DYNAMIC PRICING MEANS THE RETAILER IS AGILE REACTING TO PRICE CHANGES USING COMPETITOR PRICE MONITORING
It is in a general sense, the practice of keeping product prices flexible in accordance with the changing market conditions.
While computing dynamic prices for the commodities sold, retailers can keep the following parameters in mind:
1. Competitor monitoring
4. Sales objectives
7. Other internal and external market factors
The retailer can react by either setting premium prices or by adopting aggressive price cuts to compete against the competitors. The main aim of dynamic pricing is to increase profits and raise revenue levels. This is done by capitalizing on the competitor’s market stand and the prevailing conditions. Competitor availability is a key factor in dynamic reacting in pricing too. Consider an example. The absence of the competitor’s product lines in certain market segments can be seen as an opportunity to aggressively market one’s own products. This fills that gap whilst fetching great prices for the retailers. In the modern era, where e-commerce is the prevalent framework, online retailers are particularly known to adjust their prices in response to competitor pricing.
Dynamic reacting in pricing is a known phenomenon in most industries. However, it is particularly common in the electricity, entertainment, hospitality, public transport, and travel arenas. Of course, every specific industry type has its strategies of repricing their products and services, which is based on their specific needs, the market demands, and their past experience.
Price intelligence is the key technology that drives dynamic reacting in prices. For the retailer to react to the competitors, he must first monitor their market stand and behavior. Competitive price intelligence allows them to undertake this very task. This technology uses modern tools such as data mining techniques and artificial intelligence to observe competitor behavior.
Tools for everyone
Retailers can also benefit from competitive price tracking and monitoring software. These provide valuable insights into the competitive landscape in real-time. Such software can also help evaluate the strength of the pricing strategies in place. Check out Sniffie’s features and find out how you could start outperforming your competition today.
Want to learn more about pricing?
Are you keen to learn more about pricing? Head to our Pricing Academy, from there you can find our latest articles about pricing and other free resources related to pricing, be sure to check them out!