The Elements of Value Pyramid

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.

The amount and nature of value in a particular product or service always lie in the eye of the beholder, of course.

Products and services deliver fundamental elements of value that address four kinds of needs: functional, emotional, life changing and social impact.


The elements of value approach extends Maslow’s “hierarchy of needs.”

In the elements of value pyramid, the most powerful forms of value live at the top. To be able to deliver on those higher-order elements, a company must provide at least some of the functional elements required by a particular product category. But many combinations of elements exist in successful products and services today.

In general, the more elements provided, the greater customer’s loyalty and the higher the company’s sustained revenue growth.

Some elements are more inwardly focused, primarily addressing consumers’ personal needs. Others are outwardly focused, helping customers interact in or navigate the external world.

Summing-up: The concept of value remains rooted in psychology, but the elements of value can make it much less amorphous and mysterious. The elements can help managers creatively add value to their brands, products, and services and thereby gain an edge with consumers—the true arbiters of value.


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