Analysing Competition for Cost of Product

(0:00-0:14)

Hello everyone.

Friends. Today’s topic is “Setting up the winning price for product as per market and customer”.

Well yes, how can we set a price for a product that is winning for both customers as well as the market. The price should be winning. For whom? For the customers.

Friends. There are many factors that should be considered to set a winning price.

Come let’s start this session with an example.

I want to give you an example of an AC brand. Suppose let’s say you want to purchase an AC; you will search everywhere including google. Now, let’s have a look at 3 such websites where the pricing is listed for the AC.

Firstly, let’s check their original website. Look, this is an example where the pricing is “26 thousand nine hundred and ninety-nine (26,999)”. The price might have changed now but I took this screenshot for the training program. You can check the latest price on their website. Okay. So, this is just an example friends.

The cost on their own website for this Ac brand is 26,999 rupees right now. Now, if I check the same AC on a different website like Flipkart, as you can see here the cost is “25 thousand nine hundred and ninety (25,990). Now let’s have a look at the pricing for the same product on amazon. When you search it on amazon, you can notice a major difference in the price which is “25 thousand four hundred and ninety (25,490)”. You can clearly understand that there is a major difference in the price. Now, where did this difference come from?

I hope you all remember as I already explained about the supply chain in the previous session. In the supply chain, you can decrease the price of your product and still maintain profits.

And there is no surprise in already knowing that Amazon is the world’s leading E-commerce business website and they have always managed to maintain costs very well where they gain more profit even with fewer investments.

As I explained the supply chain in the previous session and if you understood it properly, you can also maintain a good winning product service price without having any loss. Yes, you can quote a winning price to the customer while maintaining the profits as well.

03:23

Now, “what is the winning price of a product?”.

“It is one of the most focused and crucial tasks because the product’s sale depends on it”. Yes, the product’s sale depends on it.

Friends, if you succeed in providing a good cost to the user or the buyer, same as amazon did in this example. Well, compared to Flipkart and whirlpool, the cost was very competitive on Amazon.

So, friends, if you also succeed in providing such competitive prices to your buyer or the audience, don’t you think the customer will prefer to purchase the product from you? Well yes, the customer will obviously come to you. (I hope this much is clear).

Okay. Now, if you analyze the market properly or do a proper “market analysis”. What is “market analysis”? So, you have to analyze and check the websites of your competitors and check how are they reaching out to their target audience as well as try to understand their strategy. This is what we call “market analysis”.

So, “E-Commerce market-based pricing strategies is based on cost-based strategy”. “Take it a step further by incorporating your niche competitors”.

What are “niche competitors?”. Well, niche competitors are direct competitors. You have to analyze the direct competitor of your product and check how they managed their sales and supply chain or their raw materials? How do they manage to maintain their business? If you manage to analyze even with just an overview, you can still set the best “winning price” for your product, business, and service. (Understood?)

Now, I have a small tip for you. “Don’t react fast”. (repeat). Well yes, this happens many times when you run a business and especially when you are in the E-Commerce business. What happens is the front runner, for example, let’s say amazon. So, if you are trying to build one more amazon, you have to analyze that amazon is already very stable, and you have just started. Amazon can start a monopoly if they want to. Okay, but friends, you don’t have to act fast. You have to take a break and understand. “You have to analyze all the things before reacting”.

You might act out of anger when a very big competitor does a sudden change of price like he starts selling the product that is worth 10 rupees in just 2 rupees. There is a possibility that this might happen. My suggestion- “Please don’t panic”. Yes, “Don’t panic at all”. “You have to analyze all the things before reacting”.

You have to understand the supply chain and also understand that you are just a beginner right now. They have already started and are running a stable business where they already understand and know their raw materials, the supply chain, their customers, and their products as well and they know very well when and how to react? But when you are a beginner and you start to react without understanding, you might lose stability. As a result, your business might have to suffer some major losses. So, don’t react fast. Okay. Just analyze, just analyze, and wait. Sometimes doing nothing will benefit your business. (Are you getting it?).

