The Pricing Effectiveness Index (PEI) for Performance Measurement of Fresh Vegetable Sales by Retailers to Secure Sustainable Profitability

Abstract

Utilizing price margin as a metric for price effectiveness is deemed inappropriate, as margin serves merely as an intermediate indicator of performance. This research introduces the concept of the Pricing Effectiveness Index (PEI) to assess price effectiveness, specifically employing the profit change index to evaluate price fluctuations expressed in proportional or percentage terms. The study was conducted across all traditional markets in Mataram City utilizing census methodologies. Data collection encompassed both observational and survey techniques. Observations and surveys were executed within the commercial establishments of retailers dealing in vegetables, particularly water spinach (Ipomoea aquatica). The findings indicate that the PEI is a viable tool for measuring the price effectiveness of water spinach in traditional markets and holds potential for assessing the price effectiveness of other products. Furthermore, it can serve as a strategic framework for adjusting prices to enhance profitability for business operators.