Free White Paper: Master Your Distribution and Boost Your Competitiveness with Price Observatory and Price Monitoring!
Faced with increasingly intense competition, brands must have a firm grasp of their retailers' and competitors' pricing information across the various markets in which they operate. Failure to do so can result in a loss of competitiveness, lower margins, and damage to brand image.
Price Observatory offers an effective price monitoring solution to help manufacturers overcome these challenges. This Practical Guide provides tips on how to beat the competition and preserve your brand value. Companies such as Schneider Electric and Vtech testify to the concrete benefits of this solution, particularly in terms of competitor price visibility and digital distribution optimization.
Patrick Moreau, Head of Pricing & Performance Manager at Schneider Electric, says that Price Observatory enables them to make informed pricing decisions thanks to increased visibility of market prices.
Patrick Semporé, Key Account Manager at Vtech, appreciates the speed with which he can obtain a comprehensive report on digital distribution, thereby optimizing their presence on marketplaces.
With Price Observatory, you have the keys to master your distribution, stay competitive, and maintain your brand value.
Pricing Intelligence: The Complete Methodology to Stay Competitive
As competitors grow ever more agile, price remains one of the most powerful levers to grab attention, trigger purchases, and protect margins. But without a clear methodology, pricing intelligence can quickly become time-consuming, imprecise, and hard to act on. Data piles up, but decisions stall. The real value lies not in the data itself, but in how systematically it’s analyzed and intelligently used.
In this article, we break down a complete methodology for pricing intelligence—from defining your scope to fully automating your process, including data collection, analysis, and continuous monitoring.
You’ll learn how to structure your approach, choose the right tools, avoid the most common mistakes that hurt competitiveness, and how Price Observatory can help optimize your pricing strategy.
What Is Pricing Intelligence and Why Does It Matter?
Pricing intelligence refers to all the actions involved in collecting, centralizing, and analyzing your competitors’ prices—either for identical products or for equivalent references. It requires a structured, methodical approach to get a clear, up-to-date view of the market.
It differs from:
Competitive intelligence, which covers broader aspects like product strategy, communication, channels, innovation, and partnerships.
Pricing science (or pricing optimization), which relies on data science and AI to model demand, forecast competitor reactions, and optimize prices in real time.
The goals of pricing intelligence are multifaceted:
Stay competitive by adjusting your pricing to actual market conditions—without falling into profit-eroding price wars.
Protect and grow your margins with a granular understanding of profitability thresholds and competitor tactics.
Adapt your positioning to market movements and validate or fine-tune your strategy as needed.
Identify commercial opportunities, such as poorly timed competitor promotions, stockouts, or exploitable price gaps by segment or region.
Pricing intelligence becomes your strategic radar—it guides decisions, reduces uncertainty, and turns price data into a long-term competitive advantage.
The Foundations of a Strong Pricing Methodology
To turn pricing intelligence into a true strategic asset—not just a passive data collection effort—you need a clear framework.
Start by defining a precise scope: Determine which products, ranges, competitors, and channels you want to monitor before collecting any data.
Ensure data reliability: Sound decision-making depends on accurate data. That means robust product matching (via EAN, GTIN, or visual recognition) and regular validation to avoid mismatches that distort results.
Set the right monitoring cadence: Collection frequency should reflect your market dynamics—daily for volatile sectors like electronics or e-commerce, and weekly or monthly for more stable ones.
Analyze, don’t just collect: Effective pricing intelligence goes beyond gathering numbers. It should produce clear KPIs: price indices, trends by channel, competitiveness ratios, and share-of-shelf metrics.
Integrate pricing insights into your business processes: Your pricing, marketing, procurement, and sales teams should all be able to act on these insights immediately.
Without this structure, pricing intelligence becomes just another spreadsheet—dormant, underused, and with little impact on your competitiveness.
The Key Steps of an Effective Pricing Intelligence Methodology
How can you implement effective pricing intelligence? It’s not something you can improvise.
