What does Economic Value to the Customer (EVC) include?

Economic Value to the Customer (EVC) is a critical concept in marketing that quantifies the total value a product or service provides to customers in relation to its cost. The correct answer highlights that EVC includes both perceived value and performance differential.

Perceived value refers to how customers view the value of a product based on their experiences, expectations, and comparisons to competing products. It encompasses the emotional, functional, and experiential benefits that customers associate with a product or service.

Performance differential, on the other hand, relates to the specific advantages a product or service has over alternatives in the market. This could be in terms of features, quality, efficiency, or any other factors that contribute to superior performance in the eyes of the customer.

Combining these two elements—perceived value and performance differential—provides a comprehensive understanding of a product's economic value to customers. Customers are likely to consider both how well the product meets their needs and how they perceive its value against competitiors when making purchase decisions. Thus, the formulation of EVC allows businesses to better align their offerings with what customers truly value, ultimately leading to stronger market performance.