Three Ways to Judge The Impact Of Competition On Pricing Strategy
Linda P. Morton
You need to know the impact of competition on pricing strategy i to price your product competitively. This requires comparing and contrasting your products to your competitors'.
Many criteria contribute to price. These include distribution methods, customer service, business reputation, price range, product features and target market.
But this article will primarily concentrate on the impact of competition of pricing strategy based on the price range of competitive products, their features, and target market.
To make these points easier to comprehend, I'll discuss one of my products as an example.
Impact Of Competition On Pricing Strategy: Determine The Price Range Of Competing Products
The first impact of competition on pricing strategy is the price range for similar products.
Research on competitive products will tell you the low and high prices, and the range between them.
For instance, I did some research on Amazon.com and discovered that the competition for my market segmentation book ranges from $6.95 to $159, with a median of $82.98. So I know to price my book somewhere in this price range.
Knowing the price range is just the first step in deciding on your price, you also need to consider its features and target market.
Impact Of Competition On Pricing Strategy - Determine The Features Offered By Competing Products
The second thing you need to learn about the impact of competition on pricing strategy is that price varies by features.
Every product has certain features that customers have grown to expect as standard. All products should provide these standard features. It's the additional features that distinguish your product from your competitors'.
For example, any book on market segmentation should cover basic market segmentation information, including what it is, what it does, its benefits, and basic criteria for conducting market segmentation research.
So for my book to sell, it has to provide something different. It provides detailed and thorough information on market segments that can be used by laymen to get professional results. Unlike many market segmentation books, it requires no statistics and uses a simple process. That makes it different and provides a selling feature.
Impact Of Competition On Pricing Strategy: Learn The Target Market Of Competitive Products and Go After A Different One
The third major consideration regarding the impact of competition on pricing strategy is the target market. The product's intended users determine the price for a product because some target markets will pay more than others. And you can always sell a product at a higher price if its designed for target market.
If you choose a target market not served by your competitors. and design your product to meet your target market's needs, you can charge more.
For example, most market segmentation books are written for one of three target markets: marketing students, marketing professionals, and executives of large businesses.
I've not found one that is designed for small business owners. And most are just so complicated that, even if a small business owner bought these competitive books, they wouldn't finish reading them.
Impact Of Competition On Pricing Strategy: Conclusion
By knowing the range of prices for competing products, the unique features of each, and target markets, you'll be much better prepared to price your product.
For example, my market segmentation book targets small business owners. It presents a simple process that requires no statistics so small business owners can do it themselves. In other words, it's designed for a specific target market not served by competitive products. It provides unique features, and the median of the price range is around $83. But my target market has limited resources so I decided to price it just over half the media price. Plus, it is an e-book, instead of a traditional printed book.
Just as I arrived at a good price by considering the impact of competition on pricing strategy, you can too.
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