Are you a Manufacturer or a Brand Manager? Do you have an old school of thought?
For instance – Don’t we as manufacturers or brands have the freedom to set Market Price and not worry about Market Competition or Price Intelligence (or Price Intel)?
The answer is both Yes and No – Yes to the former, and No to the latter. You have the freedom to set your Market Price without much consideration if you are a Market Leader who designs and manufactures unique and innovative products. Likewise, if you manufacture similar products like your competitors or focus on product differentiation, you still have the freedom to choose your price.
Whether your focus is on Product Differentiation, Product Innovation, or any kind of product strategy, you cannot simply ignore Market Price Analysis and Competition. Because you do not want to lose Brand Value. Therefore, Price Intel and Market analysis are important factors.
When Apple first introduced innovative and trendsetting products namely – iPhone and iPod, it was able to label price without much consideration on competitors. Nevertheless, Apple had to implement a Retailer Strategy, i.e., offered special incentives to retailers to maintain price within the MAP (Minimum Advertised Price).
In contrast, Nike produces a variety of Trail Running Shoes, but so do its competitors – Reebok, New Balance, Asics, Adidas, FILA, Puma, etc. Top Brands like Nike need to check how top competitors are pricing for a similar line of products. Pricing too high can lead to BRAND SWITCHING while pricing too low can lead to BRAND EROSION.
Although the proliferation of the market and new technology is rewarding, it carries new challenges and complexities. Given the new trend in digital marketing and with the global surge of marketplaces and sellers, the requirement and ability to track Market Prices has become inevitable and an undeniable necessity.
As a manufacturer, the wise question to ask is –
Is Market Price affecting Product or Brand Performance?
In a competitive market, PRICE is crucial to Product Performance. It drives the behavior of consumers in purchasing decisions. It also has a psychological impact on the consumer which sets a certain impression and affects BRAND IMAGE. Generally, higher-priced products are perceived as “Premium” and vice–versa.
For example, Tiffany, a luxury brand markets its products as a Specialty product, i.e., high priced with a focus on a segment of customers who are willing to pay the extra dollar. They believe the value received is worth the price. Hypothetically, if Tiffany changes its Marketing Strategy and lowers price to target all customer segments, there is a high chance of BRAND IMAGE devaluation and Market Placement Strategy changes from Specialty to Convenience Products.
How do Manufacturers Mitigate it?
The first instinct is to set the MAP (Minimum Advertised Price) to avoid such issues. Earlier in the article, we mentioned that Apple implemented MAP which is, in fact, a good strategy. However, there’s always a catch – merely implementing or setting the MAP is not enough! Are you tracking your retailers for MAP Violations? Are you tracking your competitors’ Pricing Strategies for a similar product line?
After implementing the MAP, many manufacturers do not comprehend the need to track it which can be disastrous in the long run. With today’s scalable global market competition, retailers tend to indulge in Price War. This can be detrimental for Brand Popularity as it affects consumers’ perception and can devalue BRAND IMAGE. Not tracking your competitors properly can result in a loss in R&D investment used to design and manufacture new products. Hence, it is necessary manufacturers MUST monitor MAP violations and track competitors’ Pricing Strategies.
What is the Solution?
Competitor Price Intelligence (CPI) Tool plays a key role. It helps Manufacturers and Brands Monitor MAP Violation among the retailers. Besides, it can identify, track, and analyze related SKUs based on Product Features and Attributes that match a competitor’s product. The tool provides various intel and reports on Price Trends, Competitors’ Pricing Strategies, and Market Growth trends.
Most Top Brands and Manufacturers understand this and are already using tools to make better decisions. If you haven’t yet, you MUST without a doubt! Why not start right now, right here?
Contact us for more details or a demo.