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You need to know the impact of competition on pricing strategy i to price your product competitively. This requires comparing and contrasting your products to your competitors’.

A lot more goes into determining a product’s price than just the product. The manner and speed of delivery, the way that customers are served, and the product guarantee contribute to the price that customers are willing to pay for your product.

It would take more than reasonable article length to cover all of these. So instead this article will cover only price range, product features and target market.

In order to demonstrate these three ways of judging the impact of competition on pricing strategy, I’ll use one of my products.

Impact Of Competition On Pricing Strategy: Determine The Price Range Of Competing Products

To determine how to price your product, do a bit of research and determine the range of prices that your competitors charge.

Knowing the price range of competitors’ products will help you to determine what you should charge for yours.

As an illustration, my market segmentation book has many competitors. A little research on Amazon reveals that the prices for competitive books range from a low of $6.95 to a high of $159. This tells me that my book should be priced somewhere within this range, probably near the median of $82.98.

You need to discover the price range of your competitor’s products as you determine your price. Whether your price should fall on the low or high side of the price range for competitive products depends upon your product’s features compared to your competitors’. It’s also influenced by your target market.

Impact Of Competition On Pricing Strategy - Determine The Features Offered By Competing Products

The second impact of competition on pricing strategy relates to features.

Now your research should go beyond core features. Customers expect all products to have core features. To get more than the minimum price, your product should provide at least one feature that makes it different from all competitive products.

For instance, if my book only provided a definition of market segmentation and other standard market segmentation information, it would be hard to sell. People expect that information so it’s not a selling feature.

Most market segmentation books rely on statistical analysis. Some are very complicated, and most are too much so for the average reader. So my book uses a simple process that requires no statistics and can be used by almost anyone. That distinguishes it from competing products.

Impact Of Competition On Pricing Strategy: Learn The Target Market Of Competitive Products and Go After A Different One

The third impact of competition on pricing strategy requires knowing whom the products are marketed to. Some people are just willing to pay more for a product than other people. And all people are willing to pay more for a product especially for them.

If you choose a target market not served by your competitors. and design your product to meet your target market’s needs, you can charge more.

To illustrate, most competitors for my market segmentation book are written for present or future (student) marketing professionals. Some target large business managers, and a few target specific industries.

Small business owners just aren’t being served well by these competitive market segmentation books.

Impact Of Competition On Pricing Strategy: Conclusion

By knowing the range of prices for competing products, the unique features of each, and target markets, you’ll be much better prepared to price your product.

For example, my market segmentation book targets small business owners. It presents a simple process that requires no statistics so small business owners can do it themselves. In other words, it’s designed for a specific target market not served by competitive products. It provides unique features, and the median of the price range is around $83. But my target market has limited resources so I decided to price it just over half the media price. Plus, it is an e-book, instead of a traditional printed book.

You can also determine the best price for your product by remembering the impact of competition on pricing strategy.