Calculating competitive analysis & Preparing

Price Strategy
The competitive analysis is a statement of the business strategy and how it relates to the competition.
The purpose of the competitive analysis is to determine the strengths and weaknesses of the
competitors within your market, strategies that will provide you with a distinct advantage, the barriers
that can be developed in order to prevent competition from entering your market, and any weaknesses
that can be exploited within the product development cycle.

A competitor analysis is to identify the current and potential competition.

The first is to look at the market from the customer's viewpoint and group all your competitors by the
degree to which they contend for the buyer's dollar.

The second method is to group competitors according to their various competitive strategies so you
understand what motivates them.

Through your competitor analysis you will also have to create a marketing strategy that will generate an
asset or skill competitors do not have, which will provide you with a distinct and enduring competitive
advantage. This is a scale that lists all your major competitors or strategic groups based upon their
applicable assets and skills and how your own company fits on this scale.

Competitive strategies usually fall into these five areas:

1. Product
2. Distribution
3. Pricing
4. Promotion
5. Advertising

Many of the factors leading to the formation of a strategy should already have been highlighted in
previous sections, specifically in marketing strategies. Strategies primarily revolve around establishing
the point of entry in the product life cycle and an endurable competitive advantage.

Preparing Price Strategy

Pricing is one of the classic “4 Ps” of marketing (product, price, place, promotion). It’s one of the key
elements of every B2C strategy.

There are many factors to consider when developing your pricing strategy, both short- and long-term.
For example, your pricing needs to:

 Reflect the value you provide versus your competitors

 Match what the market will truly pay for your offering
 Support your brand
 Enable you to reach your revenue and market share goals
 Maximize your profits
Pricing Strategy Key Concepts & Steps

It’s best to define your positioning, create your brand strategy, and identify your distribution channels
before you develop your pricing strategy in the marketing plan. By doing so, you’ll ensure that your
pricing reflects your value and reinforces your brand.

 Match your pricing strategy to your value proposition

Your price sends a strong message to your market – it needs to be consistent with the value you’re
delivering. If your value proposition is operational efficiency, then your price needs to be extremely
competitive.

 Understand your cost structure and profitability goals

Companies calculate these costs differently, so verify the exact calculations your company uses for

 Cost of goods sold (COGS): the cost to physically produce a product or service
 Gross profit: the difference between the revenue you earn on a product and the cost to
physically produce it.

 Analyze your competitors’ prices

Look at a wide variety of direct and indirect competitors to gauge where your price falls. If your value
proposition is operational efficiency, evaluate your competitors on a regular basis to ensure that you’re
continually competitive.

Determine price sensitivity

A higher price typically means lower volume. Yet you may generate more total revenue and/or profit
with fewer units at the higher price; it depends on how sensitive your customers are to price
fluctuations. If they’re extremely sensitive, you may be better off at a much lower price with
substantially greater volume.

After Designing Your Pricing Strategy

Once you’ve finalized your pricing strategy in the marketing plan, it’s time to design your marketing
campaigns.