Manufacturing companies across the globe are facing challenges as the prices of raw materials are on the rise. Plants are finding it difficult to keep pace with the rising demands of the global market. In fact, the shipping and distribution costs have also increased in recent times. It is not easy for the manufacturers to move their production abroad for benefiting from lesser labor costs.
In such a scenario, it is essential for the manufacturers to optimize their prices to create significant profit margins and sync their business objectives with data-driven pricing strategies. With the help of competitive pricing intelligence software, manufacturers can set pricing strategies for their businesses. Once the goals have been set, the manufacturers can choose from various pricing strategies for meeting their business goals.
What is Competitive Intelligence?
For any manufacturing business, competitive intelligence plays a crucial role. It is the process of collecting, analyzing, and using information on the competitors for making informed pricing decisions. It helps in gaining a competitive advantage in the market. Competitive price intelligence is essential as it helps an enterprise in understanding the competitive surroundings along with the opportunities and threats. The data collected by the competitive intelligence platform helps in developing effective and efficient business practices.
Now that we know what competitive intelligence is, it is time to learn about its significance.
Importance of Competitive Pricing Intelligence in Product Marketing
As competitive intelligence helps in gathering competitor information, it helps in making excellent marketing strategies. The idea is to collect as much data as possible to find out about the strengths and weaknesses of the competitors. It enables the manufacturer to create an effective marketing strategy for achieving a competitive advantage.
Competitive pricing intelligence is an incredible process for the product marketing team. If the process is conducted well, it can help in improving the workflow and unveiling significant insights.
The right competitive intelligence tool/ software can help in:
- Identifying gaps in the market.
- Improve the product and services owing to extensive market research.
- Make data-driven and informed decisions.
- Stay ahead of the competitors.
- Support the sales team.
Competitive intelligence can help in getting answers to the following questions:
- What kind of strategy the competitors are using and how you can apply the insights for improving your strategic planning for making smart decisions?
- What kind of pattern of strategy is visible in their social media channels, product announcements, press releases, marketing messages, acquisitions and statements?
- Where are they expected to head next by continuing on the strategy?
- What actionable information you can pass on to the marketing team for improving your business strategy?
In a manufacturing business, the executive and communications team need market intelligence for delivering impeccable decision making.
How can Competitive Intelligence be used with a New Product?
The project managers should be aware of what the competitors are doing prior to the product launch. It helps in knowing the competitor’s marketing techniques and their product offerings. Online pricing intelligence can help in deriving insights on what your business should do differently for enhancing the value proposition of your product.
Competitive intelligence tools offer data that helps the sales, product development, and marketing teams for positioning the product in a better way. The marketing team can use the tools for gaining insights on the competitor’s marketing strategies which consists of digital advertising and social media content. On the other hand, the sales team can use competitive pricing intelligence for learning about market shifts, corporate acquisitions, and price adjustments made by the competitors.
Pricing intelligence tools can help a business in uncovering newer opportunities before the product launch. Manufacturers can identify the opportunities for expansion of business operations to new geographical locations and innovative new features for the product. They can also offer add-on services for beating the competitors. In fact, the sales team can identify acquisition targets when they wish to penetrate the market further after the product launch.
What is the Aim of Manufacturing Pricing Strategy?
As mentioned above, pricing intelligence tools offer insight that enables a manufacturing business to make pricing strategies. When deciding on a pricing strategy for the manufacturing company, the goal is to optimize the profits. The optimum price will be the one that is in sync with the company’s unique business objectives. It must be a strategy that enables a business to make a profit. The best price is derived from the existing market conditions and costs.
For determining the best pricing, it is to be considered that price consists of five elements which are as follows:
- The customer’s willingness to pay.
- Direct cost which is the material and labor cost.
- Manufacturing overheads.
- Non-manufacturing overheads.
- Profit margin.
Considering the above-mentioned components of the price in the manufacturing industry, one of the common strategies used is the cost-plus pricing strategy. However, the value-based pricing strategy is also becoming popular in the recent times.
