Why Modern Retailers Need Real-Time Price Monitoring
How do customers make purchasing decisions? The answer is multipronged, but one of the more influential factors comes in the form of comparison. Consumers seek out multiple vendors and track products over time. They utilize the myriad price monitoring tools at their disposal to get a macro view of the industry in question. And then they use this context to make the most informed decisions possible.
However, this sort of due diligence shouldn’t end with the customer. Retailers that successfully leverage pricing data find themselves leagues ahead when it comes to market positioning. Hence the importance of an algorithm-fueled software that reads the room and churns out pricing strategies in real time. This is your key to staying ahead of competitors and winning over smarter consumers.
In fact, real-time price monitoring enables a wide range of possibilities for any retailer.
Set Smarter Prices. Enjoy Higher Product Margins.
For starters, price monitoring software is a helpful instrument for singling out your biggest competitors — i.e., the ones whose actions directly affect your market standing. Once you do have a solid grasp of your rivals, the challenge of intelligently beating their prices begins. “Intelligently” here meaning not simply undercutting their prices; that will only result in a destructive price war where you and your competitors set your products cheaper and cheaper until everyone is in the red.
No, you want to utilize your knowledge in a way that optimizes for customer desires, market trends, and inventory turns. What you want is a pattern of dynamic pricing, where the fluctuations of market demand are always accounted for. Think of airlines, where prices increase as take-off approaches, or Uber rides, where fares change minute to minute based on rider interest. This sort of flexibility is vital for squeezing the most out of your offers.
Dynamic pricing is far from the only strategy worth considering, however. For instance, think of how and when you set discounts and offer promotions. Doing so haphazardly is a recipe for undervalued products. But analyzing historical customer behavior to pinpoint timely price reductions? Now that’s a clever way to bring in more loyal clientele.
Suffice it to say: Price monitoring lies at the core of successfully implementing any worthwhile monetary tactic.
Use Price Monitoring to Empower Your Corporate Identity
There’s a flip side to the dynamic pricing coin: customers are turned off by inconsistency. If your prices are all over the place, you’ll end up with an unstable brand reputation. Which brings up a natural question: How do we reconcile this fact with the need for fluid prices?
As is often the case, the answer lies in maintaining balance. Tilt too far one way and you’re missing out on profit, tilt too far the other way and you’re damaging your price image. But if you can find the happy middle ground, both your pockets and brand stand to benefit.
One way to find where this balance lies for your business is by determining your unique selling proposition. With price monitoring tools, you can find the overlap between what you do better than anyone else and what your customers are willing to pay for.
The pocket of value you discover is your greatest asset. Use it to continuously shape your brand’s direction. And remember, that direction shouldn’t be based on what you want to be as much as on what customers want you to be.
Evaluate the Past, Seize the Present, and Prepare for the Future
A dynamic price monitoring approach factors in distinct layers of time. For instance, one way to tackle pricing is by learning from past hits and misses. This can entail a deep dive into your pricing history and also that of your competitors; both perspectives can assist you in structuring a better framework moving forward.
Looking back can be helpful, but nothing is quite as powerful as getting an accurate picture of the now. The beauty of tracking the market in real time is that you can respond instantly. On-the-spot analysis opens the door to on-the-spot decision making and, in turn, an unassailable leg up on lagging competition.
Armed with an understanding of the past and firm stranglehold on the present, you have all you need to predict the future. Or, if not you, then an automated end-to-end software can help. With such a solution, you can face each fork in the road of pricing and confidently gauge where each path will lead.
And with each path you take, you can use the same tool to analyze those decisions and improve upon them next time. Rinse, lather and repeat.
Final Word: Efficiency is the Name of the Game
Smart pricing isn’t simple, nor is it a one-stop shop. You don’t just stumble upon a magic price to list and — voila! — your sales are skyrocketing.
Unfortunately, the process is laborious and iterative. So that’s why we at Intelligence Node have developed programs that minimize the menial work and save you time and effort while guaranteeing accuracy. We can provide total visibility of your market and even uncover some key performance indicators that escaped your attention. Because that's how price monitoring helps you beat your competition: by making sure you’re covering bases that they’re still missing.
Sanjeev Sularia is the CEO of Intelligence Node, a real-time retail price intelligence platform that empowers businesses to drive product-level profitability and grow margins.
Related story: How Retailers Should (and Shouldn’t) React to Competitors’ Price Changes
Sanjeev Sularia is CEO of Intelligence Node, a retail analytics and AI price optimization company that offers the world’s largest retail product index. Prior to founding Intelligence Node, Sanjeev was the CFO for Exclusively.in, a fast-growing high-end fashion e-commerce site acquired by Snapdeal, and CFO for Shersingh.com, a private label e-commerce company acquired by Myntra. Sanjeev is a graduate of London Business School and a Forbes Technology Council member.