As an e-commerce company in a competitive market, finding the right pricing strategy and positioning yourself correctly can be challenging. You must define your competitive advantage to set the right product prices to determine which pricing strategy is right.
Pricing is one of the most important factors affecting your profit and revenue. In this blog post, we will look closer at how you can use your competitors' data to optimize your pricing strategy and gain a competitive advantage. But first, let's dive into what a competitive advantage is.
Porter's Generic Strategies finds your competitive advantage
A competitive advantage is the key to standing out in a competitive market. As a company, you can achieve this advantage by either delivering the same value as your competitors at a lower price or offering differentiated value at a higher price.
Michael E. Porter developed the Generic Strategies model, identifying different strategic archetypes. These archetypes explain how you, as a company, can gain a competitive advantage. You can either focus on having the lowest costs or differentiate yourself from your competitors by charging a higher price for your product. When defining your competitive advantage as a company, it is also important to consider your target audience. Do you want to appeal to a broad or narrow audience?
Use your low costs as your competitive advantage
A low-cost leadership strategy involves minimizing costs throughout your value chain. This can be achieved through efficiency improvements, cost control, and economies of scale. By reducing costs, you can offer competitive prices to your customers while maintaining a reasonable profit margin. This strategy often appeals to a broad target audience as it competes on price.
Use differentiation as your competitive advantage
A differentiation strategy involves creating unique and valuable products or services that differentiate you from your competitors. This can be achieved through innovation, quality, design, customer service, or other differentiation parameters. You can differentiate yourself from competitors by offering something unique and commanding a higher price. Differentiation is suitable for appealing to a narrow target audience willing to pay extra for special features or benefits.
How to identify the right competitor data to track
In today’s data-driven world, you have access to an overwhelming amount of competitor information. But not all data is equally valuable. To truly gain a competitive edge, you need to focus on the right metrics that directly impact your market position and pricing strategy.
1. Pinpoint your key competitors
Before you begin data collection, you can start by identifying who your real competitors are. These typically fall into two categories:
Direct competitors: businesses offering the same products to the same target audience.Indirect competitors: brands selling similar products but positioned differently in the market (e.g., premium vs. budget alternatives).
By tracking both, you can spot pricing gaps, emerging trends, and potential threats before they impact your sales.
2. Focus on the most impactful data points
To make your competitor tracking truly valuable, prioritize these key data points:
Pricing & promotions
Price is one of the biggest factors in a customer’s purchase decision. Monitoring competitor pricing trends, discount strategies, and dynamic pricing changes allows you to adjust your strategy and stay competitive.
Stock availability
If a competitor runs out of stock, you have a golden opportunity to capture their potential customers. Keeping an eye on competitor inventory can help you decide when to increase prices or push promotions.
Product assortment & new arrivals
Are your competitors expanding their product catalog? Tracking their new arrivals and assortment changes helps you anticipate shifts in customer demand and ensure your own selection stays competitive.
Customer reviews & ratings
Competitive intelligence isn’t just about pricing. Analyzing customer reviews on competitor products can reveal common complaints or unmet expectations insights you can use to improve your offerings and marketing strategy.
3. Track trends, not just snapshots
One mistake many make is focusing only on one-time competitor data instead of long-term trends. A single price drop might not mean much, but if a competitor consistently undercuts your prices, it could indicate a bigger shift. Looking at historical data helps you identify patterns and make strategic adjustments before they affect your bottom line.
4. Leverage automation for real-time insights
Manually tracking competitor data is time-consuming and inefficient. Automated pricing intelligence tools help you collect and analyze data in real-time, so you can make faster, smarter decisions without the endless spreadsheets.
How PriceShape helps
Manually tracking competitor data takes time, and relying on outdated information can cost you sales. PriceShape automates the entire process, giving you real-time insights into competitor pricing, stock availability, and product assortment—all in one easy-to-use dashboard.
Instead of guessing when to adjust your prices, you can set up automated alerts and access historical pricing trends, allowing you to act at the right moment. With dynamic pricing capabilities, you can optimize your strategy to increase sales and profitability, all without constantly monitoring the competition yourself.
By focusing on the right competitor data and leveraging the right tools, you can stay ahead of the market, make informed decisions, and turn pricing intelligence into your competitive advantage.
Harness your competitors' data
So how do you leverage your competitors' data for your competitive advantage?
You need to utilize your competitors' data. How do you do that? By monitoring and analyzing their prices. By gathering this information, you can set your prices based on the competitors' pricing levels.
This data particularly benefits those utilizing Michael E. Porter's low-cost leadership advantage. A competitor-based pricing strategy is often employed where competitors' actions determine prices. Dynamic pricing is valuable in a rapidly evolving e-commerce world as it allows you to track market trends and respond quickly.
Price data, however, is one of many relevant factors in your pricing strategy. You can also examine inventory levels for yourself and your competitors. Collecting this data gives you insights into who is best or worst positioned regarding product availability. For example, suppose there is high demand for a product, and you have sufficient stock while your competitors have limited stock. In that case, you do not need to lower the price as you are the most competitive since you have the item ready for the customer.
The same applies to the opposite situation. If you notice a product has been in stock for a long time without being sold, offering a special price would be beneficial as demand has decreased, and you are losing money by storing it without prospects of long-term revenue.
How do you find this data?
It can be challenging to collect this data manually as your competitors constantly update their data. Our tool, PriceShape, is designed to help you gather competitors' prices and inventory status if this information is available. All this information is updated daily, ensuring you always have the latest data.
With this data, you can create pricing strategies tailored to your products. These strategies can be dynamic and adapt to your competitors' prices and market developments.
Read more about how PriceShape can help your business and how you can use competitor data to gain a competitive advantage.
