The importance of competition and market prices

[bitheerani319]

One of the key aspects when designing a pricing strategy is to compare the value proposition with other alternatives that target customers can obtain. This means examining:

Substitute products and services
Its characteristics
Your purchasing process
It is important not to limit our vision to direct competitors, but to think sri lanka phone number list any other alternatives that customers may have. This is even more important in a general environment with a lot of disruption, as has been the case in recent years. Our advice would be to make this comparison independently of prices and, in a second step, to look at them. It only helps to focus on the value proposition and the customer experience or journey.

This work must be done in conjunction with marketing and sales. This may seem like an exercise in strategic marketing rather than strategic pricing. But again, pricing is more closely tied to marketing.

Once the customers' options have been listed, analysed and compared, the prices need to be compared. The aim is to find out which sensitivity factors may influence customers' purchasing decisions (switching costs, difficulty of comparison, expenditure, quality-price, final benefit, etc.) and their price sensitivity or elasticity.

The result of this activity should be a greater understanding of how customers decide to purchase and perceive value propositions with their price.

The difficulty here is to be as objective as possible and to truly reflect the mindset of customers. The more objective the information, the better. The main risk here is to follow what management thinks is happening in the market, rather than what is actually happening out there.