Are you a Brand Manager at a Manufacturer or a Retailer? Do you follow this school of thought – we as a manufacturer have the freedom to set Market Price and not worry about Competition or Price Intelligence?
The answer is both Yes and No. You have the freedom to set your Market Price. You don’t have to worry if you are the Market Leader that designs and manufactures unique and innovative products. Likewise, if you manufacture products like that of your competitors, or produce differentiated products, you still have the freedom to choose your price.
Manufacturers must monitor MAP violations and track competitors’ pricing strategies.
Irrespective of your strategy – Differentiation & Premium, or Value, you cannot ignore Market Price Analysis and Competition. You don’t want to leave money on the table. Hence Price Intelligence and Market Analysis are always critical.
When Apple first introduced the trendsetting iPhone and iPod, it could set the price without much consideration of competitors. Nevertheless, Apple offered special incentives to retailers to maintain MAP (Minimum Advertised Price).
In contrast, Nike produces a variety of Running Shoes, but so do its competitors – New Balance, Asics, Adidas, FILA, etc. Top Brands like Nike must always understand how top competitors are pricing similar products. Pricing too high can lead to BRAND SWITCHING, while pricing too low can lead to BRAND EROSION.
Although capabilities to rapidly produce and distribute new products is rewarding, it carries new challenges. Given growth in digital marketing and the global surge of marketplaces and 3rd party sellers, the ability to track competitive Market Prices is a vital necessity.
As a manufacturer, you must ask 3 key questions –
1. Is Market Price affecting my Product or Brand Performance?
In the competitive market, PRICE is crucial to Sales Conversion. It drives consumers towards the purchase. It also has a psychological impact to the consumer on BRAND impression. Generally, higher-priced products are perceived as “Premium” and vice–versa.
For example, Tiffany – a luxury brand – markets its products as Specialty. It targets customers willing to pay the extra dollar for the premium brand products. These consumers believe the value received is worth the price. Hypothetically, if Tiffany changes its Marketing Strategy and lowers prices to target all customer segments, there is a high chance of BRAND IMAGE devaluation, and the brand’s market perception will shift from Specialty to Convenience.
2. How can I proactively monitor my prices vs competition?
The first instinct is to set MAP (Minimum Advertised Price) to avoid such issues. Earlier in the article, we mentioned that Apple implemented MAP. However, there’s always a catch – merely implementing MAP is not enough! Brands must track retailers for MAP compliance and catch MAP Violations. Similarly, brands must track competitors’ pricing strategies for similar products.
After implementing MAP, many manufacturers fail to properly and timely track retailers’ MAP compliance across channels. This can be disastrous for channel and brand management. With global competition, some retailers engage in a Price War. This can be detrimental for the Brand as it negatively affects consumers’ Brand perception. Not tracking retailers and competitors effectively can result in the loss in R&D investment used to design, manufacture and brand the new products. Hence, manufacturers MUST monitor MAP violations and track competitors’ Pricing Strategies.
3. What solutions can I use to monitor my product’s market price?
Competitor Price Intelligence solutions play a key role in tracking, monitoring and enforcing reseller activities.
Competitive Price Monitoring tool helps Manufacturers and Brands monitor MAP Violation among sellers. It identifies, tracks, and analyzes related SKUs based on product features and attributes that match a competitor’s product. It provides insightful reports on Price Trends, Competitors’ Pricing Strategies, MAP Violators, Channel Management and Market Growth.
Additionally, it detects non-compliant sellers that are selling a brand’s products and hints at potentially fraudulent products hitting the market. If a brand has strict policies against selling in a channel like Amazon or eBay, it flags when a reseller is selling in these unauthorized channels. It flags when a brand’s products are sold by resellers that have low reviews, potentially tarnishing a brand’s image.
Many Brands and Manufacturers use Competitive Price Intelligence solutions to retain their competitive edge. If your brand doesn’t yet use this solution, you MUST! If you are using a MAP compliance tool, but are unsatisfied as you are not trusting the data of your price intelligence tools, connect with a high-quality Price Intelligence provider like GrowByData to offer you competitive price intelligence and MAP monitoring software.