Eric Almquist, John Senior, and Nicolas Bloch (colleagues at Bain & Company) wrote an article for Harvard Business Review titled The Elements of Value: Measuring—and delivering—what consumers really want (September 2016).

« What consumers truly value can be difficult to pin down and psychologically complicated. »

« How can leadership teams actively manage value or devise ways to deliver more of it, whether functional (saving time, reducing cost) or emotional (reducing anxiety, providing entertainment)? »

« We have identified 30 “elements of value”—fundamental attributes in their most essential and discrete forms. These elements fall into four categories: functional, emotional, life changing, and social impact. Some elements are more inwardly focused, primarily addressing consumers’ personal needs. For example, the life-changing element motivation is at the core of Fitbit’s exercise-tracking products. Others are outwardly focused, helping customers interact in or navigate the external world. The functional element organizes is central to The Container Store and Intuit’s TurboTax, because both help consumers deal with complexities in their world. »

« In our research we don’t accept on its face a consumer’s statement that a certain product attribute is important; instead we explore what underlies that statement. For example, when someone says her bank is “convenient,” its value derives from some combination of the functional elements saves time, avoids hassle, simplifies, and reduces effort. And when the owner of a $10,000 Leica talks about the quality of the product and the pictures it takes, an underlying life-changing element is self-actualization, arising from the pride of owning a camera that famous photographers have used for a century. »

« Three decades of experience doing consumer research and observation for corporate clients led us to identify these 30 fundamental attributes, which we derived from scores of quantitative and qualitative customer studies. Many of the studies involved the well-known interviewing technique “laddering,” which probes consumers’ initial stated preferences to identify what’s driving them. »

« The elements of value work best when a company’s leaders recognize them as a growth opportunity and make value a priority. It should be at least as important as cost management, pricing, and customer loyalty. Companies can establish a discipline around improving value in some key areas: »

« New-product development. Our model can stimulate ideas for new products and for elements to add to existing products. Managers might ask, for example: Can we connect in a new way with consumers? Can our customers benefit from integration with other software applications? Can we add therapeutic value to our service? »

« Pricing. Managers commonly view pricing as one of the most important levers in demand management, because when demand is constant, higher prices accrue directly to profits. But higher prices also change the consumer value equation, so any discussion about raising prices should consider the addition of value elements. Recall how Amazon’s judicious increases in value helped justify higher prices over time. »

« Customer segmentation. Most companies have a formal method of segmenting their customers into demographic or behavioral groups, which presents an opportunity to analyze what each of these groups values and then develop products and services that deliver those elements. »

« The elements of value have an organizational dimension as well: Someone in the company should be tapped to explicitly think about, manage, and monitor value. One pay-TV executive, lamenting the success of Netflix, told us, “I have a lot of people working on product features and service improvements, but I don’t have anyone really thinking about consumer value elements in a holistic manner.” »

« The concept of value remains rooted in psychology, but the elements of value can make it much less amorphous and mysterious.  »

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