To turn raw pricing data into strategic decisions, you need to follow a clear, structured process.
Here are the 7 essential steps to building a robust, sustainable methodology.
1. Define Your Pricing Scope
Start by precisely outlining the scope of your monitoring.
This means identifying the strategic products or ranges to focus on, the priority competitors to track, and the key distribution channels and geographic zones.
A well-defined scope helps focus resources on high-value data. Begin with high-volume or high-margin items, then expand gradually.
Also monitor areas with aggressive competition or segments prone to price wars.
A scope that’s too broad can dilute your analysis, while one that’s too narrow may cause you to miss key opportunities and weak signals.
2. Choose the Right Tools and Methods
Tool selection depends on your catalog size, number of competitors, and your internal capacity to process data.
Manual collection: Suited for small operations or limited SKUs, but extremely time-consuming.
Included services (warranty, installation, support)
Stock availability
Packaging and product variations
This level of detail avoids misleading comparisons and gets you closer to the real price paid by the customer.
Modern tools enrich your data with these variables automatically, giving you a consistent and reliable foundation for analysis. The more structured your collection, the more meaningful your decisions.
4. Ensure Accurate Product Matching
Product matching is the step that ensures data relevance. It consists of pairing each of your SKUs with its closest competitor equivalent.
Common methods include:
Unique identifiers (EAN, GTIN)
Image recognition to identify visually similar items
Semantic AI to match listings with different titles but similar specs
Poor matching leads to flawed analysis.
Top-tier solutions like Price Observatory combine automated matching with manual validation—especially important in technical categories or those with many product variants.
5. Analyze the Data
Once your data is collected and validated, the next step is interpretation.
Price indices to evaluate your overall competitiveness
Trend analysis: Identify recurring increases or decreases by season, channel, or competitor
Segmentation by range, category, or geography to prioritize actions
You can also include price elasticity models to predict the impact of changes on demand and margin.
The goal is to go beyond static observation and develop a dynamic, strategic understanding of your market.
6. Decide and Take Action
Insights must lead to concrete actions. Examples include:
Dynamic repricing to respond to market shifts
Negotiating better supplier terms if competition is eroding your margins
Targeted promotions to counter a competitor’s campaign
Stock clearance when needed
The key is speed of execution. A delayed decision often loses its impact.
That’s why pricing intelligence must be fully integrated into your operational processes to become a true performance lever.
7. Set Up Continuous Monitoring
Pricing intelligence is not a one-time audit—it’s a continuous process.
Set automatic alerts for significant price deviations
Keep your reporting updated with KPIs like price competitiveness, average margin, and share of shelf
Regularly adjust your scope and tools to stay aligned with your goals and market evolution
This proactive approach helps you anticipate trends rather than just react to them, making pricing intelligence a permanent pillar of your commercial strategy.
Embracing Automation and Data Science
Automation is now the cornerstone of successful pricing intelligence. SaaS platforms like Price Observatory allow you to monitor thousands—or even millions—of SKUs across multiple channels, countries, and currencies, with update frequencies adapted to your market.
These solutions provide:
Significant time savings, eliminating the need for manual collection
Broad and consistent coverage across all relevant marketplaces and territories
High data accuracy, powered by smart collection and cleansing algorithms
What to Look for in a Tool
A good pricing tool should offer seamless integration with your existing systems (PIM, ERP, BI), a user-friendly interface for data analysis, and configurable alerts.
Multilingual support and local format compatibility (taxes, price structures) are also essential.
The Role of Data Science
Data science transforms pricing intelligence into a proactive strategy.
With AI and machine learning, it becomes possible to:
Forecast pricing trends using predictive models
Analyze price-demand elasticity to understand how pricing changes impact performance
Identify long-term competitor behaviors and simulate pricing scenarios
By combining automation and predictive analytics, pricing intelligence evolves from a simple monitoring function to a strategic decision-making tool—helping you stay ahead of the competition before they even make a move.
