Which of the following approaches can a company use to evaluate the quality of their customer relationships in terms of consumer surplus and willingness to pay?

• A. Calculate the company's production costs for each product sold.
• B. Assess the number of competitors in the market.
• C. Analyze the difference between customers' willingness to pay and the actual price paid to estimate consumer surplus.
• D. Measure only the total revenue generated from all customers.

Answer: (C)

Verified step by step guidance

1. Understand the concept of consumer surplus, which is the difference between what consumers are willing to pay for a good or service and what they actually pay.
2. Recognize that to evaluate the quality of customer relationships in terms of consumer surplus, the company needs to focus on customers' willingness to pay and the prices they pay, rather than production costs or market competition alone.
3. Identify that calculating production costs or measuring total revenue does not directly provide information about consumer surplus or willingness to pay.
4. Focus on analyzing the difference between customers' willingness to pay and the actual price paid, as this difference represents the consumer surplus and reflects the value customers derive beyond the price.
5. Use this analysis to assess how well the company is capturing value from customers and to understand the strength and quality of customer relationships.