Price Index – PI
- To sample your existing and potential customers’ views on the VFM you offer, first define what is meant by ‘Value for Money’:
- The following grid can then be used to determine how your customers assess the VFM you offer
- Clearly, your aim should be for responses to lie in any of the green shaded boxes, whereupon you might expect much ‘repeat custom’ – otherwise customers might think your offerings were no better than ‘total crap’ as Gerald Ratner once unwisely described the jewellery he sold
- However, it’s interesting to note how some price levels influence customers’ opinions about the quality on offer to them viz:
- A customer is given a glass of wine to taste and told it costs £10 per bottle
- He’s then given another and told the second glass costs £90 per bottle
- Tests show most people say the second glass tastes at least twice as good as the first – but both glasses are exactly the same wine
- People can be that easily misled by price