Sample Dashboard from Price Observatory
Common Mistakes to Avoid
Effective pricing intelligence requires a clearly defined scope, reliable data, contextualized analysis, and quick action to remain competitive.
Without a real methodology, you risk bias, wasted time, and lost opportunities. Here are the most frequent pitfalls—and how to avoid them.
Poor Product Matching Comparing items that aren’t truly equivalent (differences in size, bundles, product versions, or refurbished status) skews your results.
For example, comparing a 256 GB smartphone to a competitor’s 128 GB model will lead to inaccurate conclusions. A reliable tool should leverage EANs, GTINs, or visual recognition to ensure meaningful comparisons.
Collecting Without Acting Gathering data without translating it into actionable decisions (repricing, targeted promotions, supplier negotiations) immobilizes valuable analytical capital.
Your indicators should drive real, measurable actions.
Uncalibrated Scope A scope that’s too broad will dilute your insights, while one that’s too narrow will give you a fragmented market view.
For instance, only tracking French prices might cause you to miss an international price war.
Neglecting Qualitative Factors Pricing intelligence isn’t just about numbers—stock availability, visual quality, product descriptions, and customer reviews also affect perceived value and competitiveness.
Ignoring these factors reduces the strategic impact of your monitoring.
Measuring the Effectiveness of Your Pricing Methodology
Pricing intelligence only creates value if you can measure its impact. That’s why it’s crucial to track relevant KPIs, such as:
Price Competitiveness Rate: The percentage of SKUs priced within the optimal market range. This gives a clear view of your competitive position.
Average Margin Before/After Adjustments: Determines whether pricing decisions are improving profitability without harming sales volume.
ROI of Pricing Actions: Measures the direct financial impact of pricing actions (repricing, promotions, supplier renegotiations) on revenue and margin.
Price-Based Market Share: Evaluates your market weight relative to your pricing position compared to equivalent competitors.
To be effective, these KPIs must be tracked consistently (weekly or monthly, depending on your sector) and integrated into a dynamic dashboard—like the one provided by Price Observatory.
Finally, continuous improvement is key: analyze your KPIs, identify areas for progress, test new actions, and measure their impact again.
This iterative approach ensures your methodology evolves with the market and keeps you competitive over the long term.
Conclusion
Today, structured pricing intelligence is no longer just a monitoring tool—it’s a true strategic lever for companies aiming to maintain long-term competitive advantage.
By combining reliable data, relevant analysis, and fast decision-making, you can stay competitive, protect your margins, and adapt your positioning in real time to market shifts.
In a market where competitors adjust their prices within hours, flying blind means losing ground.
In contrast, a well-structured and properly equipped methodology transforms price tracking into concrete opportunities: winning market share, optimizing promotional campaigns, and reinforcing your products’ perceived value.
Try Price Observatory now, our automated pricing intelligence solution. In a personalized demo, you’ll discover how to go beyond data collection and build a proactive, data-driven pricing strategy focused on growth.
Request your demo today and take the lead on your competitors.
Control your distribution and optimize your prices: towards an omnichannel strategy
Mastering omnichannel distribution, both online and in-store, is a strategic challenge for all brands. This is how they can preserve their brand image, create a quality shopping experience and, ultimately, increase their sales. To meet this challenge in the age of omnichannel, these brands must be able to collect reliable and usable data at all levels of contact: in stores, on reseller sites, search engines or price comparison sites. It is now an essential point in their marketing strategies in order to quickly identify areas for improvement and make the right strategic decisions.
Control your distribution at the point of sale
Brands know it well: linear readings are essential to optimize in-store performance, carefully monitor stock, traffic, merchandising, layout and pricing. In particular, they allow sales managers and brand managers to identify areas for improvement to satisfy customers and refine strategies. The integration of technologies such as mobile apps, AI and IoT (Internet of Things), combined with standardized training and collection procedures, make these audits more efficient than in the past, with 100% manual linear readings being particularly tedious. This helps build a data-driven culture that supports operational excellence and continuous improvement.
