Published in: Pricing

Why deploy your competitive intelligence tool and your price optimization tool simultaneously?

In an increasingly competitive market, (e)retailers are constantly looking to adjust their positioning and optimise their prices. Price adjustments can be made along 3 axes: 

• purchase prices, 
• competition 
• consumer price sensitivity. 

It’s clear that you often turn first to a competitive intelligence tool. 

Why would you do this? To better understand your market position. 

The price optimization tool is often considered later, for several reasons: 

• the need for automation is low (because you limit yourself in terms of scope, frequency or granularity),  
• lack of maturity, 
• lack of budget, 
• availability of IT resources.

Yet adopting these two tools simultaneously can offer you significant advantages and accelerate your learning curve!

This article explores this complementarity and explains why it’s essential to integrate them simultaneously.

Focus on pricing maturity and implementation costs

Many of you feel that you are not ready for a pricing optimization project from the outset, due to two constraints:

• A maturity constraint  
• A cost constraint

The sequential deployment approach (competition then optimization) is sub-optimal, and combining these tools from the outset is far more beneficial to your business.

The limitations of a competitive intelligence tool on its own

A competitive data collection tool, by itself, offers an instant view of your position in relation to the competition, enabling you to assess your place in the market. Such a tool allows you to calculate your unweighted price indices, nevertheless such a calculation has several limitations: 

• Index accuracy: 

Indeed, without weighting, your price index gives you an incorrect view of your price positioning in your market, and may mislead you in your decision-making.

• The actionability of data

Without large-scale actionability, competitive intelligence data is of very limited value. It’s important to bear in mind your ability to update prices, in order to correlate this with the frequency with which you crawl your competitive intelligence data.

For example, if you only have the possibility of changing your in-store prices once a month, because you are not yet equipped with electronic labels, you need to synchronize the frequency of your competitive intelligence data collection to ensure that your data is as up-to-date as possible.

What’s more, implementing a competitive alignment approach requires a very good command of margin optimization elements (purchase price, SRP, etc.). It also requires mastery of price corridor management (min & max) and range consistency for each reference.

• Matching

It is also extremely important not to overlook the importance of matching. Without quality matching, the data collected cannot be put to good use.

For example, knowing your competitors’ prices without being able to adjust yours reactively and strategically can leave you vulnerable to rapid market changes. The absence of a price optimization tool to interpret and act on your prices risks locking you in and preventing you from maximizing your margins and competitiveness.

What are the advantages of combining a price optimization tool with a competitive intelligence tool?

Simultaneously integrating a competitive intelligence tool and a price optimization tool not only accelerates your growth curve, but also ensures consistent management of your product ranges, margins and prices. 

Accelerate and automate data activation

By integrating a competitive intelligence tool with a price optimization tool from the outset, you can accelerate your strategic progress curve thanks to two complementary functionalities: 

• Definition of your competitive alignments
• Margin control (PA, SRP, etc.)
• Price index control (through better management of your price corridors)
• Granular management of range consistency
• Rapid identification of crawl errors 

This enables you to reach maturity more quickly by combining market insights with concrete actions.

Work on granular consistency and business impact

The synergy between the two tools enables consistent management of product ranges, margins and prices after alignments. What’s more, it also allows you to think about weighted indices! Not only can you understand your positioning, but you can also adjust your prices in real time to stay competitive while maximizing your margins.

As you can see, deploying effective and consistent price optimization requires mixing multiple data points (transactions, margin, catalog) and, consequently, requires automation that only a pricing tool can offer.

How can we overcome the obstacles to implementing a joint pricing optimization & competitive intelligence project?

Thanks to numerous discussions with our prospects and customers, we have identified 3 main constraints that hold you back from implementing such a project:

“I lack pricing maturity”.

It’s undeniable that it’s important to start with simple things. And competitive intelligence is simpler than price optimization. Nevertheless, it is possible to start by implementing simple management rules on a pricing optimization tool, prioritizing actions without complexity, so as to take advantage of the tool’s modular capabilities. As you go along, you’ll be able to refine the granularity and complexity of these approaches as you progress.

Coupling the two tools can accelerate your progress, save you a lot of operational time (thanks to task automation) and increase your maturity on pricing topics. In fact, this type of project allows you to benefit from high-performance tools and expert support. As a result, you’re better equipped to navigate a complex competitive environment and boost your market performance.w

“I don’t have the budget for both tools at once”.

It’s true that an initial investment in a pricing tool can seem costly. However, measuring the ROI of a pricing tool is possible and even relatively simple with a tool like PricingHUB.

The question is how to calculate the ROI of the collection tool alone. On its own, it’s not possible to calculate an ROI; on the other hand, a pricing tool can make a global case for return on investment, including both competitive intelligence and price optimization.

“My IT teams don’t have the bandwidth for such a project”.

Working on an integrated project simplifies management and resource requirements. A global “collection + optimization” project can be handled by a single contact, and the integration of the collection data into the tool can be automated without requiring any intervention from your IT.  In this sense, PricingHUB works with several partners to facilitate implementation, and we ensure connectivity between us, requiring little effort on the part of your IT team. 

What are the real benefits of this synergy?

We have identified 3 main advantages to implementing both tools simultaneously.

 Adjust the cost of competitive intelligence data

Gradually, during implementation, you will be challenged on a number of strategic issues, including data collection. Indeed, the implementation of a pricing tool will lead you to a better definition of your competitive intelligence needs, enabling you to identify the information you really need to optimize your prices, and the frequency with which you need it.
You’ll then be able to invest in the right place, according to your strategic needs, your technical capabilities and your requirements linked to the operationalization of your price optimization strategy.

Ensuring ROI from your pricing tool 

A good pricing optimization tool demonstrates its return on investment by improving margins and increasing competitiveness. It’s as simple as that.

Simplify your IT project

Integrating the two projects from the outset reduces the complexity and effort required to manage two separate systems. As they say: two birds with one stone!

The complementarity between a competitive intelligence tool and a price optimization tool is undeniable for retailers and e-tailers seeking to maximize their competitiveness and profitability. Rather than considering these tools as separate steps, it is far more effective to adopt them simultaneously. This integrated approach not only enables us to understand the market, but also to act proactively and strategically.

To discuss this with our experts, please contact us here !