price strategy

Benefits and Losses of Competitive Pricing Strategy

by: admin   /   26 Apr, 2018
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The competitive pricing strategy is also called as market-oriented pricing strategy (CPS). This term is referred to the approach in which the e-commerce retailers define their online prices on the basis of the competition in the market. This pricing is defined by considering the market trends and competitors rather than the cost and the demand for the product or service among the consumers.

For a business to be successful and to experience the benefits of competitive pricing strategy, the retailers need to have a solid intelligence generating system to get the latest data about the competition in the market and act on the strategies, based on the data, without any due notice. With the most efficient response, one can deal with the competition in the market, in an efficient and effective manner. In simple words, the competitive pricing strategy helps you to stay ahead of your competitors by acting on the basis of a detailed market analysis.

How the CPS Works?

Any e-commerce retailer can set its own prices based on the position of their platform in the market. The retailer can also set a goal to become competitive in the market. He can set the target as average or can always be in the higher position than the level of competition in the market.

For instance, if the business is dealing was with the provision of the premium level products to the higher end customers, better suggested would be to set the prices of the products higher than that of the competitors. Such, decision may lead to plumped margins a high loyalty but very lover conversion rate. On the other hand, if the retailer wants to boost its sales, it may offer the pr,products with lower prices and thus can be more competitive in the market.

If you are looking to make an efficient competitive pricing analysis, being a retailer you need to automate the CPS because matching the complete range of products with that of many different competitors takes a lot of time and efforts. So you must try to make the process beneficial and productive by , using latest e-commerce technologies like CPS tracking software. Such software is specifically designed to help you do a focused analysis and make strategic marketing and retail decisions by knowing your real position in the retail market, rather than spending lots and lots of time in gathering the data from the market. and by the time you are done with gathering the data, there might be changes in the market prices or any other factor, but a CPS software is a great idea to deal with the matter efficiently and quickly. Assess your position timely and act quickly.

Let’s have a look at some of the potential advantages and some probable disadvantages of the competitive pricing strategy software’ to assess your business position in the market.

Benefits or Opportunities of CPS:

    • The CPS helps the business to take control of the competition by avoiding loss of market share and the potential customer to the competitors. By having sufficient information about your competitors by the help of right technology, you can respond to every single move of them, intelligently. As a result you will be able to position your business and respond to the competitors in a better way without losing the potential customers just because of the pricing strategies.


    • Pricing is the most important criteria for the online shoppers and they make their final decision on the basis of price and the reviews of the customers. According to the surveys, more than 60% of the online shoppers consider price as the major indicator, at the same time an average customer visits at least 3 websites before finalizing the platform to shop from. Thus no matter what quality or other offers you are giving to the customers, they won’t hesitate event for a second to shop from your competitors just because of they are offering better price than you. Adopting the CPS software will help you keep a stable customer base and let your business grow well by offering competitive price.


    • With the help of CPS you will be able to move ahead towards the dynamic pricing that is considered as a dynamic approach to stand right at the top of the CPS game. With dynamic pricing you can use updated information about the CPS that can be used as triggering factor to enhance your pricing model. With the dynamic pricing ability you can compete well with the competitors and offer your customers with better prices without compromising on your profit.


    • The CPS can also be combined with the major pricing strategies to make it more fruitful. For instance you can hold the profit level via CPS; the e-commerce retails must always keep the costs in mind and must adopt a mixed approach to do business. Here the cost-based pricing can decide the target profit margins as per the pricing set by the competitors.


Losses & Risks of CPS:

    • If the retailer is too busy in dealing with the CPS they might miss other important factors like overhead costs or production cost etc. Such situation can cause risks of losing potential margin.


    • By setting up the CPS the retailers believe that the potential competitors have set the accurate prices for their products. But the pricing strategy of the competitors is possible to not to fit the demands and other factors of the company. Any such situation can cause disharmony or issues in the company.


    • Creating resources like money, staff, technology and other such, to deal with the CPS can be a challenge for the new or a small company with a limited budget.


    • For both good and bad the CPS is of great importance for the retailers in the e-commerce market and the CPS is of great importance and helps the businesses to deal with the strategic move at each step of the market.


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