Businesssexcess
5 Novembre 2019 à 13h15 - 121

Navigating retailers from reactive to proactive pricing strategies

When brands sell their products through e-commerce retailers, it might be thought that they have no good reason to monitor end-consumer online pricing tools for retailers. They did their job, in fact, and it is now the retailer's responsibility to sell the products, right? Nonetheless, there are a few reasons why e-trailer prices for their goods and their rivals should be kept in mind by brands.

Considering the competition

Producers try to understand the pressure they are going to face when building new products. Price is an important element to consider and compare, of course. Usually, brands will look at the launch prices of competing products when trying to determine the launch price of a product. However, sometimes this is not enough: after launch (usually downward) prices evolve. The prices of the competing product may have plummeted by the time the company releases its service, making the alternative non-competitive

Visualize the product lifecycle

A product's lifecycle depends on many factors such as product type, brand power, and tech obsolescence rate. Here are two examples: –clothing is usually made, shipped, sold, put on sale and replaced in about six months by a new collection–consumer electronics typically have a lifecycle of 1 to 3 years before they are rejuvenated by brants (think about how Apple updates its product lines from time to time).

Price is an important part of a lifecycle. Usually, when retailers feel the market is losing interest in a product, prices will start to be reduced.

Find out which retailers are shaping the market

While sometimes it may seem like retailers are constantly changing prices frenziedly, this madness is a method! Price changes are either constructive or reactive. A retailer may make strategic price changes if they: –find an opportunity to increase market share and decide to drop the price on a commodity, –see a high demand for a product and increase the rate to boost profitability, –assume that they have too many consumer units and discount it to avoid being left with too many unsold products.

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