Skip to content

4 value creating scenarios


creating value

click on image to enlarge

by Kenneth Rudich

The last post, “Creating Value with Modular Thinking,” discusses how the principles of modular design apply to the concept of creating value for customers, and how the generic value chain for marketing encourages modular thinking to effectively manage value creation across time.  

This post outlines some of the key value creating scenarios likely to be explored when using the value chain for marketing.    

the value creating scenarios

Throughout this blog, I interchangeably use terms like “components” and “modules” to describe the different parts of the generic value chain for marketing.  Regardless of the term used, let me reiterate that value can be created from within an individual component or it can be enhanced by strengthening the relationships between components.  In each case, the added value comes from making a change either in the perceived benefits, the cost, or possibly both.  This will hold true regardless of whether it happens within a component or in the relationship between components.

With that in mind, the four most probable value creating scenarios, as shown in the diagram above, are:

  1. The perceived benefits are increased, the costs remain the same, and the value goes up.
  2. The perceived benefits remain the same, the costs are reduced, and the value goes up.
  3. The perceived benefits go up, the costs go up, and the value may or may not go up (see discussion below).
  4. The perceived benefits go up, the costs go down, and the value goes up.  

external forces

The external forces will have a significant role in determining what actually happens with the implementation of any given scenario.  This is shown in the lower right hand corner of the above diagram.  As you may recall, the generic value chain diagram shows the external forces as exerting an influence on it. 

For example, let’s say a competitor successfully executes the fourth scenario against your organization’s execution of the first one – so that the perceived benefits between the two products remain comparable but now they sell it at a lower price.  Under this circumstance, your organization may have increased the value of its product, but it wasn’t as much as the competitor was able to do.  This creates a possibility for the competition to now have a market advantage.

the curious “?” in the third scenario          

Notice the question mark in the value outcome cell for the third scenario?  There are several sub-scenarios that can explain this.

For example, it may be a prestige item where some people are willing to pay extra for the brand image because it matches the perceived psychological benefits they get from having it.  It therefore derives its value based on the value of the psychological benefits.

Or maybe it’s a case where the rise in cost is only marginal and seemingly fair in light of the perceived increase in benefits.

Or maybe there is a basic version of the product line and a deluxe version, and each individual is left to decide which one represents a better value. 

Finally, there is the risk that a higher price will overshadow the perceived benefits and the sales of that item will suffer as a result.

Consequently, the third scenario is more likely to unfold in a manner that is distinctly different from the other three, with all else being equal.

the two perspectives of value creation

Lastly, there are two perspectives from which to view these value creating scenarios, and they will come into play when tracking the outcomes against the objectives.  I will introduce and explain these two perspectives in the next post.


  1. Kingston Memory Reviews says:

    Wow! This can be one of the most helpful blogs we have ever come across on thesubject. Basically wonderful post! I am also an expert in this topic so I can understand your hard work.

  2. WQ761UA#ABA says:

    Thanks for this post, I am a big fan of this website would like to proceed updated.

  3. Pete Widrick says:

    Thanks for posting. Good to see that not everyone is using RSS feeds to build their blogs ;)

  4. Arlie Breedon says:

    Nice post! You truly have a wonderful way of writing which I find captivating! I will definitely be bookmarking you and returning to your blog. In fact, your post reminded me about a strange thing that happened to me the other day. I’ll tell you about that later…

  5. online auctions says:

    I think, efective marketing is important for an online business. It is through marketing that a certain product or service is known. One way to reach out people is through marketing the qxbid products online.

  6. Bookmarks says:

    This is my first time to visit your blog and I would say you share nice information. You definitely do research and write very well! Keep it up!

  7. […] concept of value from a variety of angles – the definition of value, branding, the value chain, value creating scenarios, and creating value with modular thinking to name a few. One common theme throughout is the idea […]

  8. Kenneth Rudich says:

    Hi Robert:
    Interesting you should mention the slow loading. I’ve been annoyed with how agonizingly slow it can be, but wasn’t sure what to attribute it to. What makes you think it’s the template as opposed to something else? Though I like this template, I’d rather shop for a faster loading one than keep it.

  9. hey excellent little web page ya got here :) I utilize the same design template on mine yet for whatever weird reason why it appears to reload sooner on this web site despite the fact that your own carries a lot more multimedia. Have you been making use of different plug ins or widgets which speed it up? Do you think you could quite possibly give the titles so I can use them on my personal online site so twilight new moon users could watch twilight eclipse online trailers and films more easily I’d personally be ever so thankful – cheers in advance :)

  10. Kenneth Rudich says:


  11. physical therapist says:

    My cousin recommended this blog and she was totally right keep up the fantastic work!

  12. facebook poker says:

    I actually need to get out of my apartment a lot more and give up wasting the majority of my daytime hours learning poker on myspace or facebook for the reason that in recent times i have been not been able to get up to date about this. Even though I find it difficult to disclose that I completely come to an agreement with every last expression, it is very good to browse through some sensible commentary in placed of the popular crap I come across flying around the net.

Leave a Reply