How to check your price positioning in comparison with competitors?


Pricing strategy is one of the most important and, at the same time, most difficult decisions to be made by every seller. Whether your business operates offline or online, price is always an important factor contributing to successful sales. How, then, should you select the right pricing strategy? Why should you check how your products are positioned in comparison with your competitors?

What kinds of pricing strategies can be used?

The pricing strategy of a brand should be based on several factors – most importantly, on the type of the product and its target group. The pricing strategy can be defined in several ways. The most frequent strategy is the cost-oriented strategy (where you total the manufacturing costs and add a margin), demand-oriented strategy (where you try to estimate how much the customer is willing to pay for a particular product) and competitive-oriented strategy (where you set your prices by analysing the prices of your competitors). To use the last of these three methods, you will have to determine how your brand should be positioned on the market.

There are at least several methods for classifying pricing strategies. The most frequent classification is the following:

  • low pricing strategy
    This strategy is normally used for strongly competitive markets and products that are easy to substitute. The seller has low margins, choosing sales volume over high profits. The prices in this strategy are lower than the average market price.
  • neutral pricing strategy
    This strategy is used for products priced at approximately the same level as the average price on the market. The manufacturers who use it usually avoid competing through price and try to encourage the customers to buy their products by emphasising the benefits of their offering other than the price itself.
  • high pricing strategy
    This strategy is generally used for products with exceptionally high quality, which are frequently innovative and difficult to substitute. Such products include, in particular, premium and luxury goods. The prices in this strategy are higher than the average price on the market, and sellers charge high margins, frequently disproportionate to the manufacturing cost. However, they can increase the value of the product as it is perceived by the customer through appropriate marketing communication.

5 E-commerce pricing strategies to employ in your business

As we mentioned before, there is no universal strategy that would fit every business. That’s why defining your goals beforehand is so crucial. Below you’ll find the 5 most popular pricing strategies in e-commerce to implement in your e-shop.

  1. Cost-plus pricing. 
    Let’s say that you are just a beginner. You have some stock inventory of physical products that you’d like to sell with a profit, and for now, you don’t have the urge to go into details about pricing strategies. Then definitely go for a cost-plus pricing strategy! You just take the product’s production cost, add a markup, and … done. However, as simple as it is, it’s not an ideal approach, and over time, many drawbacks may show up.
    Examples: clothing and grocery stores.

  2. Competition-based pricing.
    Before building a well-known brand that you can price according to your client’s perceived value, you perhaps will mostly focus on selling. If your inventory consists of popular, easy-available products, it’s very likely you have plenty of competitors. To take the lead, monitoring them is simply a must. In that case, competitive pricing seems to be the most reasonable strategy to choose. That means your pricing will fluctuate according to your competitors’ market moves and changes. Of course, when operated manually, it’s an incredibly time-consuming and error-prone task therefore using a price monitoring tool is highly recommended. Competition-based pricing strategy is largely used by Amazon retailers.

  3. Value-based pricing.
    Have you been ever wondering why people can pay a fortune just for a scarf, a phone, or a car? It’s not because of its exceptional functionalities (well… maybe sometimes it is). What matters the most is the non-market value the product gives. This pricing strategy is extensively used in the fashion and luxury commodities industry. If your brand is strong, creates a sense of belonging to a particular community, or just fulfills your clients’ craving for an unexceptional experience, you don’t need to worry about the economics or even your competitors. The value of your product is much beyond its actual market price. Great examples are Louis Vuitton, Apple, and Starbucks.

  4. Price skimming.
    Skimming is a pricing strategy sometimes also referred to as creaming. A product is launched at a high price and is dedicated to customers with low price sensitivity. The customers are usually well-off, and they want to get the new product as quickly as possible. After some time, the price of the product decreases, and it becomes available to customers who are more sensitive to prices. The best example of price skimming in practice is Apple.

  5. Dynamic pricing.
    Finally – a perfect match for e-commerce! Running a brick-and-mortar shop is not as exposed to market rapid changes as an online business is. For many e-sellers time is money, and by “time” we mean “seconds”. While buying online what matters the most is the price – customers usually use price comparison websites to choose the cheapest retailer. In that case, even a few cents may make a difference and bring a profit or a loss. There are a few variables that have an impact on price fluctuations, yet competitors’ pricing is both the most common, and the most important one.
    Do you want to stay ahead of your competitors and win the e-commerce market? Try out Dealavo’s Dynamic Pricing features and don’t be troubled by rapid price changes anymore.





Marketing communication in the context of price positioning

Marketing communication is a very important aspect of selling and brand building. Premium products are intended for a completely different target group than economy products, which means that the methods you have to use to convince the customer to buy your products will also be different. Knowing how your products are positioned compared to the competition is one of the most important factors when planning marketing communication. Why is this knowledge so critical?

Imagine a situation where a manufacturer advertises itself as a premium brand. It turns out, however, that its products are actually the least expensive option in certain stores. This will not go unnoticed by the consumers, who may conclude that the product is worth much less than the seller would like. Through regular monitoring of your prices in comparison with the competition, you can make sure that your communications are consistent and avoid such slip-ups. It should be noted that the price positioning of brands is not constant, and it may change along with the development of the product, both to the benefit and detriment of the manufacturer. By observing price positioning, you can regularly monitor the situation and respond accordingly in order to maintain the consistency of the image of your company and its communications.

How to check price positioning? Useful tools

How to monitor prices in comparison with your competitors? One of the ways is to check the actual price positioning of the brand by using the latest monitoring tools. They offer a wide range of price monitoring options, starting from the prices of your own products as well as the products of your competition and ending with the monitoring of special offers, individual categories and stores or out-of-stocks.

For instance, Dealavo prepares reports for clients that show the market prices for the selected product categories, broken down into different price levels. Thanks to transparent summaries, containing the names and pictures of the individual SKUs and relevant price ranges, our clients can easily verify their position on the market and compare their offering with that of the competition. The Dealavo report can also be used to check your positioning not only in comparison with the entire market but also in specific stores and selected price ranges. With such a transparent summary, our clients can easily notice when the actual positioning of their brand is inconsistent with the selected communication strategy, and they can make the changes needed to maintain a consistent image.

Monitoring of online and offline prices

Although Dealavo is a platform dedicated primarily to e-commerce, you can also monitor offline sales channels. You can check which products – your company’s or  the competition’s – are available at the physical stores of the retailers.

Contact us if you would like to learn more about price monitoring. Our experts will help you pick the right solutions to effectively monitor your market and acquire the valuable data you need to improve your pricing and marketing strategy.

Use the potential of price monitoring!