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Three Ways to Judge The Impact Of Competition On Pricing Strategy 
By: Linda P. Morton
You can determine the impact of competition on pricing strategy by determining how your competitor's products compare to yours.
Many criteria contribute to price. These include distribution methods, customer service, business reputation, price range, product features and target market.
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.
To illustrate what I mean, I'll compare one of my products to competitive products.
Impact Of Competition On Pricing Strategy: Determine The Price Range Of Competing Products
You have to know how your competitor's price their products and the range between their prices.
Knowing the price range of competitors' products will help you to determine what you should charge for yours.
For example, I have a book on market segmentation. If you search on Amazon.com for market segmentation, you'll find many books listed from $6.95 to $159. So my book should be priced somewhere within this broad price range. The median price in this range is $82.98.
If my book was very short or inferior, I'd price it on the low range. If it was very long and exclusive, I'd price it on the high range. But because it is 295 pages, packed with loads of research, I'll aim closer to the middle. But before I decide on the final price, I need to consider features that most benefit potential customers and what they are willing to pay for those features.
Impact Of Competition On Pricing Strategy: Learn The Features Provided By Competitive Products
The second thing you need to learn about the impact of competition on pricing strategy is that price varies by 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.
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: 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.
Although your product may be similar to competitive products, you can charge more if you design it for a specific target market.
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: Summary
Once you know the price range of competing products, the extra features offered by each, and the target market for each, you will have a much better idea of how to price your product.
For instance, I considered price range, unique features and target market in determining the price for my market segmentation book. I aimed for the median price because my book provides features not offered by competitive books. Then I adjusted that price lower because small business owners have limited income, and my book is provided as an e-book.
You can also determine the best price for your product by remembering the impact of competition on pricing strategy.
Article Source: http://www.uberarticles.com/articles
To learn more about pricing strategy, see my post on The Effect of Competition on Pricing Strategy. And get my DVD Marketing Your Small Business for just shipping.
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