Enough of the general-topic ‘Strategy Articles’ already!
This piece introduces a five-part series on the tactics to develop and use a successful online pricing strategy. Let’s start by covering what our series will not provide: a lot of useless information. That’s well covered already—
Pricing strategy discussions—do these seem a bit over-generalized these days? (They do, to us.) Last week we counted the number of pieces posted across the mainstream Internet channels for our industry. Eight separate articles—on the topics of online store pricing strategy, competitive pricing strategy, etc. As we studied each piece, we noticed surprising similarities: obvious concepts were presented as if they were great revelations, but nothing of implementable nature was discussed or suggested. One topic example: ‘be careful of MSRP—it might be too high’. A second: ‘competitor prices will change! Be ready to act!’ Right—got it; then we walked away from each read without one piece of solid, actionable advice.
In our upcoming five-part series, we will describe and discuss real-life steps to move from competitive price-change strategies, directly into the desired outcome: actual improvement in margin and profit. Many of our perspectives will come through experience in the industry. (Prior to our transition into the Competitive Pricing Intelligence Software business, we owned and operated a seven-figure online retail store.) The following summarizes the weekly topics we will cover, and as we move through each of these, we have stories to share:
- Development of High-Performance (Competitive Response) Financial Model
1st Step: Define your price change / profit change financial analysis strategy
Develop a financial model that accurately predicts what you will make (and need to make)
- The (Usually) Missing Step: Practice Price-Change Response Scenarios
2nd Step: Practice a scenario or two: ‘Next Wednesday, this happens…’
Run manual response-simulations to a competitor’s price change (up, and down)
- Game-Changing Software Solutions for Competitive Price Information Analysis
3rd Step: Competitive Pricing Business Intelligence Software
Understand how leading-edge computer software can let you know what the competitors are doing
- Implement and Test a Software-Assisted Price Chance Response
4th Step: Implement your competitive pricing intelligence solution, but start modestly
Practice the using the technology on a few key pricing decisions
- Replicate Success: Proliferate Your Pricing Strategy Technology System
5th Step: Expand your competitive pricing strategy system
Implement the 80/20 rule for expanded system use
As this article series unfolds, we will offer a unique opportunity for you to participate in the development of your own competitive pricing success; otherwise said: we are going to give you ‘business assignments’ to complete. Yes—really—we will suggest you engage in working assignments. In net: these actions will step you through not only the development of a pricing strategy, but take you to the end-point: development and use of a tactical pricing response system to improve your margin and profit.
Therein lay the key words: use of a Tactical Pricing Response System. The end-game of margin and profit success is not won with a ‘strategy’. Success comes—perhaps we should say success only comes—when tactical pricing responses are both possible and correct. Bottom line: in our upcoming series, we present steps and suggested actions to build a tactical pricing response system.
Another aspect of last week’s eight articles: they were written without a focus toward a specific readership. Hard to do? Yes—we understand: there are incredibly diverse business profiles in our industry. Small, medium, high—volume ventures. Commodity-item stores; specialty-shops; chain stores; online-only—and the list goes on. For purposes of focus and applicability: we will gear our content and suggested steps for a specific body of readership.
So—which group of online retailers will we write toward? Answer: the online store owners who are not (yet) successfully implementing a tactical pricing response strategy. Ok—fine—we admit it—that was a bit literary subterfuge; we understand everyone is looking for a special, sure-to-work Magic Pricing Strategy. We have news to share, and we all know this anyway: There is no Magic Pricing Strategy. Darn it.
There is a manna of competitive pricing success, however. (Well, we should say there is a mantra of competitive pricing success.) Implement the correct tactical pricing response system—not a strategy; a response system. In the upcoming articles, we will walk through five steps in sequence. With these five steps, you can define a real-life (and actually useful!) tactical pricing response system. The end-result of your effort: you will have the foundation necessary to make competitor price-change responses—with best advantage.
But between now and the publication of our next article—we have an assignment for you:
Have a great week and sell well!