how to do a competitor analysis in a competitive market?Let me know if this sounds familiar:
You’ve spent a whole day changing your prices only for your competitors to react instantly. Frustrating isn’t it? Terrifying?
I’ll let you in on a secret. Your competitors know what you’re doing! They know which products you’re changing prices on and by how much. They can even tell where you focus your ad spend!
The bigger question is how you’re using competitor data. If you’re using this data just to match your competitors’ prices you’re missing out on a huge opportunity.
Here’s a real-life example
I obtained publically available prices for 4,185 products sold by a leading veterinary retailer over a three month period. Let’s assume they’re my largest competitor.
Over the last three months, they made 2,486 price changes on 1,651 products. I can immediately see that they’re not changing prices on 61% of their inventory! This gives me an edge as I now know that I can make price changes on these products without fear of competition.
If I combine this insight with my knowledge of what is selling in my inventory, I can immediately use pricing decisions to corner parts of the market my competitors are failing to monitor.
Of these 1,651 products that they are changing the price on I can analyse the products, brands, and categories where they are changing price most frequently. From the analysis on the veterinary retailer, I can see that they’ve focussed on diet foods and supplements.
This makes sense as I know that these are high margin. I can infer from this that these products are likely to be very price competitive and I should adjust my strategy accordingly. I will need to be on top of my pricing and may need to invest more in advertising spend.
I can also see when my competitor is changing prices.
From the graph, I can see that the majority of the price changes get updated on a Friday or Saturday
I now know that if I schedule my price changes on a Sunday I will get ahead of them for a whole week. (If you’re using automated pricing you’ll be doing this automatically 😉).
I now know from this simple analysis of publicly available data I can adjust my pricing strategy to make serious gains over my competition.
Not bad for twenty minutes work! So are you doing this? If not, we can help you today!