Mastering your digital distribution and digital shelf
Mastering the Digital Shelf, the online equivalent of in-store shelves, has become essential for brands looking to optimize their online visibility and attractiveness. Online intelligence plays a key role in monitoring pricing, availability, promotions, and product presentation, allowing brands to stay competitive and adjust their strategy in real-time against competitors. With specialized tools like Price Observatory, they can keep up with market trends and improve their digital positioning.
Harmonize physical and digital strategies
The control of distribution therefore requires omnichannelity. It represents a strategic approach to unify the customer experience by harmonizing physical and digital channels. This approach therefore consists of creating a synergy between the different points of contact with the consumer, whether it is a physical store, a website, a mobile application or social networks. The goal is to provide a seamless and personalized customer experience, where information and actions taken on one channel are recognized and acted upon on all others. By offering a unified view of the customer relationship, omnichannel improves customer satisfaction, strengthens loyalty and optimizes sales performance.
What solutions can be found to meet the challenge of omnichannel distribution?
The importance of in-store and online shelf surveys and thus having a 360° view is now obvious. But what solutions can be adopted to simplify this time-consuming data collection which, if done poorly, is a source of errors? To optimize this process, solutions such as Easy picky and Price Observatory are particularly effective. Easy picky Automates Shelf readings in stores thanks to scanning tools embedding an Image Recognition solution, which works simply by activating the camera of a smartphone or tablet and walking through the aisles of a store. Price Observatory ensures a Comprehensive online monitoring. It records prices, stocks, catalogues, images used, customer reviews and product ratings in real time. It monitors the greymarket, buy box holdings on marketplaces, market trends and competing products. The solution makes it possible, thanks to high-performance product matching algorithms, to monitor price changes in real time in order to better advise retailers in their online sales and pricing strategy while maintaining a good brand image. By combining these two tools, brands benefit from a reliable and up-to-date source of data in real time, allowing them to make informed decisions and strengthen their competitiveness both online and in-store.
How EasyPicky simplifies field data collection for Henkel
The sales forces of Henkel Home Care division were responsible for manually filling out large Excel spreadsheets during field surveys, which was tedious, time-consuming, error-prone and could only be done a few times a year. Negotiations with department managers were hampered by the lack of KPIs, affecting the quality and effectiveness of discussions. Sales and marketing departments had a limited vision of the field, only receiving ad hoc data during survey campaigns, which made it difficult to accurately evaluate strategies. EasyPicky has revolutionized the collection and analysis of field data for Henkel's sales force. Thanks to its Image Recognition solution, they can take exhaustive readings at each visit, simply by activating the camera of a tablet, even in 100% offline mode.
Industry leaders now benefit from instant analysis of the data collected, strengthening their negotiating power with customers with reliable and measurable information in real time. Sales and marketing departments also have immediate access to field data, automatically consolidated in Henkel's CRM, giving them a clear and constantly updated view of point-of-sale performance to quickly adjust sales and marketing strategies.
How Price Observatory provides Schneider Electric with clear visibility into the prices of its dealers and competitors
Schneider Electric is a multinational company with several divisions and an operational structure for each country. During the CoVID crisis, the BtoC division experienced very strong growth due to the rise of the Do It Yourself trend among consumers. Their sales to individuals, via e-tailers and specialist stores have increased sharply and Schneider Electric needed reliable information on online prices. However, the group was, at the time, totally blind on this point. With Price Observatory, they now have clear visibility into the pricing of their resellers and competitors, allowing them to make informed decisions about their own pricing. Data scrolling data guides countries in setting their prices, so that everyone knows how to adapt the price structure to the specificity of the country. Price Observatory's solution also guides countries on the Go To Market, as products are marketed through several distribution channels: B to B and B to C (including e-commerce).
