Surely if you price your products and services according to their branding, their worth, then they’ll fly off the shelves…?
Obviously, I’m playing devil’s advocate and to be more specific, obviously, this is not true. Competitor prices are what create value in your market sphere. So you have to look at them hard if you’re going to find out what you should be charging for your own product.
This doesn’t always mean you should be charging less than your competition mind. If you are positioning yourself as an upper-level entrant into a particular market sector, you should charge more than the competitor who sells mid-level products in the same sphere.
I’ll use stereo equipment as an example. Because it has distinct range definitions and I know quite a lot about it too (come round my house on a Saturday and you won’t hear silence I can tell you!).
So, stereos basically fall into three categories – entry level, mid-range, and high end. An entry level stereo is composed of components costing between £100 and £300, with speakers weighing in at between £250 and £500.
A mid-range stereo system is composed of components costing between £300 and £700. And has speakers that cost roughly £1,000 per pair.
A high end stereo may have components costing more than £1,000 each: and speakers costing at least £1,500 per speaker – so £3,000 for the pair.
Obviously in these three bands there’s quite a range of pricing going on. And obviously everyone making stereo equipment at each level wants to grab their share of the market. So how does competitor price monitoring work here?
The premium factor in any stereo purchase is sound quality. If you are not interested in sound quality you’re not buying stereo components – you buy an iPod or something like that. So its like that every single person buying this stuff wants a sound experience noticeably better than listening to MP3s or car stereos.
So the pricing strategy is to deliver sound quality at an existing benchmark, but for less (when you are an entry level stereo unit); and to deliver better sound quality, for more money, at the top end of the ranges.
Competitor price monitoring must, then, look at the price of equivalent quality stereo kit and make a decision. Drop your price or change your design to justify raising it.
One of the most popular areas of stereo design is high end entry level – the £300 per unit equipment. Up at this price range you wouldn’t traditionally expect the sound quality of an £800 unit. So the big name stereo equipment makers started coming out with stripped down versions of much higher spec stuff – delivering £800 sound quality at £300 levels.
How does this then sit with the £800 and upwards market? Now competitor price monitoring for mid-range stereo equipment must look at the branding as well as the actual quality of the £800 stuff. And the answer is that you get more sensitivity and style for your money. At least that’s what the branding tells us!
About Author: Kristina Louis is a freelance content writer by profession and write articles on behalf of Competitor Price Monitoring. Business,and Internet technology are her topic of interest and she find immense pleasure in writing article on Business.