The Elements of Value

I recently came across a very good piece of research by Harvard on the elements of value. Broadly, it indicates four major groups of value that consumers actually pay for, viz. 1) Functional, 2) Emotional, 3) Life Changing, and 4) Self-transcendence. It roughly coincides with the Maslow's Hierarchy of Needs.

It helps tremendously in defining how a business should go about improving profits, by examining how we can add further value, or appeal to a value-segment that we may never have thought of serving.

The tuition business in Singapore, especially a full-service one like Frankel Tutors, works mainly at the following levels.

1. Provides hope (life changing). They want to do well in their exams, and the service provides hope for them to do so.
2. Motivation (life changing). They need that extra push, that extra motivation to bring them through the treacherous waters of academics.
3. Affiliation/belonging (life changing). They want to study together with like-minded friends or classmates, especially if they have a unmotivated classmates in their regular school.
4. Reduces anxiety (emotional). They want to know that there is support, that they do not need to worry about their papers.
5. Informs (functional). They lack the information, either due to teachers who do not teach (unfortunately, they exist even in the best schools) or due to their lack of attention in class.
6. Reduces effort (functional). The tuition teacher helps them by performing the research to do well in papers.

By focusing on these in our message, we can add enough value for us to eventually raise our prices (losing price-sensitive customers, but gaining more value from customers able to pay).