Are you a Manufacturer or a Brand Manager? Do you follow this school of thought – we as manufacturers have the freedom to set Market Price and not worry about Competition or Price Intelligence (or Price Intel)?
The answer is both Yes and No. You have the freedom to set your Market Price without consideration if you are a Market Leader that designs and manufactures unique and innovative products. Likewise, if you manufacture products like your competitors or focus on product differentiation, you still have the freedom to choose your price.
Manufacturers must monitor MAP violations and track competitors’ pricing strategies.
Irrespective of your focus – Differentiation, Innovation, or Strategy, you cannot ignore Market Price Analysis and Competition. You do not want to lose Brand Value. Thus, Price Intel and Market Analysis are critical.
When Apple first introduced the innovative and trendsetting iPhone and iPod, it could set price without much consideration of competitors. Nevertheless, Apple had to implement a Retailer Strategy and offered special incentives to retailers to maintain MAP (Minimum Advertised Price).
In contrast, Nike produces a variety of Trail Running Shoes, but so do its competitors – New Balance, Asics, Adidas, FILA, etc. Top Brands like Nike must 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 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 my Product or Brand Performance?
In a competitive market, PRICE is crucial to Product Performance. It drives consumers towards the purchase decisions. It also has a psychological impact on the consumer who makes a certain impression of the BRAND. Generally, higher-priced products are perceived as “Premium” and vice–versa.
For example, Tiffany, a luxury brand markets its products as Specialty, i.e., high priced with a focus on customers willing to pay the extra dollar. 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 Placement shifts from Specialty to Convenience.
How do Manufacturers Mitigate this?
The first instinct is to set MAP (Minimum Advertised Price) to avoid such issues. Earlier in the article, we mentioned that Apple implemented MAP, which is a good strategy. However, there’s always a catch – merely implementing the MAP is not enough! Brands must track retailers for MAP Violations. Brands must track competitors’ Pricing Strategies for similar product lines.
After implementing MAP, many manufacturers fail to properly and timely track channel and retailers’ MAP compliance. This can be disastrous for channel and brand management. With global competition, some retailers indulge in a Price War. This can be detrimental for Brand Popularity as it affects consumers’ perception and can devalue BRAND IMAGE. Not tracking retailers and competitors properly can result in a loss in R&D investment used to design and manufacture new products. Hence, manufacturers MUST monitor MAP violations and track competitors’ Pricing Strategies.
What is the Solution?
Competitor Price Intelligence (CPI) solutions play a key role. They help Manufacturers and Brands monitor MAP Violation among the sellers. The tool identifies, tracks, and analyzes related SKUs based on Product Features and Attributes that match a competitor’s product. The tool provides insightful reports on Price Trends, Competitors’ Pricing Strategies, MAP Violators and Market Growth.
Many Brands and Manufacturers use these solutions to retain their competitive edge. If your brand hasn’t yet, you MUST! If you are using a MAP compliance tool, but are unsatisfied due to data issues, connect with a high-quality Price Intelligence vendor like GrowByData to offer you competitive price intelligence and MAP monitoring.
Contact us for more details or a demo.