Price Image: Definition, Measurement, and Leverage Points
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Do your customers think you're more expensive than you actually are?
Schedule a meetingLearn about our pricing analysisPrice image is customers' perception of a retailer's or brand's price level relative to the competition. It is based more on a few highly visible products (key performance indicators) than on the actual average price, and it directly influences the choice of store.
The Essentials in 6 Questions
The perceived price level, not the actual average.
Management, marketing, pricing.
It is built over time, not in a single step.
On the KVI displays, the starting prices and promotions are visible.
It attracts traffic and helps protect margins elsewhere.
Customer surveys cross-referenced with a basket of KVI metrics and competitor data.
Brand image or true competitiveness: What’s the difference?
A store may be cheaper on average but still seem expensive: perception doesn't always match the average price.
| Concept | What It Is | How is it measured? | A pitfall to avoid |
|---|---|---|---|
| Price image | Customers' Perception of the Brand's Price Level | Customer Surveys, KVI Basket | Judging the brand based on just five prices, without realizing it |
| Competitiveness | Actual Price Position Relative to the Competition | Price surveys, price indices, price differences | An overall average that masks the declines in the KVI indices |
| Margin | Profit Margin on Sales | Gross and Net Margin, Mix Effect | Sacrificing profit margins for a boost in reputation that never materializes |
Effective management involves balancing these three objectives, as explained in our article on price-image management.
Customers rely on just a few reference prices to judge an entire retail chain. Price image is an overall perception, built over time, that, together with accessibility and service, contributes to a retailer’s brand equity. Detailed method:measuring a retail chain’s price image, the KPIs.
What strategies can you use to build your price image?
Six levers, guided by the desired price positioning: the price image is the perceived result.
| Lever | Effect on price perception |
|---|---|
| KVI | The products that are compared most often carry more weight than all the others. |
| Introductory price | Attract traffic and demonstrate competitiveness. |
| Promotional Policy | Frequency, depth, and clarity shape the perception of low prices. |
| Range consistency | A clear scale enhances credibility. |
| Psychological price levels | Display thresholds influence perception. |
| Commitment to Value for Money | Makes the image visible to the customer. |
These levers are managed through pricing strategy, as explained in our article on price-image management.
How do you measure your price image?
By comparing customer perceptions with a basket of key performance indicators (KPIs) tracked against the competition, across each channel.
Define the scope
Overall, by category, or by catchment area.
Build KVI's shopping cart
The products that shape the brand's image, weighted according to their importance in consumer perception.
Select competitors and channels
Retail, e-commerce, marketplaces.
Improving the reliability of the reconciliation process
Without reliable matching, the discrepancies are incorrect.
Calculate and Govern
Index, deviations and dispersion, alert thresholds, validation.
Our competitor price tracking monitors your KVI shopping cart across all your channels through regular price monitoring; our price analysis evaluates your price image aisle by aisle and identifies priority areas for improvement. On marketplaces, see how to manage your prices without losing control of your price image.
The 4 Common Mistakes in Price Display
Inaccurate matching, average catalog prices, overlooked promotions, or inconsistent channels.
- Comparing without reliable matching: false matches create false discrepancies.
- Use a catalog average instead of a KVI basket, which hides the drop-offs.
- Ignore promotions and net prices, as they distort the interpretation.
- Forget omnichannel: a disconnect between the store and the website is becoming apparent (see: monitoring competitors without damaging your price image).
Frequently Asked Questions
Short answers to the most frequently asked questions about the price image.
What is brand image?
Price image, or price perception, is the perception customers have of a retailer's price level compared to its competitors. It doesn't reflect the actual average price: it's formed around a few highly visible and frequently purchased products ( key-value items) , promotions, and the in-store experience. It matters because it influences the customer's choice of store even before they compare prices. A retailer therefore manages its price image by carefully selecting its benchmark products to maintain its profit margin on the rest of its product range.
What is the difference between brand image and price competitiveness?
The difference between price image and price competitiveness lies in the difference between perception and reality. Price competitiveness is the actual position of prices relative to the competition, measured by surveys and a price index on a basket of products. Price image is what customers perceive, and it is formed based on a few benchmark products, promotions, and the store atmosphere. The two can diverge: an objectively competitive brand may seem expensive, and vice versa. This is why both are measured and compared, particularly through customer surveys.
Can a brand be inexpensive yet appear expensive?
Yes, a retailer can be cheaper and still appear expensive. Just a few price drops on the most frequently viewed and compared products, such as major brands, are enough to create the impression of a high-priced retailer, even if its average price is lower than its competitors'. Conversely, a retailer can focus on its core products and appear inexpensive with a similar average basket size. Hence the importance of managing price image based on a specific basket of goods and services (KVI) rather than an overall average, which masks these effects.
Why is brand image so important?
Price image is so important because customers judge a brand based on a few key price points, not the entire product range. A poor price image drives customers away, even with competitive pricing, because they stop comparing. Conversely, a good price image attracts and retains customers, and helps protect margins on core products, where customers rarely compare prices. It also influences responses to promotions and tolerance for price increases. That's why it's monitored as a key performance indicator in its own right, just like profit margin.
What is the relationship between perceived price and relative price?
The link between price image and relative price is that between perception and its measurement. Relative price compares the price of a product or basket of goods to that of competitors; tracked across a basket of KVI (Kind-of-Virtual) products, it provides an objective measure of the retailer's position on the products that shape perception. This measurement is then compared with customer surveys: if the relative price is good but the price image is poor, the problem often stems from a few poorly positioned, highly visible products or insufficient promotional communication.
Key Takeaways
- Brand image is a perception based on a few key performance indicators.
- It is guided by six factors, ranging from the introductory price to the consistency of the product line.
- It is measured by cross-referencing customer surveys with KVI's basket of indicators.
Would you like to measure and manage your price-image?
Track your KVI basket against the competition across all your channels.
Let's talk about your pricing strategy →Learn about our pricing analysisYou might also be interested in these articles
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