Pricing plays a crucial role in a company's competitive environment. Price is often the most important purchasing factor for customers, and they are always looking for the best deals. This behavior is particularly pronounced in today's economy, where consumers have many options and online shopping opportunities are plentiful. Entrepreneurs in the retail industry can respond to customer behavior, especially the strong interest in low-price offers and the constant search for the best prices, in a number of ways.
In this paper, we will explain the relevance of this comparison, discuss the importance of a structured undercutting of the Recommended Retail Price (RRP), and analyze whether this undercutting is similar at the manufacturer or category level.
Relevance of the comparison for retailers
- Competitiveness: Comparison with competitors' RRPs allows retailers to assess their competitiveness. Are their prices reasonable or even more attractive to potential customers compared to similar products from other suppliers?
- Price positioning: The findings from the comparison help retailers determine their price positioning. Do they want to be perceived as a lower-priced alternative or do they focus on higher prices and added value?
- Maximizing revenue: The comparison helps retailers set the right price to maximize profit while building customer loyalty.
- Customer behavior: Customer behavior around prices and perceptions of price changes can be better understood by understanding competitor pricing strategies.
Structured undercutting of the RRP
An interesting aspect of the comparison is whether competitors undercut the RRP in a structured way. This could indicate that there is a deliberate pricing strategy to attract customers or increase market share. There may be various reasons for undercutting the RRP, such as:
- Cost advantages: A competitor may have lower sourcing or manufacturing costs, allowing them to offer lower prices and still be profitable.
- Customer retention: retailers may lower prices to retain customers.
- Market share expansion: Lower prices can be used to gain market share and displace competitors.
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Differences at manufacturer and category level
Comparison with the competition should also examine undercutting of the RRP at the manufacturer and category level to identify patterns and trends. It is possible that certain manufacturers or product categories are more affected by RRP underruns than others. This could be due to market structure, competitive intensity, or demand for certain products.
"copio" stands for Competitor Price Information and Optimization and serves as an analysis support for price strategy for retailers:
Modern market and price monitoring technology such as copio analytics collects data from online stores, marketplaces and price portals and provides retailers with valuable support for their pricing strategy. This technology enables, among other things:
- Immediate market monitoring: retailers can track current price data and other attributes of their competitors' products and draw comparisons.
- Competitor analysis: copio analytics provides detailed and, after multiple data collection, historical insight into competitor pricing.
- Assortment analysis: copio analytics' extensive analysis function also shows, for example, the development of competitor assortments in order to identify new products or trends among competitors or to change prices, based on inventory and availability at competitors, to improve margins.
Overall, comparing market price to competitors' RRP provides retailers with important insights into the market, competitiveness and price positioning. Intelligent use of this information, supported by modern technologies such as copio analytics, can help retailers optimize their pricing or even assortment strategy and increase the success of their business.