Are you competing with the right people?
The problem is that many people don't know how to identify their true competitors because they're so focused on finding all the companies that do what they do. But that's not enough. You need to find out who your customers want and then figure out who is giving them what they want.
So how do you know who your real competitors are? Who are the companies that are going after the same customers and offering similar products as yours? How can you ensure that your company competes with the right people?
That's where this guide comes in. We'll walk through exactly how to find out who your true competitors are and what other businesses should be considered when making decisions about running your business so that you can stay focused on what matters most.
What is Competitive Pricing Analysis?
Competitive Pricing Analysis is a pricing strategy that helps you understand how much your competitors are charging for similar products or services. It helps you identify your competitors' strengths and weaknesses, as well as what their pricing strategy is. This allows you to make informed decisions about your own pricing strategy and make sure that it's working for your business.
You can use Competitive Pricing Analysis to:
Find out what your competitors charge for their products and services and how they price them.
Compare your pricing with theirs, and make sure yours is competitive.
Determine whether your pricing strategy is working well enough or whether it needs to be adjusted.
Competitive pricing analysis is an important part of market research for any small business. It's a way for you to identify your immediate competitors, as there are often two kinds of competitors: one who fall within your niche and another who is your closest competitor.
Your immediate competitors are those who are selling similar products or services as you in the same geographic area, but they may be targeting different markets or have different marketing strategies. For example, you might be selling pet supplies while they sell pet accessories.
Your closest competitors are those who offer a similar product or service at a comparable price point with similar marketing strategies. Their products may not be exactly the same as yours, but they're close enough to make it difficult for you to differentiate yourself from them on price alone.
How you can identify your immediate competitors?
Identifying your e-commerce competitors can be difficult. To make it easier, we've put together a list of the top ways to identify your immediate e-commerce competitors.
1. Identify Your True Competitors
In the day and age of digitization, it has become easier to keep track of your competition. An easy Google search will let you know who your competition is in the industry or niche you operate.
The task is intensive, but it will allow you to list down the market players you need to compare yourself against; the results you get are also the same as your customers. For instance, if you want to find brands that sell sneakers – Adidas, Nike, and Puma may be in the top results. Then it's up to you to further narrow down the search criterion. Whether you're a premium or affordable sneaker store, the search results would change accordingly.
You can also conduct the search based on keywords using SEO tools like SEMRush, Moz, and Ahrefs. This data and more will give you a heads up on whom you should track.
2. Categorize the Competition
Now that you have "searched" your competition by using Google, remember that search competitors are different from business competitors. The former uses the necessary keywords that you use. Meanwhile, business competitors are taking away your customers. However, it would be best if you tracked both these areas efficiently.
Think about this, those who rank higher too can take your customers. It is not very common to click the second page on Google search results. On the other hand, your business competitor is impacting your sales and revenue. Therefore, tracking both becomes necessary for your benefit.
Then you segregate them based on who is your primary competitor and who is your secondary competitor. You can have as many sections as you want based on search results and the price. Having a list like this will let you tailor your strategies so that you can drive not only sales but also build your customer base.
3. Read Competitor Content
Competitor content will allow you to see how they present themselves. Everything can be a look into how they carry the business, from their blog posts to social media. Subscribe to their newsletter, and go through their whitepaper content, e-books or brochures to find out more about them.
On most occasions, these materials are where they update information regarding their promotional offers or the launch of a new product. Data like this will serve as a guide for you.
4. Track Competitor Prices
This one is a no-brainer. Studying competitor prices is one of the foremost parts of the research. It helps in price optimization. And with pricing intelligence tools, you can monitor the price fluctuations of several competitors. It will let you note the rate at which the fluctuation occurs and why there's dynamic pricing. Furthermore, this analysis will enable you to formulate your strategies.
Deal days on Amazon are not something every other eCommerce can follow, but they can take some of the insights to have similar campaigns. One other reason why Amazon is a tough competitor is the catalog of items it offers and the swift re-pricing of items it does.
Instead of understanding how the product has a price point, know the why of it. For example, do they change regularly? Does it happen on deal days, or is it seasonal? This information will let you develop data-driven pricing strategies.
5. Compare Your Websites
Even a landing page matters. When you study the way your competitor carries market operations, also take into consideration things other than their product quality and pricing. It is about the competitors' online presence. For instance, Target and Walmart, both retail giants, have an online presence but the websites are differently structured.
The post-Covid era increased the value of having an excellent online presence. But if your website looks dated, has a lot of glitches and crashes, and doesn't offer a seamless user experience, it's not surprising that customers will move on. However, on the other hand, an informative, well-done, stable website can make the user experience pleasant.
When comparing websites, you will have to see what your customer prefers. It will help you align your business strategies accordingly. And also help you build a better online presence.
The whole aim is to leave your customer happy and not make them choose your competitor over you.
6. List Out Value Propositions
Customers might look up a product they want to buy, but while there can be two brands offering the same product, what do you think makes the customer choose one particular brand? To help understand this point better, going through the value a brand brings to the table makes for a good starting point.
Your research might reveal that your shipping cost or quality is better than that of your competitor, and that is what is bringing shoppers to your site. However, they can also overlook these for a more affordable item.
Try to check the areas where your competitor can score a win. Do a comparison accordingly and see how you could revamp your strategies.
It's also wise to note those value propositions that may not have the same worth in the eyes of the customer. But, they are promoted in your marketing campaigns. The result is zero impact on sales and a devastating impact on costs.
Also Read: How to Remove Unauthorized Amazon Sellers
7. Read Customer Reviews
Customer reviews are always one of the most vital buying motivators. A poorly rated product will have a tough time getting off the shelf, while a five-star validation will win you half the battle.
While going through the customer reviews on your competitor's site, the one thing you need to check is what helped their product rating. For example, is it the quality, delivery, after-sales service, or price?
If you find that a customer has specific complaints regarding the quality of the product or the excessive shipping charges, it's a cue for you to step in and offer them a better deal. Customer reviews are just intel available for free and something you can use to understand the pulse of your target market so that you provide them products accordingly.
Wrapping up
While it may be tempting to focus on your own business, you need to know what's going on in your industry. That's how you stay ahead of the curve, and that's how you save yourself from getting blindsided by a competitor. And for this very reason, you need to research how your competitors operate in the marketplace to help you make better business decisions and gain a competitive edge.
Competitive pricing analysis will help you there. It will let you see how your business compares to your competitors. Then, once you have the required material, you can fill those gaps you would otherwise overlook. But, it’s no easy task to handle this much data, which is why experts like Datahut can do your job for you while you can focus on other priority areas. With our expertise and tools, you can undertake business operations and develop strategies more effectively.
Contact us today if you want to rule the marketplace and take on your competitor!