The rise of omnichannel distribution and the increasing complexity of consumer touchpoints require new strategies and data collection tools to ensure optimal visibility and competitiveness. Solutions such as EasyPicky and Price Observatory provide brands with concrete answers to these challenges, by facilitating field surveys and offering real-time 360° online monitoring. Thanks to these solutions, brands now have a complete and accurate view of their performance, allowing them to adjust their strategies in a reactive manner and optimize their brand image and sales.
Brands: how to better control your Digital Shelf with online monitoring?
What is the Digital Shelf?
The Digital Shelf is the online equivalent of the shelves in physical stores.
It's the place where customers search, discover and buy products online, whether it's on the retailer's website or mobile app, or on another retailer's website or marketplace.
Just like in a physical store, customers want to be able to access well-stocked shelves, while remaining clear and organized enough, and have the information they need to make a purchase with confidence.
The digital shelf should allow customers to search for information about a product. Search results pages and product category pages are entry points for online customers and should contain a lot of information: images, videos, description, pricing, availability, variants and options, ratings, and customer reviews. The pages of each product should also provide all these information.
Supermarkets and brick-and-mortar stores have mastered the art of creating a quality in-store shopping experience. Thanks to merchandising, they know how to create attractive window displays, highlight leader products or promotions aisle head display offers, arrange the shelves in such a way as to highlight products with higher margins, offer a fluid in-store experience to the consumer and encourage them to buy by creating pre-defined universes and consumer journeys. They also offer impulse purchases near the checkouts, and offer immediate assistance on the shelves thanks to salespeople who are available for any questions.
Online, customers are looking for a similar experience: they want to easily find the product they are looking for using categories, keywords, etc., to get detailed information about each product, to have access to useful usage tips, recommendations and reviews from other consumers to be reassured about their choice, they also want to be directed to other similarproducts or additonal ...
The Digital Shelf: more and more points of contact
The digital shelf include all the touchpoints that consumers use to research, evaluate, and compare a product with other brands, and then make a purchase. With the development of digital technology, these touchpoints are multiplying, making the consumer buying journey increasingly complex. To manage this digital space well, it is crucial to ensure that products are easy to find, well presented, and accompanied by all the necessary information to encourage purchase.
Online monitoring, an essential tool for mastering your digital shelf
Online monitoring consists of systematically monitoring how your products are presented on your retailers' sites, on marketplaces and on the sites of other unknown retailers. This includes price monitoring (tracking prices, promotions, price changes), the way your SKUs are presented on product sheets (images used, description, presentation) as well as monitoring market trends, monitoring competitor SKUs, customer reviews and ratings on your products, and the promotional activities of other brands. The goal is to collect relevant data to adjust your online distribution strategy and stay competitive.
Online monitoring is particularly important for:
Monitor the competition: Observing competitors' strategies, their prices, promotions, and how they present their products can provide valuable insights to adjust one's own strategy
Adjust Prices: Stay competitive by adapting prices in real-time.
Identify Opportunities: Detect opportune times to launch promotions or discounts.
Adapt Quickly: React quickly to price changes and new offers from competitors.
For effective price intelligence, companies use price intelligence software such as Price Observatory that aggregates this data in real time via scraping technologies and APIs to extract data directly from competing websites.
Competitive intelligence is not limited to price monitoring, other factors are also important to master your Digital Shelf.
Reputation management: Tracking customer reviews and feedback helps to react quickly to negative reviews and improve customer satisfaction.
SEO optimization: Online intelligence helps to understand which keywords and phrases are most searched for by consumers, which helps optimize content to improve search engine optimization (SEO).
Essential online monitoring tools to master your Digital Shelf
To carry out effective online monitoring, brands can use various technological tools:
Google Alerts: To receive notifications about brand or product mentions.
Semrush: To analyze competitors' SEO and content strategies.
Brandwatch: For an in-depth analysis of social media mentions and sentiments.