Best Pricing Strategy for Manufacturing Company:
- Competitive Pricing Strategy
It is a pricing method that sets the price of the products as per the price set by the competitors for the similar products.
- Cost-plus Pricing Strategy
Also known as markup pricing, the strategy adds a fixed percentage or amount on the top of the production cost. The resultant amount is the selling price of the product.
- Value-based Pricing
Value-based pricing is a strategy that sets prices based on the customer’s perceived value of the product. It is also known as customer-focused pricing.
- Supersession Pricing
In this strategy, the once-premium product is replaced by the new model and it becomes the new premium-priced product. The price of the old product might decrease. The automobile industry is a prime example of the supersession pricing as old spare parts need replacement as they become obsolete.
To come up with a competitive pricing strategy and increase the profit margins, a manufacturing business needs to invest in a competitive intelligence tool with excellent features from a reputed company.
With the help of powerful competitive pricing intelligence, industrial supply companies can gain valuable insights into market trends, customer behavior, and the pricing landscape.
Benefits of Pricing Intelligence
When it comes to the industrial supply sector, pricing intelligence offers numerous benefits that can significantly impact a company's success.
Here are some key advantages:
Let’s discuss benefits of pricing intelligence in detail:
1. Competitive Advantage:
Pricing intelligence equips industrial supply businesses with the knowledge of their competitors' pricing strategies, allowing them to identify gaps and opportunities in the market. Armed with this information, companies can adjust their pricing models to offer competitive prices that attract customers and give them an edge over rivals.
2. Improved Profitability
By analyzing pricing data and market trends, industrial supply companies can optimize their pricing structures to maximize profitability. Pricing intelligence helps identify price thresholds, demand elasticity, and customer segments willing to pay a premium. This enables businesses to set prices that generate higher margins while remaining competitive.
3. Better Decision Making
Pricing intelligence provides valuable insights into customer preferences, behaviors, and buying patterns. Now, this information allows industrial supply companies to make data-driven decisions regarding pricing, product positioning, and promotional strategies. Further by aligning pricing decisions with customer demands, businesses can enhance customer satisfaction and drive revenue growth.
4. Enhanced Dynamic Pricing
When we say that pricing is the key, it means that with pricing intelligence, industrial supply companies can implement dynamic pricing strategies that adjust prices based on market conditions, demand fluctuations, suppliers, inventories and competitive dynamics. Additionally, this flexibility enables businesses to optimize revenue by offering personalized pricing to different customer segments, capturing value during peak demand periods, and quickly responding to changes in the market.
5. Enhanced Customer Acquisition and Retention
Pricing intelligence helps businesses understand how their prices compare to competitors and how customers perceive the value of their products or services. By offering competitive prices and demonstrating value, industrial supply companies can attract new customers while retaining existing ones. This strengthens customer loyalty and fosters long-term relationships, ultimately driving repeat business and referrals.
6. Market Insights and Forecasting
Pricing intelligence provides valuable market insights beyond just pricing. It helps identify emerging trends, customer preferences, and new market opportunities. By monitoring competitors' pricing strategies, companies can adapt to market shifts, introduce new products, or target untapped customer segments proactively.
7. Efficient Resource Allocation
Pricing intelligence helps optimize resource allocation by identifying products or services with higher profit margins. It enables businesses to allocate resources effectively, prioritize investments, and streamline operations. By focusing on high-margin offerings, industrial supply companies can allocate their resources efficiently and achieve sustainable growth.
Ignite Your Growth with Pricing Intelligence
In the fiercely competitive landscape of the industrial supply sector, pricing intelligence emerges as a game-changer for businesses seeking sustainable growth and a competitive edge. Armed with comprehensive knowledge of competitors' pricing strategies and market dynamics, industrial supply companies can make informed decisions, optimize profitability, and captivate customers. By harnessing the power of pricing intelligence, businesses can confidently navigate the ever-changing market, seize untapped opportunities, and solidify their position as industry leaders. So, don't just survive; thrive in the industrial supply realm by unlocking the potential of pricing intelligence and watch your business soar to new heights.
PriceIntelGuru is your partner in growth. Take the first step towards transcending success by booking a demo with us today!