Promotion and discounts are an inevitable part of a business, especially during volatile times. Heavy discounts are activated by large retailers to get more cash, while smaller retailers follow up with similar acts to be relevant in the market. Retailers and brands have to be aware of the repercussions of discounting, thus raising the importance of launching a discounting strategy with low impact on brand image.
Competitor discounting strategies can be understood further by looking into external data insights from the Competitor benchmarking module.
Step 1: Establish the goal of your analysis
Having a clear goal of your analysis sets the direction for optimum data insights. Your top competitor list could be derived accordingly to your goal and this helps in streamlining the analysis to be targeted towards similar customer preferences and performance.
In this example, the goal is to identify the optimum discount range for my products to drive strong sales conversion.
Step 2: Understand macro-view of competitor discounting strategy
Under the ‘Overview’ tab in the Competitor Benchmarking module, look into the Average Discount % and First Discount to understand the discounts offered by competitors and intensity of discounted products launched within the period and its comparison vs previous period.
In this case, it is observed that competitors have decreased discounts, given in this quarter at 31% with lesser SKUs being discounted (-9% vs Feb till Apr).
Step 3: Analyse category/subcategory discounting strategy
Head over to ‘Product Analysis: Discount Analysis’ tab to understand discounting strategy by category/subcategory.
Discount breakdown by category for respective retailer/brand is available to view under the ‘Price Breakdown by Retailer’ card. Click on the ‘Sell Out Rate %’ card filter to view the sell-out rate % for each discount range for each category and retailer/brand.
Taking Tops category as an example. Expand Tops selection to view a breakdown of subcategories discount breakdown and sell out rate %. A complete list of subcategories offered by competitors selected will be displayed under this card.
The top row, ‘All retailers’ section acts as a benchmark for product SKUs and sell out rate % comparison among competitors to identify the best performing discount for each category/subcategory.
Step 4: Understand market demand towards discounts offered
Understand each category/subcategories discount distribution by comparing their Average Discount % range. Insights gained from the Average Discount % refers to the discount range target customers are most responsive towards. For example, it is observed that Crop Tops registered a wider spread of discount range from 10% to 49% in comparison to Tops average discount range of 20%-49% range. This depicts more flexibility in curating discount mechanics for Crop Tops, taking into consideration the product attributes and initial price points.
The intensity of SKUs offerings is identified by the size of the circle under each discount range.
Next, cross-compare subcategories sell-out rate % vs respective category sell-out rate % to identify the most reactive discount range.
This step is crucial as it weighs both supply and demand of the subcategories by referring to SKUs offering and sell-out rate % performance.
The sell-out % for each discount range differs despite similar SKUs offering for Crop Tops range between 10% to 49% discount. Taking Crop Top as an example, it is observed that Crop Tops at 10-19% discount range outperform total Tops category with higher sell-out % (53.1% seen in Crop Tops vs 52.9% seen in total Tops category). This reflects the optimum discount to explore while curating a tactical promotion for this category.
You could expand the ‘All Retailers’ tab under Crop Tops to understand further the different discounting strategy adopted across competitors.
Additionally, you may click into respective retailers/brands section of the same discount range to understand further the product differences between retailers should they act as an influencing factor in formulating their discounting strategy.
Identifying the optimum discount range for each category and subcategories by benchmarking against competitor discounting strategy promotes a conscious discounting strategy activation for your brand. The sell-out rate % insights help you further in effectively formulating optimum discounts relevant to market stance.
Hope you found this article helpful! If you have any questions or would like to explore the Omnilytics dashboard further, feel free to reach out to your respective Client Success Manager.