Three Ways to Judge The Impact Of Competition On Pricing Strategy

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.

A lot more goes into determining a product's price than just the product. The manner and speed of delivery, the way that customers are served, and the product guarantee contribute to the price that customers are willing to pay for your product.

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.

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

You have to know how your competitor's price their products and the range between their prices.

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.

Knowing the price range is just the first step in deciding on your price, you also need to consider its features and target market.

Impact Of Competition On Pricing Strategy - Determine The Features Offered By Competing 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.

But the exact process to conduct market segmentation can differ drastically. Some processes require complicated statistical analysis that are usually conducted and understood only by marketing agencies specializing in market segmentation. Others use simpler processes that require less complicated statistics. Very few require no statistics. So ease of the market segmentation process covered in my book is a feature that relates directly to readers' benefits.

Impact Of Competition On Pricing Strategy: Know The Market That Your Competitors Are Targeting And Target A Different One

Another element in the impact of competition on pricing strategy is the target market. If you create your product for a particular group of people, you can charge more than if you create it for everybody. And if that is an exclusive group, you can charge even more. For instance the highest priced market segmentation books are written for marketing agencies. They can afford to pay top dollar for information that they can mark up to their clients.

If you choose a target market not served by your competitors. and design your product to meet your target market's needs, you can charge more.

For instance, the target market for most market segmentation books are either student or professional marketers, managers of large businesses, or businesses in a large industries.

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

Impact Of Competition On Pricing Strategy: Synthesis

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.

You can also determine the best price for your product by remembering the impact of competition on pricing strategy.

About The Author:

Discover more about pricing strategy at The Effect of Competition on Pricing Strategy. And get my DVD "Marketing Your Small Business" for just shipping. You are welcome to reprint this article - but get your own unique content version here.

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