The Brand Framework Series: The Elements of Value Pyramid 30 Measured Elements

The Elements of Value is Eric Almquist and Bain & Company's Framework that separates customer-perceived value into 30 components, grouped into a 4-layer pyramid (Functional, Emotional, Life Changing, Social Impact) to make value that used to be abstract become measurable and comparable between brands. This Framework is most useful as competition with prices and features approaches the saturation point.

Consumers today are willing to pay more for something and bargain for many other things without hesitation. The question a brand should ask is not whether the product is good enough, but in the eyes of customers, what level of value we are delivering, and whether the value is imitated by competitors within a quarter or a value that takes time to accumulate.

What is The Elements of Value and where does it come from?

This Framework was developed by Eric Almquist, John Senior and Nicolas Bloch of Bain & Company and first published in Harvard Business Review in 2016 under the article The Elements of Value. Relying on data from a survey of more than 10,000 American consumers versus 50 companies across multiple industries, Bain capped this Framework the following year with a B2B Elements of Value version with 40 elements in a 5-story pyramid.

The concept of the Framework builds on Maslow's Hierarchy of Needs, which describes the hierarchy of human needs. Almquist and the team applied the concept to the value perceived by customers from goods and services, until it formed a value pyramid on the ground floor reflecting basic needs. The upper floor reflects deeper levels of emotional value and fulfillment.

The key principle is that value in higher layers often creates more engagement with customers and is more difficult to copy. However, long-term successful brands do not aim to create value only on the upper level, but first solve basic requirements firmly and then continue to higher levels of value sequentially.

Key principles and procedures

Functional (Utility Value) is the bottom layer. Covers Saves Time, Reduces Effort, Reduces Cost, Organizes, Informs, Quality. Good delivery makes no difference, but delivery doesn't, is where customers change brands.

Emotional (Value on a Sense Level) Covers Reduces Anxiety, Provides Fun, Design and Aesthetics, Nostalgia, Badge Value Value in this layer starts to make a difference because it involves tangible experience through practical use.

Life Changing (Life Changing Value) covers Motivation, Heirloom, Self-Actualization, Affiliation and Belonging, linked to long-term customer identity. Brand selection is therefore an identity declaration.

Social Impact (value at the social level) is in Self-Transcendence, the feeling that one's consumption has contributed to the good of the surrounding world. It is most difficult to reproduce.

3 Step of use

Start by assessing the brand's position with all 30 elements against its competitors, then choose the elements to use as axes. Understand that each business category gives unequal weight (for example, food and drink give weight to Quality and Sensory Appeal, and banks give weight to Provides Access and Heirloom). Finally, convert the selected elements into tangible requirements at every Touchpoint.

An example in the streaming industry.

The platform that successfully took share from the original player did not win because it had more content alone, but delivered multiple components at once. Both Reduces Cost vs. Subscribing Saves Time TV Channel from Reduces Effort Content Introduction System from starting to watch immediately and opening into Provides Fun, Nostalgia, Therapeutic Value.

Common pitfalls

Trying to be dominant in all components. Bain's research found that companies that scored high on four or more components had a revenue growth rate 4 times higher than a single component, but trying to be dominant in all components leads to indominant in any element.

Invest in Social Impact Before Functional Strength The Framework is not designed to compensate for the underlying impairment Social Impact sits on goods whose quality is not stagnant, or whose services cannot be delivered, will be caught and damaged by consumers rather than by not declaring a stance.

Select elements without looking at the context of the business category. That Quality is important in food but Heirloom is important in banks means that stripping a brand's strategy in another category without fining. Invest the wrong way.

Use the Framework as a research report that is presented once and then kept. Return is born when selected elements become decision criteria in product development, pricing and customer segmentation.

Use internal assumptions instead of actual data from customers This Framework relies on quantitative data from consumers. Using internal team commentary instead of actual research makes the selected elements may not be something the customer values in particular.

Compare to another Brand Framework in the series.

Bain's Elements of Value stands out for measuring with quantitative data, while Bernd Schmitt's Brand Experience emphasizes designing experiences in 4D touch points. Both work complementary. Elements of Value tells what value customers want. BXP tells how to deliver that value in the experience.

Against Patrick Hanlon's Primal Branding, which emphasizes belief system structure, Elements of Value emphasizes a more tangible measure of value. Both answer different questions. Hanlon asks, "Why do customers believe in our brand?" Bain asks, "What value do customers actually get compared to their competitors?"

Douglas Holt's Cultural Brand Strategy works at the Social Impact and Life Changing levels. When a brand successfully captures a cultural ideology, the value in the high two layers of Bain's pyramid appears automatically, while Interbrand's Brand Role in Society and Kotler's Brand Activism Model emphasize enhancing operations to deliver social impact, not just quoting communication.

Martin Lindstrom's Sensory Branding is a dedicated tool that helps deliver Sensory Appeal and Design and Aesthetics in Bain's Functional and Emotional layers.

When not to use (When not to use)

Businesses that are not yet competitive at the basic level, quality goods are not stable, after-sales services are still having problems, or cannot consistently deliver what is advertised. The bottom layer of the pyramid should be solved before this Framework is not designed to compensate for underlying deficiencies.

Small businesses that do not yet have a budget for quantitative research with many consumers will not be able to fully implement the Framework; however, it can start with in-depth interviews and comparisons with internal competitors first, to identify the likely elements of the core.

Businesses whose products have just entered the market and do not have a sufficient customer base to provide reliable research should wait for a database before investing in quantitative research based on the charm of the Framework.

Example of adoption to digital businesses

At SUFFIX, we use The Elements of Value as a tool to talk to the customer's Product Team and Marketing Team to prioritize features and communication points. In case the customer is a SaaS with multiple competitors, the team will perform brand Value Mapping against 3-5 competitors in all 30 components to identify three things: Gap to plug, Uncommunicated Strength, and Undominated White Space.

Actual examples for Platform B2B, where customers are the Operations team. The team found that all competitors featured at Saves Time and Reduces Effort were the same. Going to the Functional class made no difference. The team chose to upgrade to Reduces Anxiety (data leak concerns) and Affiliation and Belonging (being part of the Operations Leader group using the platform). The result was a 30% Pricing move without losing customers because customers bought new value that competitors had not yet delivered.

For the Consumer App, the team often uses the Framework to indicate which layer of value the new features are being developed. If the new features fill the layer where the brand is already featured, the payoff will be low. But if you fill the layer where the brand is weak and the competitor is not outstanding, the payoff will be higher. Using the Framework as a compass of the Product Roadmap, it will change the decision from opinion to strategy that refers to the data of the actual customer.