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The Value Curve Model: Visualising Value Propositions

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In an increasingly competitive environment, product managers face the challenge of finding ways to differentiate their products and services. Furthermore, as markets evolve over time, they split into multiple segments and it can be difficult to determine which factors are of most importance to customers.

Visualising value propositions

The concept of a Value Curve is to use a diagram to compare products on a range of factors by rating them on a scale from low to high. These can be features, benefits or ways in which a product is distributed or consumed. The combination of these various factors defines the product or service.

Multiple Value Curves should be drawn, to allow a visual comparison with competitive products and to unearth possible spaces or gaps in the market. By investigating the feasibility of these gaps (Will customers want this? Can you afford to offer this?) It may be possible to identify changes to the product that significantly alter the value proposition.

The concept of Value curves was introduced by academics W Chan Kim and Renee Mauborgne in a Harvard Business Review article from January 1997 entitled “Value Innovation: The Strategic Logic of High Growth”. It was expanded upon in their best-selling 2005 book, “Blue Ocean Strategy”.

Value Curve Case Study : ING Direct

There are numerous examples of Value Curves and a quick web search will reveal case studies about Nintendo’s Wii, Accor Hotels Formule1 and Easyjet amongst others. We searched high and low for something that hasn’t had a Value Curve analysis done and we honed in on ING Direct’s Savings Maximiser account here in Australia. Whilst we aren’t privy to the full details of this product, we know enough from their website and team members having used these accounts to be able to define the product.

ING is a global financial institution. ING Direct is a sub-brand that covers consumer banking products – the “Direct” refers to the direct-to-consumer aspect of the products. ING Direct started off with savings accounts – no branches, no ATM network, no peripheral products. This light model meant that ING had lower fixed and operational costs and combined with its clout in financial markets, it was able to offer interest rates significantly higher than that of competitors and do so with no account keeping fees.

To start with, we put together a simple chart as shown below. On the y-axis we have a spectrum that ranges from “low” to “high”. On the x-axis we record a number of features or elements that define the product: the interest rate offered access to funds, channels for interaction and of course, fees.

We show the ING Direct Savings Maximiser account in green, comparing it to a traditional bank savings account in blue (the type where you lock your funds in for x number of months or years) and a traditional bank current account in red (the type your salary gets paid into and from which you access funds).

Value Curve analysis comparing ING Direct's Savings Maximiser with traditional products

Value Curve analysis comparing ING Direct's Savings Maximiser with traditional products

Looking at the Value Curve, it’s very obvious that the ING Direct offering differs greatly to its rivals. By cutting out costly traditional elements such as a branch network, ATMs and additional banking products it is able to keep its business model simple and its costs down. It provides a stripped back interest bearing account with a higher rate of interest than rivals, and it does so with no fees. Note, on a Value Curve price is inverted – a “high” value means a great price – which is zero! A “low” value means a higher price. This inversion sometimes seems counter-intuitive, but think of it from the customer’s perspective – what price would make you happy?

The rival savings account (in blue) also offers high interest rates, but these require the customer to commit funds for a period of time and so they have a low value in terms of access to funds and don’t really take advantage of the branch and ATM network.

The competing current accounts are more accessible, but provide low interest rates and are also the most expensive accounts typically incurring monthly fees.

Of course, ING Direct’s service isn’t for everyone. It’s reliance on internet and telephone access meant that in the early days it missed out on the less technically savvy consumer out there. But it has developed its product with particular individuals in mind and has gone from strength-to-strength as customers become more au fait with online banking. It has continued to refine the product over time with features such as bonus interest and recurring instalments. Its entire marketing message resonates with an audience that wants simple, fee-free, high interest offering.

You’ve made the curve, now what?

