Page 55 - Harvard Business Review, Sep/Oct 2018

Pump Up

the Value

A crucial step in devising Good-Better-Best bundles Examples
is choosing attributes to add, drop, or vary to create Volume: Netflix prices its streaming service according to the number
different perceptions of value. Adding and dropping are of devices on which content can be simultaneously viewed.
straightforward; the creativity is in varying attributes that
span your G-B-B offerings. The chart below can help you Service: The Princeton Review offers three SAT prep options, ranging from
“self-paced” (primarily do-it-yourself online exercises) to private tutoring.
find nonobvious ways to create Good and Best variations
on an existing (Better) offering. Experience: The band Earth, Wind & Fire offers a “fantasy” package that gives
concertgoers a personal meet-and-greet and photo ops with the musicians.
G-B-B Value Barometer Time period: Season passes at Sundance Mountain Resort come in two versions:
unlimited and discounted midweek.
ATTRIBUTE GOOD BEST Waiting time: Massachusetts General Hospital offers a concierge option
Volume Low Unlimited that provides 24/7 phone access to doctors; many concierge practices also
guarantee same- or next-day appointments.
Service Basic High-end Speed: Federal Express offers a variety of next-day delivery options in
Experience Regular Over-the-top major cities, often including 8:30 am, 10:30 am, and 3:30 pm.
Brand: 90+ Cellars buys excess inventory from highly rated wineries and sells it
Time period Off-peak Peak under its own label, without revealing the wineries’ names.
Waiting time Standard None Warranty: DieHard auto batteries have warranties ranging from
Speed Slow Fast 18 months (gold) to 4 years (platinum).
Number of restrictions: Many airlines offer “basic economy” tickets that
Brand Generic Differentiated are nonrefundable and allow no advance seat assignments.
Warranty Limited Extended Relationship: Memberships to the Boston Symphony Orchestra vary in such things as access to
intimate gatherings with musicians, invitations to rehearsals, and behind-the-scenes lectures.
Number of High None
restrictions Certainty: Many heating oil companies offer homeowners the option of paying market
rates (which fluctuate) or, for a premium, locking in a rate for the season.
Relationship Distant Close Flexibility: TV networks typically sell up to 85% of their ad spots in advance, reserving the rest
Certainty Low Guaranteed for advertisers, such as movie studios, willing to pay a premium for last-minute availability.
Flexibility Low High Skill level: Equinox Fitness rates and prices its personal trainers according to
how far they have advanced in its training institute.
Skill level Basic Experienced

vary, but the tool’s real power is its ability to help firms come up The goal of adding a Good offering is to pick up new budget-
with out-of-the-box options that could be increased, decreased, minded customers without losing revenue from existing ones.
or tweaked. (In a perfect world, not a single customer would move from
Once the brainstorming is complete, a company can begin Better to Good.) Indeed, one of the biggest risks of shifting to
analyzing the potential features it has identified. Three ques- G-B-B is that existing customers will migrate to the new lower-
tions are key: Does the feature have mass appeal or low appeal? priced offering, cannibalizing revenue and margins. Fence
How would adding or subtracting it affect the cost of producing attributes prevent this, by making the downgrade a difficult,
the good or offering the service? And is it a “fence” attribute— unpleasant, or painful choice.
one that constitutes a barrier preventing existing customers Examples of fence attributes abound. In cable television,
from crossing over to something cheaper? ESPN, CNN, and HGTV are always included in “extended basic”
Many managers start by focusing on the Best option, be- (the Better offering) because many existing viewers highly value
cause of its obvious potential for revenue growth (and because at least one of those channels, and losing access makes the idea
imagining new high-end features is fun). But they should begin of trading down to basic (the Good offering) anathema. Hotels
by identifying and analyzing fence attributes—often the most offer discounted “no cancellation” reservations; the lack of flexi-
challenging task in G-B-B implementation. bility creates a fence for many travelers. During a recent tour,

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