July 21, 2016
In Part I and Part II of this series, I discussed why obtaining competitor information is an essential part of your marketing strategy and what sources are available to most businesses for gathering competitor information. In the final installment of the series, I address how to organize all the data you worked so hard to gather and use it effectively.
Organizing Your Data
Now that you have collected your competitive data, there are several ways you can gather and organize it. The method you choose mostly depends upon what resources you have available at your fingertips.
- Your best option is to implement an advanced pricing software solution. Some have the capability to include a user entry screen or import functionality added to allow this data to be captured. Once captured into a table in the software, you have the flexibility to use the data within the software in whichever manner best fits your business needs.
- You can use an outside marketing or database company to create a process for importing the data into a database in order to generate simple reports to organize the data. When I worked as a pricing manager in the tire industry I worked with a marketing company that specialized in creating databases for organizing data. We had a process established whereby the sales force would gather and send any competitor data they received (in any format) and the company would either scan or enter the information into the database. From there we could generate one of several customized reports the company created for us or filter certain data and download it into Excel for manipulation. Overall it was a relatively inexpensive investment to get a customized competitor database.
- Of course you can always use the old reliable Microsoft Excel or Access to organize your data. This may be the most economical way to gather your data, but you will most likely offset the cost with more time spent manipulating the data. There might not be extensive reports you can create, but if you pair it with Tableau, Crystal or even Google Analytics, you will be able to generate some effective custom reports. This can also be a great source for gathering the data for import into your advanced pricing software.
Up to this point we have spent a lot of time determining what data you need, how to gather it and how to organize it. One last thing you will need before your analysis can begin is a competitor product list and features that are mapped to your products so you can easily match a price on a competitor’s product list to yours. There will invariably be holes in the matching process as your competition will likely not sell every product you do and you will not sell every product they do. This is not a problem at all. From a management perspective this can be used as a deciding factor to adjust prices, or, if you believe there is room for product expansion, create a new product to compete with your competitor.
An effective analysis of competitor data starts with having a clear understanding of what you want to analyze and what your expectations are. As Stephen Covey would say, “begin with the end in mind.”
Product Comparison – Begin by selecting a handful of products within a few product groups that you want to assess. For each product, perform a product evaluation whereby you list all the features and benefits that differentiate your product from your competition. Use this information to narrow your focus on what is most important. For example, if you have a product that outperforms the competition or does not compete against another product, you may be able to command a higher price. Or perhaps your research tells you your product is lower quality but you’ve been trying to sell it at a moderate to premium price, you may need to reduce the price so it is more in line with customer price expectations.
Price Comparison – Whether you are using an advanced pricing software solution or Excel for your data gathering, being able to compare the pricing of your product to your competitor’s product is a powerful tool. In my first blog I said your pricing will always be higher, lower or equal to your competitor’s price. Now you know with good certainty which one it is. Depending on what your pricing strategy is and how your product performs compared to the competition, you can adjust your pricing in the direction necessary to achieve your strategy with a much higher level of confidence.
Pricing Opportunities – Maintaining a competitor database allows you to better respond to changes in the market. When a competitor drops their price on a particular product, having an understanding of where your competitor’s currently priced will allow you to quickly and effectively react as necessary. A competitor database also provides the opportunity to confirm your pricing strategy is established appropriately if you know where your pricing is in relation to your competitors.
Although capturing competitor data is just one tool you should include as part of your comprehensive marketing strategy, I believe it is the fastest way to make a direct impact on your pricing. Over the course of this series, I hope you have gained some insight into the importance of gathering competitor information and now have a few steps you can take to initiate this process to include it as part of your marketing strategy.