Whether you are working on a new product development or you are refining an existing product, Chan and Maugborne suggested four ways to alter a product based on Value Curve analysis. These are:

  1. Raise: Can any existing elements be enhanced or increased? ING Direct’s primary focus is on maximising the interest rate it offers to customers.
  2. Reduce: on the flip-side, are there any elements that can be reduced? These may be features that are of little value relative to their cost. With no branch network, ING Direct has a slightly reduced access to account compared to a current account – but the types of customers it caters for do not value a branch network highly for this product.
  3. Create: is there anything that can be introduced that to date has not been available within the market? A new feature that makes the product more effective in solving the customer’s problem. ING Direct introduced the ability for a portion of a regular salary to be automatically paid into the savings account.
  4. Eliminate: are there any elements to the product that add no real value to customers but are simply there as part of a status-quo. It’s perhaps very obvious that customers dislike monthly fees, but most banks need to charge these to cover their costs. However ING Direct was able to eliminate bank fees by cutting out costly elements such as a branch infrastructure.

In achieving the ideal Value Curve, your product must be both relevant and compelling for customers, and should be distinct from competitors in attributes that they value.

Putting the Value Curve into practice

The Value Curve is sometimes criticised as simplistic, academic and overlooking of less tangible factors (brand personality and so on). There’s also a risk to assuming that all customers want the same thing – as noted, there are multiple segments in any market. The inverting required when showing price can also cause confusion.

That said, it’s an easy-to-use tool that pretty much anyone can understand just by looking at. If your product’s Value Curve closely follows that of your rivals, you will likely have a tough time differentiating it. Spend a bit of extra time identifying what values your target customers value most and you may be able to tweak your product (cut a little bit of this, add a little bit of that) and you will become more relevant and compelling.

As always, we welcome discussion. Have you used the Value Curve in your role? If so, how did you go about the process and what was your experience? Has it helped? Are there any pitfalls or challenges in using the Value Curve?


For more information, we recommend reading the original article by Kim, W. C. and Mauborgne, R. 1997. “Value innovation: The strategic logic of high growth”. Harvard Business Review (January-February): 103-112.

Please add your feedback in the comments below.

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  • Good post. I’ve used The Value Curve Model in the past and really like the immediate visual impact it gives. What I’ve also done on the x-axis is to rank the items from most important on the left to least important on the right (importance of course is relative to your target market). What that points out is that if you are lower on the left, you know where to invest your development efforts.

  • Fred says:

    Love the graphs and the product strategy!

    I challenge the interest rate column as I find that a lot of the term deposits rates for low time periods are actually lower than the 5.25% earned with the ING account these days.

  • Veronica says:

    True! Value curves are great for visualizing where the product opportunities are, but (in my experience) it takes long to agree on what variables to use on the X axis if the exercise is done without external input. This is, yes we can do research and understand what are the main characteristics of products are, but we always have to ask customer’s what are the main benefits they see in our products and in competitor’s.
    Also when thinking about competitors is not always obvious who they are. For example, Cable TV (i.e. Foxtel) competes with the local video store, Internet, the Cinemas and so on!
    It might seem obvious but when doing this exercise in house, these details escape the busy Product Managers.
    I’m afraid the value curves are not widely used in company’s today… Am I wrong?

  • Andrew says:

    Your example of the ING Direct Savings Maximiser is interesting as ING Direct seemed to have responded not by improving their original product but by adding a new product that essentially dovetails into a value graph by having features that top the values where the original product doesn’t. The product is the ING Direct Orange Everyday transaction account.

    Whilst they still don’t have the branch infrastructure, they have given the new product unique features that cancel out some of the other negatives. For example if you withdraw $200 or more from ‘any’ ATM they will give you $0.50 and pay the ATM owner fees.

    Also even though its not an Allfinanz provider, ING Direct do offer other products such as home loans.

  • Prasanth says:

    Nice article, not sure of the facts and interest rates etc., but the message is well delivered, thanks for sharing

  • Nic says:

    when you use value curves how do you ensure you are not self serving in your approach, how do you make it more of a science? any tips or good references to recommend?

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