The Elements of Value

Measuring—and delivering—what consumers really want

by

Eric Almquist,
John Senior,

and

Nicolas Bloch

by

Eric Almquist,
John Senior,

and

Nicolas Bloch

From the Magazine (September 2016) · Long read

Artwork: Marijah Bac Cam, InkPulse For Winter ~III~, ink, acrylic, spray paint, and pastel on paper

Summary.

What consumers truly value can be difficult to pin down and psychologically complicated. But universal building blocks of value do exist, creating opportunities for companies to improve their performance in existing markets or break into new markets. In the right combinations, the authors’ analysis shows, those elements will pay off in stronger customer loyalty, greater consumer willingness to try a particular brand, and sustained revenue growth.

Three decades of experience doing consumer research and observation for corporate clients led the authors—all with Bain & Company—to identify 30 “elements of value.” Their model traces its conceptual roots to Abraham Maslow’s “hierarchy of needs” and extends his insights by focusing on people as consumers: describing their behavior around products and services. They arrange the elements in a pyramid according to four kinds of needs, with “functional” at the bottom, followed by “emotional,” “life changing,” and then “social impact” at the peak.

The authors provide real-world examples to demonstrate how companies have used the elements to grow revenue, refine product design to better meet customers’ needs, identify where customers perceive strengths and weaknesses, and cross-sell services.

Idea in Brief

The Challenge

What customers value in a product or service can be hard to pin down. Often an emotional benefit such as reducing anxiety is as important as a functional one such as saving time. How can managers determine the best way to add value to their offerings?

The Answer

The authors describe 30 “elements of value” that meet four kinds of need—functional, emotional, life changing, and social impact—and that, when optimally combined, increase customer loyalty and revenue growth.

The Opportunity

The elements of value work best when a company’s leaders recognize their ability to spark growth and make value a priority. Companies should establish a discipline around improving value in three areas: new-product development, pricing, and customer segmentation.

When customers evaluate a product or service, they weigh its perceived value against the asking price. Marketers have generally focused much of their time and energy on managing the price side of that equation, since raising prices can immediately boost profits. But that’s the easy part: Pricing usually consists of managing a relatively small set of numbers, and pricing analytics and tactics are highly evolved.

A version of this article appeared in the September 2016 issue (pp.46–53) of Harvard Business Review.

Eric Almquist is a partner with Bain & Company’s Customer Strategy & Marketing practice and the global head of consumer insights for Bain.
John Senior is a partner with Bain & Company’s Customer Strategy & Marketing practice.
Nicolas Bloch is a coleader of Bain & Company’s Strategy practice.

The Elements of Value

Idea in Brief

The Challenge

The Answer

The Opportunity

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