Price Observatory: To monitor prices, reviews, promos, stock on various e-commerce platforms (e-commerce sites and marketplaces)
Putting it into practice
Step 1: Define Intelligence Objectives Identify the aspects of the Digital Shelf that you want to improve, such as product visibility, access to offers, content quality, pricing, or reputation management.
Step 2: Choose the Right Tools Select the monitoring tools that fit your goals and budget.
Step 3: Collect and Analyze Data Set up regular alerts and reports to monitor relevant information. Analyze this data to identify trends and opportunities for improvement.
Step 4: Implement Corrective Actions Make the necessary changes to your digital shelf strategy based on insights gained from online monitoring.
Step 5: Evaluate Results Measure the impact of the changes made and adjust your strategy accordingly for continuous improvement.
Conclusion
Mastering your Digital Shelf is essential for brands that want to succeed in today's competitive digital landscape. Online intelligence provides an effective way to monitor and optimize the various aspects of the digital presence of products. By taking a proactive approach and using the right tools, brands can improve their visibility, attract more customers, and ultimately increase sales. For personalized advice on the pricing of your products, do not hesitate to contact our team of experts on Price Observatory website. Contact us for a demo, a real-world test or information
Omnibus EU Directive impact on Pricing Strategies
The Omnibus Directive : a term that resonates more and more in e-commerce circles, but despite its importance, many retailers and manufacturers do not know it precisely or have doubts about how to take it into account in their pricing strategy.
In this article, we'll dive into the world of the Omnibus Directive, explaining its background, purpose, and providing practical tips for staying compliant.
What is the Omnibus Directive?
The Omnibus Directive (EU) 2019/2161 is a European regulation aimed at modernising and harmonising consumer protection rules in the European Union in the digital and e-commerce age. However, it applies to both physical warehouse and online businesses.
The new rules of the Omnibus Directive came into force on 28 May 2022, as specified in Article 10 of Ordinance No. 2021-1734.
Its objective is to ensure greater fairness and transparency regarding the commercial and pricing practices of merchants, retailers and marketplaces.
The main points of the Omnibus Directive concerning Pricing
1. 1. Price Transparency and Total Price Display
One of the main components of the Omnibus Directive concerns price transparency and the obligation to display the Total Price of a product or service. The Total Price must be displayed at the beginning of the purchase process and must include all taxes, surcharges and shipping charges.
2. Transparency Regarding Promotions, Strikethrough Prices and Price Changes
In addition, in the context of a price reduction, a promotion, or sales, the Omnibus Directive makes it mandatory, alongside the updated price, to display the Reference Price, i.e. the lowest price offered in the last 30 days. The purpose of this regulation is to allow customers to clearly assess the discount made and to strengthen confidence in the accuracy of the information provided.
Professionals have the freedom to choose how to display the discount (absolute value, percentage, strikethrough price, etc.).
NB: There are two exceptions to this rule: perishable goods and progressive Early Booking for travel, for example.
3. Transparency Regarding Personalized Prices
The personalized prices applied by certain sites based on consumers' purchasing behavior should be clearly displayed. For example, offers based on recent purchase history, such as Amazon's with its recommended product carousel, should clearly state the original price, as well as the percentage and amount of the discount.
Risks of sanctions
Violators of these rules face up to two years in prison and a fine of €300,000 for misleading commercial practices. The DGCCRF will be responsible for ensuring compliance with these rules during its inspections, in particular during large-scale price reduction operations such as sales or "Black Friday".
Best Practices for Brands and Retailers
Now that we have a better understanding of what the Omnibus Directive means in terms of pricing, let's take a look at some best practices that brands and e-tailers can adopt to comply with this regulation while offering an optimal customer experience.
1. Price Transparency from the Start
Make sure that all pricing information is clearly displayed at the beginning of the purchase process, including taxes and shipping costs. Avoid hidden fees that might surprise customers at checkout
2. Clear Return & Refund Policy
Set up a transparent and easily accessible return and refund policy. Consumers need to know exactly what they can expect in terms of returns and refunds if something goes wrong with their purchase.
