Master the Art of Business
A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.
There are nine common Economic Values that people consider when evaluating a potential purchase: efficiency, speed, reliability, ease of use, flexibility, status, aesthetic appeal, emotion, and cost.
Every time your customers purchase from you, they’re deciding that they value what you have to offer more than they value anything else their money could buy at that moment. As you develop your offering, one of your first priorities should be to find out what your potential customers value more than the buying power of the dollars in their wallets.
Everyone has slightly different values at any given time, but there are a few common patterns that appear when people evaluate a potential purchase. Assuming the promised benefits of the offering are appealing, there are nine common Economic Values that people typically consider when evaluating a potential purchase. They are:
In the book Trade-Off: Why Some Things Catch On, and Others Don’t, Kevin Maney discusses these common values in terms of two primary characteristics: convenience and fidelity. Things that are quick, reliable, easy, and flexible are convenient. Things that offer quality, status, aesthetic appeal, or emotional impact are high fidelity.
Almost every improvement you make to an offer can be thought of in terms of improving either convenience or fidelity. It’s incredibly difficult to optimize for both fidelity and convenience at the same time, so the most successful offerings try to provide the most convenience or fidelity among all competing offerings.
If you’re craving pizza, a table at the original Pizzeria Uno in Chicago is high fidelity; Dominos home delivery is convenient. Accordingly, Pizzeria Uno benefits more from making the dining experience remarkable, while Dominos benefits more from delivering decent pizza as fast as possible.
The tradeoffs that are made in the development of new offerings are what give each option its unique identity. Here’s an example from the apparel business: Old Navy, Banana Republic, and Gap are owned by the same company, Gap Inc. All three lines make the same types of clothing—shirts, pants, and so on — but offering different tradeoffs.
Instead of attempting to make a single clothing line that’s designed to appeal to everyone (which is impossible, since everyone wants something different), the company focused each line around a specific tradeoff. Old Navy emphasizes functionality (efficacy) and low cost. Gap emphasizes style and fashion at a moderate cost. Banana Republic emphasizes aesthetics and status at a premium cost.
Each line has its own identity and appeals to a different type of potential customer, even though the clothes may be manufactured using the same processes and the revenues flow to the coffers of the same company.
"A successful business is either loved or needed."Ted Leonsis, former executive at AOL and owner of the Washington Wizards and Washington Capitals
Master the Art of Business