Pricing and Competitive Analysis in Retail

Given the diversity and variety of brands within each retail category, retail companies often launch and manage brands that compete with each other within the company itself. This “market cannibalization” can be problematic. Additionally, there can often be a growing number of competitors in the markets in which they operate.

SIS provides comprehensive retail pricing and competitive analysis and strategy to understand the pricing and brand perceptions consumers hold. A core purpose of our retail research projects is to understand where in the minds of consumers do competing brands stand at various price points.

Areas Explored

What are the price points across various brands in the Markets Under Study?
Where do brands stand compared with competing brands?
What are the brand attributes themselves that should be considered in pricing?
What are the psycho-demographics of customers and non-customers?
What are the customer motivations, behaviors and attitudes attributed to specific demographic profiles (e.g., age, income, gender)?
What is the market and psychological environment of stores (i.e., what other stores exist in close proximity that may impact purchasing decisions by customers?
What are potential opportunities in brand positioning for both Markets Under Study and additional markets where their franchised brands can be found?
What additional strategies are available in positioning their brands?

With these and other questions explored, SIS often develops key pricing, positioning, brand-related and competitive-recommended positions. We help our clients to develop a robust and accurate pricing strategy for their brands.

The implications face each aspect of a typical pricing strategy:

Develop Marketing Strategy Marketing Analysis, Consumer Segmentation, Consumer Targeting and Brand Positioning.	SIS conducts psychographic segmentation of consumers, positioning of brands across a range of specific price points
Make Marketing Mix decisions Define the product, distribution, and promotional tactics	SIS provides insight into the brand attributes of specific brands held in the mindset of consumers, specifically within a heavily competitive environment where competing brands operate in close proximity
Estimate the Demand Curve Understand how quantity demanded varies with price	Coupling more quantitative pricing strategy with psychographic profiles of consumers, we are able to develop a demand elasticity curve across its various brands.
Understand Environmental Factors Evaluate likely competitor actions, understand legal constraints, etc.	Photographic and diary-based capture of environmental factors such as stores in proximity and ethnographic research including profile of consumers in specific stores (e.g., gender, age, etc.)]
Determine pricing Using information collected in the above steps, select a pricing method, develop the pricing structure, and define discounts.	With this select information, SIS aims to create preliminary pricing recommendations for various brands under study

One possible framework we may use is the following:

Phase 1 Secondary Research

SIS conducts secondary research to uncover trends and the reason behind certain trends. The secondary desk research can achieve the following:

Identify and quantify the size of the market
Establish annual growth rate / potential for growth?
Identify the market segmentation
Identify the current players/competitors, competitor distribution model,
Conduct a SWOT analysis of the total hardware stores market
Demand trend and areas description-(demand model)
Supply status – retail (supply model)
Establish the net effective demand (demand supply model integration)
Demand forecasts-(based on future trends in the market)
Retail distribution model – retailers of building materials/products.
Estimate gap or surplus
Conduct a risk and mitigation analysis

Phase II Qualitative Research

Consumer Interviews can be done virtually or in-person. Another popular Qualitative research method is Focus Groups. This phase provides depth of knowledge into unmet customer needs and potential competitive threats. B2B experts can also be interviewed for insights into sales, distribution, expertise and forecasts. We collaborate with our clients during each process, and this can be an iterative process.

Phase III Quantitative Intercepts

SIS may develop a questionnaire in collaboration with our clients to understand the perceptions, behaviors and purchase decision making process of consumers in the local markets. The surveys quantify consumer insights and allow the study to understand the prevalence of these insights.

General Objectives

Consumer Psychographics
Non Consumer Psychographics
Brand Perception-Customer Profile
Non brand Perception Non-Customer profile
Consumer Brand Perceptions
Consumer Behaviors and Purchase decision making process
Consumer preferred brand attributes relative to pricing

This quantitative phase provides valuable data and measurement of:

Brand price points
Differences in pricing by malls, shopping centers and other retail locations
Benchmark brand prices against internal brands and competitor brands
Differences between customer segments

Phase IV Pricing & Strategic Analysis

The last phase synthesizes the data collected from Phase I – III. The core objective of this phase is to synthesize all research completed (primary and secondary) and position intelligence within a clear metrics-based framework. Benchmarks are a key part to SIS’s intelligence gathering and analysis, as this can be further leveraged for additional analysis (e.g., in future years and/or across other countries).

An important deliverable is the Strategic Report and Analysis which includes price point strategic recommendations. The report takes the findings from Phases I-III (e.g., desk research and in-depth interviews which specifically addressed either go-to-market strategies or direct and indirect sales channel analysis, competitive positioning, etc.) and presents actionable strategies to expand. Relevant cost/benefit analysis and multiple scenarios can be key elements toward assessing, quantifying and valuing market opportunities.