PRICE COMPARISON
Definition
Price comparison refers to the process of comparing the price of a product with that of one or more equivalent products, whether they are direct competitors, substitutes, or variants from the same manufacturer
For the distributor, this is a fundamental aspect of pricing management.
For consumers, this has become second nature, a process accelerated by online comparison tools, mobile apps, and the transparency required by certain regulations.
Why is this important to know?
- Identify pricing discrepancies: those that could damagethe brand's image or present a margin opportunity.
- Justify repricing decisions to sales and finance management using objective data.
- Anticipating consumer decision-making: Consumers can now compare products in just a few seconds on their phones, even while they're in the store.
Example
A home appliance retailer monitors the prices of 500 major products at 12 direct competitors.
The monthly analysis shows that 8% of the products are priced more than 5% above the median market price, including 23 KVI products.
For these 23 SKUs, the retailer is implementing a gradual price alignment over three weeks, while tracking changes in the volume of the “
” category. The result: a 4.5% increase in sales for the SKUs subject to price alignment, with no negative impact on the others, and a margin loss limited to 0.3 percentage points.
Common pitfalls
- Comparing a private label to a national brand without taking into account the difference in perceived value: a raw analysis skews the decision.
- Ignore promotions and coupons: A price listed at €19.99 with an immediate €3 discount at checkout is not comparable to a price listed at €19.99 (final price).
- Updating too infrequently: A price dashboard that's a month old is outdated in most categories.
FAQ
Price comparison allows companies to assess their market positioning, identify price discrepancies, and adjust their strategy in line with their competitiveness and profitability goals
It is one of the cornerstones of a data-driven pricing policy.
A reliable comparison is based on matching strictly identical or equivalent products using product chaining
. The analyses also take into account promotions, packaging, related services, and availability to avoid misleading comparisons.
The frequency depends on the industry and the level of competition
In e-commerce, prices may be monitored several times a day, whereas in brick-and-mortar retail, daily or weekly monitoring is generally sufficient for the most strategic products.
In particular, pricing teams monitor the price index, price differentials, positioning relative to key competitors, promotions, price elasticities, and margins
These metrics make it possible to accurately measure a retailer’s competitiveness in each product category.
Pricing solutions automate the collection of competitor prices, product pricing chains, and price gap analysis
They then provide dashboards and simulations that enable pricing teams to make quick, reliable decisions aligned with the company’s objectives.
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