Today’s Connected Consumers are increasingly price sensitive. According to our FutureBuy 2016 study, 58% of shoppers compare prices in different stores and more than a third (39%) use price comparison and discount websites. Consequently, promotional activity is intensifying as retailers and manufacturers battle to attract consumers with better deals. It is therefore vital that your pricing strategy is perfectly pitched.
Defining and optimizing your pricing requires ongoing investment to ensure you are a) attracting buyers and b) securing your profit margins and brand positioning. You therefore need to continually monitor pricing dynamics and promotions across all channels: in-store, online and in print (ads, circulars, all relevant retailers and publications).
Reviewing pricing strategies doesn’t necessarily mean price drops. It might be that, within the context of the market, your products are undervalued. You could not only be missing out on valuable margin, but also negatively impacting your brand positioning in the eyes of your target customer. A small increase in your price could have a significant impact, so this analysis can be hugely rewarding. In a recent project, we helped our client recognize that the strength of its brand justified higher price points. As a result, it claimed back valuable margin from its competitors. However, pricing that is too high could cause deal-seeking consumers to look elsewhere, so it’s important to find the sweet spot that is just right for consumers.
Managing price erosion
Price erosion is a sometimes unavoidable part of the product lifecycle, but manufacturers and retailers that have the ability to track both their online and offline pricing are better equipped to slow down unwanted price drops and ultimately maximize their margins. Spotting price erosion early, before the price becomes set at that level, allows brands to be able to react to the correct market activity so they can bring back the highest ROI from their promotions.
A competitive advantage
With an overview of pricing, you can answer questions such as what is my product’s daily market price (advertised/promoted)? Is my pricing policy being followed? Is my pricing right for my audience – not too high, or low? What’s the ideal price gap between my product and that of my competitors?
Crucially, we can help you track your pricing right down to an SKU level across the entire length of the customer journey. You can also combine this intelligence with Point of Sales Tracking data to determine the real return on investment of your pricing strategy.
With these tools and techniques, you can fine-tune your pricing across all channels to optimize your brand positioning, and maximize your sales and profit. It’s a key tactic in your strategy to conquer the connected shopper.
James Rudd is a Business Developer at GfK. He can be reached at James.Rudd@gfk.com.