prices Daily (Dec. 5, 2012), I received a note from Dale at LinkedIn, Pricing Experts Community:
"Continuous tracking distracts a company's leadership from monitoring their customers' changing interests. Price is not the only thing that customers care about despite retail's belief to the contrary." (Furtwengler)
My longer answer:
When it comes to competitor price monitoring, you'd better believe that retailers have good reason to care about price -- it's the first thing customers say they consider; and it's usually the first information they find listed when they use search engines or comparison shopping engines.
For the kind and size of retail we deal with -- clients with thousands and thousands of products (department stores, drug stores, toy stores, variety stores, shoe stores, appliance stores, furniture stores, pet supply companies) -- often carrying similar products to other competitors (the only real distinction being price), competitor price monitoring is a major factor because you stand to lose a lot of business without this information.
Price tracking continuity doesn't mean you have to pay attention every single moment and neglect customers' changing interests. They're not mutually exclusive and you have time for both. The beauty of using a pricing intelligence tool -- you can monitor every day, but you don't have to agonize 24 hours a day. Pricing intelligence solutions lighten your load, providing you with the info you need, in easy, reliable, usable, easily-recognizable, organized manner.
Furtwengler continued: "I also believe that the more frequently a company monitors its competitors' pricing the more likely that company is to become reactive and lose sight of its own strategy… (and) When we play by the other team's rules we're destined to fail."
Sun Tzu's (and my) answer to this:
We tell our customers to START with strategy before anything else. If you know what your competitors' pricing strategies are (and you learned them FROM your competitor price monitoring efforts), you can make intelligent strategic decisions. When you don't have a good strategy, you fall into the competitors' game and lose your way.
The point is to first craft the best strategy for yourselves. And the only way you can do this (and continue to do this) is to know what's happening in the market and with the competition through the use of competitive pricing intelligence.
We Addressed These Points In A Number Of Previous Blog Posts:
Dale & I had our first point/counterpoint about a year ago. My position then, as it is now, was written in Why Competitor Price Monitoring Really Matters (Dec. 27, 2011).
My main point was that without Competitor Price Monitoring, a lot of online retailers are not even aware of the amount of sales they're losing! Here are more of the reasons we gave then (that are even more valid today), as to why it's important to do competitor price monitoring:
1. Most consumers start with a Google search or comparison shopping engine search.
2. Online retailers must look at many competitors across the board to get an idea of what the real market looks like, and to be able to price wisely and competitively.
3. Your competitor's pricing strategy is always relevant.
On July 12, 2012, my blog post on competitor price monitoring was: 6 Major Reasons To Check Your Competitors' Prices Every Day:
1. Competing in online retail is happening more and more in real time.
2. Gives visibility into competitors' price dynamics.
3. Lets retailers be proactive regarding competitor pricing and assortment.
4. Allows retailers to price and compete effectively with automated pricing systems such as Amazon.
5. Helps retailers develop a more effective pricing strategy.
On December 5, 2012, on competitor price monitoring: 6 Compelling Reasons Every Retailer Should Track Competitors' Prices Daily, it's because:
1. There's more price comparing going on now (Google, CSE, mobile apps, competition).
2. Allows retailers to map and chart price history and dynamics.
3. Allows retailers to price proactively rather than reactively.
4. Helps retailers stand up to automated pricing systems.
5. Retailers gain a real advantage over their competitors.
6. Enables retailers to devise better pricing strategies. (Can reverse engineer your competitors' tactics and strategies; can easily monitor how competitive you are on a regular basis; can see if your strategies are paying off).
No-one said you have to play by the other team's rules, but you darn well better know their strategy and modi operandi to respond and plan properly. And you always need to play smarter and better than they do. And you must do so continuously.
With the proper pricing intelligence software, you can access the information you need, ready to go, actually cutting the time to do it yourself or figure out where you stand.
So What's The Big Deal About Competitor Price Monitoring?
Look at it this way: Would you rather just put your (or your client's) head in the sand, and guess about prices -- or set up and follow a wise, proactive strategy, by gathering all the information you can -- including, and especially, competitor price monitoring -- to make the best-informed, most intelligent, most-timely decisions about your strategy, pricing procedures, and customers' changing interests?
You can just shoot in the dark without full information and price in a vacuum -- or get into the ballpark and be realistic about what the market is doing and what pricing is best and reasonable for you.
"If ignorant both of your enemy and yourself, you are certain to be in peril." Sun Tzu, Art of War.