The BEAUTY of PRICING INTELLIGENCE

People relationships have always featured highly in the business products industry. Salespeople build strong personal bonds, know you, your colleagues and your business needs. They might even offer deeper pricing discounts when you purchase extra supplies.

But how do we know we are receiving the best price and value for money? What if the relationship is so strong that you don’t even realise your sales agent has actually been overpricing for the past five years?

In today’s e-commerce world, retailers, wholesalers and manufacturers in our space are becoming increasingly aware of how the shift online has created competitor pricing transparency and opportunity.

The online advantage of downloading catalogues, comparing products and hunting for the best price anywhere at any time has provided customers with infinite freedom.

Online Transparency

With hundreds of thousands of business supplies in the market, manually checking competitor pricing across a multitude of websites is impossible. This is why competitor pricing intelligence providers have created technology to collect pricing by product at a frequency that users require.

Having a dashboard sharing your price index compared with that of your competitors is having a window on the world’s market. You can dig into thousands of price points, showing how your products as well as whole category pricing compare with as many competitors as you need. And once you recognise their pricing patterns and trends, you will very likely be able to anticipate their next moves.

But it’s not just about looking at competitor pricing. The same intelligence enables you to confidently adjust your own online prices to optimally position pricing, gain sales and grow profitability. Just imagine having the intelligence to lower prices on whole categories when you’re overpriced to drive sales; or being in a position to raise prices and still be the most competitive in the market.

Think also how you could use that competitor pricing intelligence to negotiate better pricing with buyers and sellers to optimise margins. Or consider the well-established relationships that could be damaged when it’s revealed a retailer or wholesaler has been consistently overcharging.

The Risk Of Not Knowing

Failing to collect competitor price intelligence creates a host of potential pitfalls. Are we losing out on market share to competitors? Are we missing out by not offering products demanded by our customers but stocked by competitors? Are minimum advertised prices or manufacturers’ suggested retail prices being adhered to or are we seeing brands being compromised on price?

I would encourage you to think about the following: what key decisions are made using competitor pricing intelligence? Pricing data sits within three buckets – pricing, promotions and assortment – so the issues are:

• Do we increase/decrease prices?

• Can we align similar products?

• Basic ‘what-if’ modelling

• Promotional selection

• Assortment decisions

• Supplier negotiations/reduce cost prices

The next question is: how are pricing teams measured? Firstly, in terms of the percentage of products matched. Secondly, with the ‘difference-in-differences’ methodology to prove uplift validity. Incremental lift is calculated as a result of a specific pricing treatment.

When selecting a data provider, my advice would be to agree on a number of criteria, such as match rate percentage, data accuracy, competitor coverage, reputation, transition concerns and, obviously, cost of service. Then you’re set and next time you launch a new product range or investigate a dip in sales, open your competitor pricing intelligence dashboard and bingo!

Andrew Senior will be presenting at the next OPI European Forum in Amsterdam, to be held from 22-24 May 2023. For more details, visit www.opi.net/ ef2023