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by: LindaP.Morton
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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'.

Many criteria contribute to price. These include distribution methods, customer service, business reputation, price range, product features and target market.

But this article will primarily concentrate on the impact of competition of pricing strategy based on the price range of competitive products, their 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: Learn The Price Range Of Competitive Products

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

Every product has a price range. For some this range is small, and for others it's large. You may need to do a little research to determine the price range for competitive products.

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: Know the Features That Your Competitors Provide With Their Products

You need to know how features influence the prices of competitive products.

Every product has certain features that customers have grown to expect as standard. All products should provide these standard features. It's the additional features that distinguish your product from your competitors'.

To illustrate, let's say that my book just covered basic information that's included in every other market segmentation book. Would you want to buy it?

So for my book to sell, it has to provide something different. It provides detailed and thorough information on market segments that can be used by laymen to get professional results. Unlike many market segmentation books, it requires no statistics and uses a simple process. That makes it different and provides a selling feature.

Impact Of Competition On Pricing Strategy: Know The Market That Your Competitors Are Targeting And Target 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.

Just because you have a product that is similar to competitors' doesn't mean that you sell your product to the same type of people.

For example, most market segmentation books are written for one of three target markets: marketing students, marketing professionals, and executives of large businesses.

Few target small business owners and are simple enough that this target market will read and use them.

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.

If you use the information in this article, you can also set a good price for your product by noting the impact of competition on pricing strategy.

About the Author

Discover more about pricing strategy at The Effect of Competition on Pricing Strategy. Learn more about Marketing Your Small Business for just shipping. You can get a unique content version of this article from the Uber Article Directory.

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