07:18

So, “how to analyze the competition?”. Sir, you already advised us not to react fast or act fast and be patient when there are major changes in the competition. But how will we analyze the competition? Here also I would like to share some tips.

The first tip is to “find primary competitors”. Yes, find primary competitors. Okay, so I will ask you a series of questions now. If you know the answer or if you start to understand the question, then trust me when I say that you are already on the right path to find the primary competitor.

So, the first question is “Who am I most often compared with?”.  This means who are you comparing with the most in this market?

The second question is “Who do my customers refer in their conversations?”.  You might have noticed that when a customer has a conversation with you, they might bring up your competitor's name and compare and say things like they mentioned so and so cost for this product, why is your cost different? Etcetera. In such cases, it is important for you to know that who is the customer talking about?

The next question is “Who is meeting similar market need, solving the similar challenges, or addressing a similar pain point?”.  You should definitely know, which competitor is competing with you with the same target audience. Which competitor is understanding the customer’s problem truly and providing the best solution? (Clear?).

The last one is “Who appears in similar search results?”. This means when a customer searches for anything. For example, a person is searching, which is the famous product in this category? On the result page, there will be a few websites including yours and your competitors. Well, friends, that is your direct competition. So, “find your primary competitors”. Well yes, if you succeed to find your primary competitor, you have won half the battle friends. (I hope you have understood so far).

Now let’s have a look at the second tip. “Understand your market niche”. Yes. “According to Charlene Walters- a solid market niche helps to ensure that particular group of customers will want to buy from your business, instead of going to the competitors”.

Look, friends, let’s first understand the meaning of market niche. “What is the market niche?” Suppose you are selling a product in bulk, there will be fewer customers that would like to buy in masses. But if you are selling a product individually with separate packets, there will be a bigger crowd of people who would like to purchase the product. So, when there are people in masses and you are gaining more profit, at that time you will have to go through small separate pieces of items.

Now, for example, let’s talk about a computer brand. Here, I am preparing a computer desktop system and laptops. Now there are fewer people that will buy the computer system. So fewer people mean less demand. When the demand is less, my supply will also decrease. Okay. But the demand for the laptop is more.

So, obviously, I will increase the supply based on the demand. (Repeat). And I will remove the desktop system from my office, my showroom, or my warehouse, and I will focus on making more laptops in my warehouse instead. How did I make this decision? With the understanding of “market niche”. I will supply according to the demand. Instead of going to the other competitor why will the customer come to me for purchase? Because I have prepared the product in bulk and as a result, I have the maximum quantity of the product. Why? Because I analyzed who is my market niche? Who am I going to sell this product to? And how much is the demand for this product? Am I providing the best solution or not? So, all these decisions are taken through the market niche.

If you succeed in understanding the market niche properly then there is no doubt that you can give good competition in the market.

12:22

Now, let’s talk about the price plan. Yes, “Make a price plan”.

Look, friends. If you learn when to change the price according to the market. When to increase or decrease the price? What should be plan A or plan B?

So, “The price you charge has to be competitive, but still, it should allow you to make a reasonable profit”.

Yes, friends. If you have fixed the price but still you are not profiting, then that situation is not a win-win situation for you. Instead, that is your loss because you made a bad deal.

If you think that win-win means you should sell the product on the pricing that the customer desires, then it is not at all the condition. Obviously, you have to look at the customer’s wishes but you also have to keep your business in mind. That’s the reason you are on this platform. You have to notice your stability and decided the cost in such a way that your other fixed costs are not impacted.

So, you have to analyze and make a price A plan and price B plan so that you can quote a win-win price for your products and services.

Friends, in this session I tried to answer a few questions.

Still, if you have any queries or comments, click the discussion button below the video and post there. This way, you will be able to connect to fellow learners and discuss the course. Also, Our Team will try to solve your query.

So, see you in the next session with the next topic.

Thank you very much.

(14:27-14:36 End music).