3. Verified Reviews
Be sure to only submit customer ratings and reviews that are verified by a reliable system to ensure that the reviews posted are from consumers who have used or purchased the products. Control and verification procedures must also be displayed and easily accessible by the consumer.
4. Protection of Personal Data
Make sure your website complies with GDPR data protection regulations. Obtain explicit consent from users to collect and process their personal data, and ensure that robust security measures are in place to protect that data from breaches.
5. Transparent Communication with Customers
Be transparent in your communications with customers. Provide clear information about the products and services you offer, and respond quickly and effectively to any questions or concerns raised by customers
What are the impacts on Pricing strategies and Dynamic Pricing tools?
1. Use Price Intelligence Tools
Price monitoring tools are used to monitor the prices charged by competitors and/or resellers and to monitor their compliance with the rules as well as market fluctuations. By using these tools strategically, businesses can adjust their own prices based on market trends while remaining competitive.
2. Implement a compliant Repricing Strategy
Repricing, or dynamic price adjustment, is a common practice to stay competitive in a fast-paced business environment. However, it is important to ensure that price adjustments comply with the regulations for advertising price reductions. By using intelligent algorithms and taking into account price intelligence data, companies can automate the repricing process while ensuring compliance with the Omnibus Directive.
Brands, on the other hand, can ensure that their resellers comply with its rules.
3. Ensuring Transparency and Integrity
In all pricing and repricing actions, transparency and integrity must be prioritized. Consumers must be able to trust the prices displayed and be assured that they are not victims of misleading marketing practices. By complying with regulations and taking an ethical approach to pricing, companies can build consumer trust and ensure their reputation in the marketplace.
The benefits of a more transparent pricing strategy
An Omnibus Pricing Strategy has a multitude of benefits for e-commerce, including :
Improved price transparency and reliability : By accurately displaying discounts and complying with regulations, companies increase transparency in their pricing practices.
Increased customer trust and satisfaction : Clear and honest pricing fosters customer trust, which can lead to better customer satisfaction and retention.
Retention and acquisition of new customers : Ethical and transparent pricing can attract new customers while retaining existing ones, due to the increased trust it generates.
Avoidance of deceptive pricing practices : By complying with the Omnibus Directive, online retailers avoid misleading practices that could damage their reputation.
Promotion of fair competition : Fair pricing practices promote healthy and fair competition in the marketplace.
Highlighting quality and value : By presenting prices based on real data, companies emphasize the quality and value of their products or services.
Encouraging ethical practices : Pricing in line with the Omnibus Directive encourages companies to adopt ethical and transparent pricing practices.
Contributions to sustainable growth : By building trusting relationships with customers and promoting fair competition, companies can foster sustainable business growth.
At Price Observatory, we offer advanced solutions for e-tailers and brands that allow you to adapt to the Omnibus Directive, ensuring your company's compliance while applying an optimized pricing strategy.
E-merchants, stay competitive while complying with price regulations in an efficient way, thanks to our Dynamic Pricing module from Price Observatory
Brands and Manufacturers, monitor your resellers' promotional practices with our powerful, reliable and easily accessible price monitoring tools
For personalized advice on the pricing of your products and the Omnibus Regulations, do not hesitate to contact our team of experts on our Price Observatory website. Contact us for a demo, a real-life test or information
Like Apple, test the pricing strategy of the decoy effect
In the complex arena of e-commerce and web marketing, there is a subtle but incredibly effective strategy: the lure effect or the lure of price. This pricing technique is based on the deliberate addition of a significantly less attractive option among the alternatives offered, with the aim of making the other options more attractive by comparison. It is a game of mirrors where consumers' choices are distorted by the presence of a clearly less advantageous option.
In this article, we explain how it works and how to use it well through concrete examples.
