competitive pricing strategy is a pricing policy based on the use of competitors’ prices as a benchmark to set prices. in most cases, the business come to a competitive pricing strategy after a cost-plus approach turns out to be no longer relevant. it is impossible to set optimal prices and succeed with competition-driven pricing without having a profound knowledge of the market and your position in it as a retailer. there are three main categories that market competition can be divided into: categorizing competitors makes market analysis less time-consuming and allows retailers to focus their attention in the right direction in terms of competition.
competitive product analysis is the process of evaluating your competitors’ products to find their strengths, weaknesses, and current position in the market. you need to set a usp and offer a price that your rivals can’t match. you need to examine your competitors’ products to find out the problems that the current product has. reading reviews of your competitors’ products can tell you a lot about how satisfied their customers are and what opportunities you have. use the insights gathered from your competitors’ customer reviews to enhance your product and provide a better experience to your users.
third, draw the map by plotting on a graph the position of every product in the market you’ve selected according to its price and its level of primary benefit, and draw a line that runs through the middle of the points. one way to do that is to track the relationship between prices and a product’s key benefit over time. in its simplest form, a price-benefit positioning map shows the relationship between the primary benefit that a product provides to customers and the prices of all the products in a given market. to determine that value, you must first draw up a list of the benefits offered by all the different products or brands in the market and gather data on how customers perceive those benefits. when you have identified the primary benefit, you are ready to draw a positioning map by plotting the position of every company’s product (or brand) in the marketplace according to its price and its level of primary benefit. let me illustrate the process and purposes of drawing a positioning map by returning for a moment to the challenges that motorola faced in launching the razr2. plotting prices against the primary benefit products offer in a market makes it easy to see how that market looks to customers.
then, we cover the specific aspects of your competitors that you need to consider as well as where to find more information about them. therefore, competitive analysis forms a crucial part of marketing plans to help you understand what differentiates your product or service. understand which stage of the life cycle your industry, company, or product is in to help target your marketing efforts. as you look at swot for competitors, also consider it for your own products and services. but how do you quantify the attractiveness of online and print media or innovation? you can’t be all things to all customers, just as you can’t do what your competitors are doing. companies from other geographical areas with similar products may begin to sell in your area, and former employees or managers can start their own companies based on the themes of your business.
a competitive advantage is an attribute that enables a company to outperform its competitors. it can apply to products, services, companies, management, and for the company and its shareholders. a competitive advantage must be difficult, if not impossible, to duplicate. to construct a competitive advantage, a company must be able to detail the benefit that they provide to their target market in ways that other competitors cannot. in a cost leadership strategy, the objective is to become the lowest-cost producer.