Economic value analysis pricing divides economic value into which two components?

The correct answer is based on the understanding of economic value analysis pricing, which identifies two key components that determine how a product's value is perceived in the market. Economic value is divided into reference value and differentiation value.

Reference value represents the perceived worth of a product in comparison to alternatives available in the market. It essentially sets the baseline that consumers consider when evaluating a product's price. This value often depends on factors such as pricing of competitive products, consumer expectations, and historical data regarding similar goods.

Differentiation value, on the other hand, captures the additional worth that consumers assign to a product based on unique features or benefits that differentiate it from competitors. This may include aspects like superior quality, enhanced performance, brand reputation, or special attributes that cater to specific consumer needs.

By dividing economic value into these two components, businesses can effectively position their products in a competitive landscape and make informed pricing decisions that align with consumer perceptions and maximize profitability. Understanding this framework allows companies to strategically enhance their product offerings and justify pricing based on the added value they provide beyond existing alternatives.