If you wondering how to price your products accordingly across different categories, the Omnilytics fashion retail data platform provides a solution to help you identify the right pricing structure for your offerings by review your competitor’s pricing strategy across different categories. Find out how in this article.
Reviewing the competitor’s pricing strategy across different categories helps brands benchmark against the market to optimise prices for different categories/subcategories. Brands are able to determine the market’s perceived value for specific products by analysing their competitors’ good-better-best pricing ladder.
This can be done every month, quarter, half a year, or season. The frequency also depends on your brand’s segment. Fast fashion brands need to constantly stay on top of their competition with regular reviews to price match and stay competitive.
We recommend reviewing your competitor’s pricing strategy by category on a regular basis so that you are up to date with the pricing structure adopted by your competitors.
The analysis can be performed according to your preferred timeline. In this example, the timeline chosen is from 1st May 2020 to 31st July 2020.
The products’ stock status can be filtered depending on your analysis goal. When reviewing the pricing of new product launches, we recommend filtering by “New In”. Alternatively, you can choose “All” if you would like to look at all available products by the retailer during the timeline selected. This depends on your goals, whether to look at changes in the price points for the category at different points of the season or overall products carried by the retailers.
Step 1: Understand the pricing sweet spot by category
Use the Product Analysis: Price Analysis section on the Competitor Benchmarking module to view the median price for each category. This is particularly important when launching a new category to establish the price difference compared to other categories.
If your usually products are dresses and now want to stock tops, analyse the difference in median price to determine the market’s perceived value for the new category. For example, tops are usually priced lower (approx 20-35% lower) than dresses, which must be considered when pricing a new category.
Next, analyse the competitor’s price spread. Price spreads represent the sweet spot or product price points from 1st to 3rd quartile for the retailer. When compared against your price spread, it indicates your price positioning in the market, which is an important factor to consider to stay competitive.
Step 2: Compare Good-Better-Best pricing with levels of fashionability
Last but not least, view the assortment for each price bracket by clicking into anyone. This is useful to identify white spots as well as understanding retailers/brands Good-Better-Best pricing structure. Establish the price points for core, fashion and high fashion products for the competitor and compare that with your existing product offerings within each of these levels of fashionability.
Further deep dive into subcategories for more granular analysis. With this analysis, you can ensure that your products are priced right for the market and be alerted of pricing architecture and strategy changes to stay competitive.
Step 3: Review sell-out performance of pricing structure
By selecting the ‘Sell Out Rate’ filter on the Price Breakdown card the sell-out rates for each price bracket will appear under each one. This feature allows you to track brands or retailers’ sell-out rate for different price points within any category. The high sell-out rates for the lower-priced products across different categories in this example shows the market acceptance value and customer buying behaviour.
Reviewing your competitor’s pricing strategy provides insights on setting right prices that will align with market perception. Brands can spot opportunities to tap into and avoid underpricing or overpricing products when informed of in-demand prices.
Key questions to consider are “Which category price interval holds a high sell-out rate?”, “What is the category’s sweet spot price interval?” and “What is the Good-Better-Best pricing ladder for each category?”.
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.