I recently played golf with two doctors, following which we discussed customer satisfaction and customer ratings. One of the physicians, let’s call him Dr. Feelgood, expressed surprise that anyone would select a doctor based on ratings, and he lamented that negative ratings often reflected intangibles like staff friendliness and wait times, rather than quality of care. In my opinion those factors and more are part of the overall determination of quality and customer value. Differentiating any business based on superior intangible aspects can increase customer demand and improve pricing power.
Last week I read an article in the Wall Street Journal, The Secret Other Reason Basic Economy Is Everywhere. In the article, the writer seemed to imply airlines are doing something shady to force businesses to pay higher prices. In reality, the airlines are using smart segmentation techniques. They are simply finding combinations of features that are valued by some groups more than others; and they are matching them with price sensitivity of the groups.