Are you a Manufacturer or a Brand Manager? Do you follow this school of thought – Don’t 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 – 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 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.
Whether your focus – Differentiation, Innovation, or Strategy, you cannot ignore Market Price Analysis and Competition. You do not want to lose Brand Value and thus, Price Intel and Market Analysis are critical.
When Apple first introduced the innovative and trendsetting iPhone and iPod, it could label price without much consideration of competitors. Nevertheless, Apple had to implement a Retailer Strategy, i.e., offered special incentives to retailers to maintain price within 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 product. 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 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 the behavior of consumers in purchasing decisions. It also has a psychological impact on the consumer thatsets 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 Specialty, i.e., high priced with a focus on a customer segment 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 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, 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 MAP, many manufacturers are lapse in tracking the compliance of this, which can be disastrous for channel and brand management .With today’s 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 your retailers and 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) solutions plays a key role. It helps Manufacturers and Brands Monitor MAP Violation among the sellers. 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, MAP Violators and Market Growth trends.
Many Brands and Manufacturers use these solutions to stay on their edge. If you haven’t yet, you MUST without a doubt! If you are using but are unsatisfied due to data issues, connect with a high quality Price Intelligence vendor like GrowByData to do price intelligence without working about data quality.
Contact us for more details or a demo.