Return to Customer outcomes

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’

                                VFM = The degree to which a customer’s requirements are met

                                                       The price paid for the product or service

  • 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 ‘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

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