Business Model Design and Learning

A Hierarchy of Customer Value

Three decades of marketing research strongly suggests that perceived value is based on assessing product costs and benefits in relation to goals and ­objectives.11 We can see how this works using Woodruff ’s12 customer value hierarchy, depicting three levels of customer goals and purposes (Figure 3.1).

Figure 3.1. The customer value hierarchy.

According to Woodruff, customers think about value in a means–end way.13 If we start at the top of the hierarchy, we can see that the customers’ long-term goals and purposes shape the desired consequences in use or current job to be done. In turn, the thing that the customer ...