Zen Of Internet Marketing

You need to know the impact of competition on pricing strategy i to price your product competitively. This requires comparing and contrasting your products to your competitors’.

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.

But this article will primarily concentrate on the impact of competition of pricing strategy based on the price range of competitive products, their features, and target market.

To illustrate what I mean, I’ll compare one of my products to competitive products.

Impact Of Competition On Pricing Strategy: Know the Range Of Prices That Your Competitors Charge For Their Products

The first impact of competition on pricing strategy is the price range for similar products.

Every product has a price range. For some this range is small, and for others it’s large. You may need to do a little research to determine the price range for competitive products.

For example, I have a book on market segmentation. If you search on Amazon.com for market segmentation, you’ll find many books listed from $6.95 to $159. So my book should be priced somewhere within this broad price range. The median price in this range is $82.98.

If my book was very short or inferior, I’d price it on the low range. If it was very long and exclusive, I’d price it on the high range. But because it is 295 pages, packed with loads of research, I’ll aim closer to the middle. But before I decide on the final price, I need to consider features that most benefit potential customers and what they are willing to pay for those features.

Impact Of Competition On Pricing Strategy: Know the Features That Your Competitors Provide With Their 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.

So for my book to sell, it has to provide something different. It provides detailed and thorough information on market segments that can be used by laymen to get professional results. Unlike many market segmentation books, it requires no statistics and uses a simple process. That makes it different and provides a selling feature.

Impact Of Competition On Pricing Strategy: Determine How Your Target Market Differs From Competing Products

The third major consideration regarding the impact of competition on pricing strategy is the target market. The product’s intended users determine the price for a product because some target markets will pay more than others. And you can always sell a product at a higher price if its designed for target market.

Although your product may be similar to competitive products, you can charge more if you design it for a specific target market.

To illustrate, most competitors for my market segmentation book are written for present or future (student) marketing professionals. Some target large business managers, and a few target specific industries.

I’ve not found one that is designed for small business owners. And most are just so complicated that, even if a small business owner bought these competitive books, they wouldn’t finish reading them.

Impact Of Competition On Pricing Strategy: Summary

In summary, if you research what your competitors charge for their products, what special features they offer, and whom they are targeting, you’ll gain great insight into pricing your product.

To illustrate how to use this information, I priced my market segmentation for the specific target market so I didn’t go to the high end of the price range. After all, small business owners have limited resources. Still I didn’t go to the lowest of the range because my book provides features not available with competing products. Although I know that my book has quality, I decided to price it barely half of the median price. First I wanted to price it right for my target market, and second, it’s presently sold only as an e-book.

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

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Tags: article, blog, Business, dvd, features, link, Links, Marketing, media, Products

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