What To Know About The Impact Of Competition On Pricing Strategy
You can determine the impact of competition on pricing strategy by determining how your competitor’s products compare to yours.
Many criteria contribute to price. These include distribution methods, customer service, business reputation, price range, product features and target market.
However, this article will not cover all of these. It will instead concentrate on just three: the price range, the people who are expected to buy the product, and the features that the product provides that competitive products do not.
In order to demonstrate these three ways of judging the impact of competition on pricing strategy, I’ll use one of my products.
Impact Of Competition On Pricing Strategy: Learn The Price Range Of Competitive Products
You have to know how your competitor’s price their products and the range between their prices.
Knowing the price range of competitors’ products will help you to determine what you should charge for yours.
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.
You need to discover the price range of your competitor’s products as you determine your price. Whether your price should fall on the low or high side of the price range for competitive products depends upon your product’s features compared to your competitors’. It’s also influenced by your target market.
Impact Of Competition On Pricing Strategy: Know the Features That Your Competitors Provide With Their Products
The second thing you need to learn about the impact of competition on pricing strategy is that price varies by features.
Each product has certain features that customers have grown to anticipate as standard. All products should provide these standard features. It’s the additional features that distinguish your product from your competitors’.
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 easy 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.
Although your product may be similar to competitive products, you can charge more if you design it for a specific target market.
For instance, the target market for most market segmentation books are either student or professional marketers, managers of massive businesses, or businesses in a massive industries.
Small business owners just aren’t being served well by these competitive market segmentation books.
Impact Of Competition On Pricing Strategy: Conclusion
Once you know the price range of competing products, the extra features offered by each, and the target market for each, you will have a much superior idea of how 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 very special 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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