Some brands, such as Apple, Spotify, Pathé... know how to use this effective technique in a subtle way to maximize their profits while respecting their consumers.
1/ Manipulate consumers by adding a decoy price option
The decoy effect cleverly exploits certain flaws in our cognitive psychology. When we are faced with several options, our brains naturally look for points of comparison to assess their respective value.
Adding a significantly more expensive option creates a benchmark that influences our perception of what is reasonable and affordable. It's as if this extravagant option acts as a yardstick, implicitly determining what is acceptable in terms of price for a given product.
This is because consumers tend to change their shopping preferences when they are offered a third option. This means that if the customer clearly prefers option A, which is cheaper than option C, he can change his mind if he is offered another option B in the meantime, between A and C in terms of price but significantly less advantageous than C. This effect has been studied in neuromarketing as one of the most effective cognitive biases to apply in e-commerce.
2/ Professor Dan Ariely's experienceabout the decoy price effect
In his book "Previsibly Irrational," behavioral economist and professor Dan Ariely demonstrates how a major magazine used this technique to increase its subscription sales.
Consumers were offered three types of magazine subscriptions:
An exclusively online subscription for €59
A paper subscription only for €125
A subscription combining online access and paper format, also priced at €125
At first glance, Option 2 seems like an aberration. Why opt for a paper-only subscription at the same price as an offer that includes both paper and online access?
Faced with these 3 options, 16% of consumers chose option 1 at €59 and 84% chose option 3 at €125; Not surprisingly, none chose option 2.
However, the real revelation of this experiment appears when the decoy price is removed from the equation. When the latter option is removed, consumer preferences often change significantly. What was once considered a value proposition suddenly becomes less appealing, while initially overlooked options suddenly take on prominence.
Faced with only 2 options, 68% of consumers chose option 1 at €59 and 32% chose option 2 at €125.
It is therefore clear that the intermediate option was not superfluous; it made option 3 more attractive to consumers.
3/ Decoy Price examples from everyday life
An obvious example of the decoy effect is the packet of popcorn or candy at the movies.
When there are only two options, small or large package, the customer will conclude that the large package is more expensive and they don't want to eat as much popcorn. He will therefore buy according to his needs.
Small package → 3€ Large package → 7€
However, by offering a third prize, the decision changes. What for?
Small package → 3€ Medium package → 6,50€ Large package → 7€
The new price, the lure, will trick consumers into choosing the most expensive product, when they don't need it, because they feel like they 're getting a good deal and making a better purchase. This strategy is part of psychological pricing, because it is based on the interpretation of prices that buyers make, rather than on the real value of the products
4/ Which products does the Decoy Price Effect work with?
The decoy effect is effective with:
Very similar products but with slight differences (level of quality, manufacturing process, quantity, etc.)
Services, especially online (software subscriptions, online training, music streaming services, cloud space acquisition, online newspapers and magazines, etc.)
5/ What are the techniques to make the Decoy Price effect work?
Use an unattractive lure to convince buyers to choose the most attractive option for you.
Place the decoy next to the item you're looking to sell. This is simple in the case of e-commerce since all you have to do is display the different prices on the same landing page.
Offer three options, no more. Offering more options slows down the decision-making process too much.
Before using the decoy effect, review your pricing strategy and identify the products suitable for this decoy effect technique .
6/ The risk with the misuse of the Decoy Price pricing technique
The main risk with this pricing technique is that buyers become aware of the scheme. This can damage brand image and cause the consumer to abandon their purchase. This technique should therefore be used with caution and fairness while respecting the consumer. For example, by offering an intermediate option that is clearly less advantageous, but not completely absurd either
In conclusion
The decoy effect is much more than just a marketing trick. It is a powerful tool that shapes our perceptions and influences our purchasing behaviors in ways that are often unsuspected. Understanding how price lure influences our decisions can allow e-tailers to design more effective pricing strategies and maximize sales, while respecting consumers and avoiding overly underhanded and manipulative marketing tactics.
