Competitor Price Analysis and Monitoring: Algorithms and Tools

 With all the variety of choices on the market, the final value for a purchase is the price. That is why analyzing competitor prices is equally important for both novice businessmen and owners of large corporations. In this article, we will tell you how to monitor competitor prices, why this is necessary, and how to apply the obtained data in business.

What is competitor price monitoring

Price monitoring is the constant tracking of prices that competitors set for a product or group of products for subsequent analysis and decision-making on their own pricing. This approach allows the company to be as competitive as possible and offer customers a product at a price that is beneficial to both parties. In Ukraine, the Price monitoring services is offered by the company ua-region.com.ua.

Dozens of studies prove that, all other things being equal, the price of a product is the most important factor in making a purchase decision. Therefore, most enterprises use dynamic pricing, focusing on competitor prices.

Why is it important to track competitors' prices

In a highly competitive environment, when more than a dozen companies sell the same product, it is critical to have a competitive advantage. To do this, you need to not only monitor the quality of the product, but also the prices of your competitors. If a product in your store costs more than a similar one, and especially an identical one from your competitors, then the buyer is unlikely to make a purchase from you.

In addition, systematic price analysis allows businesses to solve a number of important problems:

• Defining direct competitors. During the monitoring process, you can identify all the main competitors, which include not only market leaders, but also less popular organizations. This will allow you to determine the circle of companies with which you will have to compete for the buyer.
• Determining demand. During the study, you can clearly determine the level of demand for the product.
• Pricing. Understanding the price of a product from competitors will allow you to determine the optimal price for it for your company, taking into account investments and expenses incurred.
• Assortment optimization. During the analysis, you can pay attention to the range of products of competitors and identify those that can be introduced or, conversely, removed from sale.
• Identifying negative factors. Monitoring the situation of competitors allows you to understand how you can improve profitability: optimize advertising campaigns or make adjustments to the sales strategy.

Monitoring methods

You can track competitors' prices in several ways:

• Manual method. It consists in the fact that data collection is carried out independently, by a separate specialist. A very simple, but labor-intensive and not entirely effective method. It is advisable to use it only in small companies with a narrow range of products. Otherwise, the data obtained will be irrelevant by the time they are analyzed. In addition, monitoring prices for, for example, hundreds of products will require a full day of an employee.
• Automatic parsing. To use it, you will need special parser programs. You can use ready-made software solutions or use software that will be written for the needs of a specific company.
• Price aggregators. These are online catalogs with profitable goods from which you can get the necessary information on the prices and assortment of competitors. However, it is worth considering that such catalogs mainly present dumping offers, and you cannot rely on the relevance of the data.
• Automatic monitoring. The most common and effective way to monitor prices is automatic. Using special programs for collecting data allows you to receive up-to-date and most complete information on prices. This approach saves time and helps to quickly make changes, responding to market conditions. At the same time, the use of programs minimizes the risk of errors.

You can get all the necessary data for analysis using the functionality of the inSales platform, which will help optimize work and analyze all the most important indicators.

Methods for finding competitors

You can search for competitors in two ways:

Relevant when you know exactly who your direct competitor is. But the method has significant disadvantages:

• limited number of competitors;
• lack of analytics for analysis;
• need to compare products in different stores.

Collecting data on specific products

Suitable in cases of high competition, when the same product is available in a large number of stores. It is used with the help of special services. The advantages include the absence of restrictions on the number of competitors with a fixed price for the service. You can also find new competitors and the ability to track similar products. The disadvantages include the lack of the ability to monitor prices on specific sites.

Comparison methods

Before you start analyzing prices, you need to decide which products your competitors will compare with yours. In other words, you need to compare a product that can be:

• Identical products. This is a series of products that have the same technical, functional, quality and performance characteristics. They must be produced in the same country and by the same manufacturer. For example, identical shirt models that differ only in color palette or baked goods of the same brand, but with different fillings.
• Similar products. These include products with similar characteristics, made from similar materials and with the same purpose. Such products can replace the compared product with minimal differences. For example, whitening toothpaste from different manufacturers or ketchup from different manufacturers.
• Differentiated products. These products have the same purpose, but differ in appearance, quality and technical parameters. In many cases, they cannot act as a full-fledged substitute. For example, lifting massagers with different functionality or cotton and wool socks.

You can monitor prices only for identical products, or for identical and similar products, or only for similar products. If you do not take differentiated products into account, you cannot get a complete picture of what is happening on the market. Also, this approach will mean that you have taken it as an axiom that the buyer is not very interested and important in the parameters of the product. That is, the analysis will be incomplete and biased. Therefore, it is necessary to take into account all three groups of goods, but differentiated products are analyzed more to expand the store's assortment.

How to track competitors’ prices

The process of monitoring competitors’ prices consists of several stages:

1. List of competitors. Initially, it is necessary to determine the group of competitors whose prices you plan to collect in the future. You need to approach the process comprehensively:

• Study search results for the types of products sold in your store. Collect organizations by key search queries.
• Study contextual advertising for the product in search engines and social networks.
• Identify stores with similar products on marketplaces.
• Analyze statistics by queries.
• Identify and analyze stores in social networks.

2. Product groups. Monitoring prices for all products in the range is a pointless and time-consuming exercise. It is necessary to track prices for products that bring in more profit. For this, you can use ABC analysis.

3. Frequency of data collection. It is necessary to collect information on price changes systematically. To do this, it is important to identify how often prices change in your niche. Depending on this, data collection can be carried out either every few hours or once a year.

4. Parsing. Before you start collecting information, you need to answer the question of how it will be done: on your own or by third-party specialists. If the range is not large and the niche is not highly competitive, then you can do it yourself. If there are many competitors and the range is extensive, then it is more advisable to resort to creating your own infrastructure for parsing.