Definition:
A competitive price index measures how a merchant’s prices compare to competitors across a group of products.
Why It Matters:
- Provides an overview of market positioning.
- Helps merchants track whether they are generally cheaper or more expensive than competitors.
- Supports competitive pricing strategies.
Example:
If a retailer’s average price is 5% lower than competitors across a category, the price index may be 95 (where 100 represents market average).