DJ Traffic

Judging the impact of competition on pricing strategy requires that you learn about your competitors’ products and how they are similar and different from your product.

Many criteria contribute to price. These include distribution methods, customer service, business reputation, price range, product features and target market.

It would take more than reasonable article length to cover all of these. So instead this article will cover only price range, product 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: Know the Range Of Prices That Your Competitors Charge For Their Products

To determine how to price your product, do a bit of research and determine the range of prices that your competitors charge.

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.

If my book was very short or inferior, I’d price it on the low range. If it was very long and exclusive, I’d price it on the high range. But because it is 295 pages, packed with loads of research, I’ll aim closer to the middle. But before I decide on the final price, I need to consider features that most benefit potential customers and what they are willing to pay for those features.

Impact Of Competition On Pricing Strategy: Know the Features That Your Competitors Provide With Their Products

You need to know how features influence the prices of competitive products.

Now your research should go beyond core features. Customers expect all products to have core features. To get more than the minimum price, your product should provide at least one feature that makes it different from all competitive products.

For instance, if my book only provided a definition of market segmentation and other standard market segmentation information, it would be hard to sell. People expect that information so it’s not a selling feature.

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 impact of competition on pricing strategy requires knowing whom the products are marketed to. Some people are just willing to pay more for a product than other people. And all people are willing to pay more for a product especially for them.

Although your product may be similar to competitive products, you can charge more if you design it for a specific target market.

To illustrate, most competitors for my market segmentation book are written for present or future (student) marketing professionals. Some target large business managers, and a few target specific industries.

Small business owners just aren’t being served well by these competitive market segmentation books.

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 instance, I considered price range, unique features and target market in determining the price for my market segmentation book. I aimed for the median price because my book provides features not offered by competitive books. Then I adjusted that price lower because small business owners have limited income, and my book is provided as an e-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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This entry was posted on Tuesday, May 13th, 2008 at 4:21 am and is filed under Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.