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In addition to the basic definition, how does intrinsic value affect business planning, marketing, sales, and everything else involved with running a business? What`s the difference between intrinsic and inherent value?

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Founder Girls with Goals

Hmm....interesting that we don`t have much discussion on the topic. Try it a different way:

Imagine you have five $20 bills in your pocket. How much are they worth? Would you say.....a hundred dollars? According to what? Suppose you were a castaway, lost on a small South Pacific island. What would you buy with your dollar bills?

The intrinsic value of the money might be that you could start a fire more easily with the paper. You might also use it to decorate a wall of woven palm fronds, to remind you of home. Other than that, it has no value at all.

A thing (or service) is worth only what someone will pay for it. So what`s the intrinsic value of a house, particularly in today`s collapsing real estate market? Would you say that at least the building materials are worth something? Those too, were purchased at the time the house was built, and their value was based on the economy of that moment.

Of course a house offers protection from the elements, maybe even warmth in the winter....if the electricity and gas, or oil heating system is still supported. Otherwise, if it doesn`t have a fireplace, it won`t even offer heat in the dead of winter. Then you could burn some of the wooden studs, or maybe some of the other flammable building materials.

Suppose there were only 10 people left in all of the country. What would they do with your product or service? How much would they be willing to exchange? Money would be meaningless, so what would you want from them?

When you think about your marketing plans, e-commerce system, and all these other discussion topics, do you also think about the fundamental, intrinsic value of your product or service? What if nobody used money anymore: Do you have something that people would be willing to barter for?

Many threads ago I tried making the point that money ≠ wealth. This is exactly what I meant but you weren`t buying it then.  

The overarching goal of my plan with the Shopper`s Guide is to create intrinsic value in the form of local-level economic relationships that might not otherwise happen. I`m essentially creating a database & network map of independent and/or sustainable local manufacturers, retailers, service providers, etc., that focus on community quality first, with ad sales quantity being a function of community quality.

Our general marketing approach is to present our advertisers as community members who actively contribute to our area`s quality of life through their business activities. The goal of this approach is to consolidate the market of consumers for whom shopping is a form of community activism — they conscientiously "vote with their dollars." I`m the first to consolidate this market here, and it is an excellent one to offer advertisers given the demographics & psychographics in a college town like this one. Without consolidating htis market, a lot of consumers & businesses would simply not find each other.

By the end of the year, I will have something worth bartering for: access to a market of consumers who make their purchasing decisions primarily by their values, and who have enough disposable income to continue doing so even through a recession. And if the dollar collapses altogether, heaven forbid, I will be in a position to introduce a community currency or credit scheme into the local economy through my advertisers.... which makes my network worth bartering into on two counts. (And I even have a community currency plan on stand-by! A 100% gold backed one that is exchangeable on demand with FRNs and requires little up-front investment, no less.)

As for the difference between intrinsic value and inherent value... to me, "intrinsic" indicates the value of a thing-in-itself, while "inherent" indicates the potential of a thing-in-itself to create value or become valuable. So for example, food has intrinsic value, while iron ore has inherent value.  But that`s just my opinion as a vocabulary geek. your mileage may vary.

—paula

I remember that long-ago thread on money versus wealth, and we didn`t disagree all that much. :-) But either way, instrinsic value is that "thing-in-itself" concept that matters so much in all business exchange. True, money has no "in-itself" value when it`s dollar bills. And wealth is the acknowledgement of intrinsic value.

Money is a symbol of stored effort...work. We can look at gold, and call it money or a metal. As money, it has no intrinsic value. But as a metal, it has many rare properties, necessary for various real things. As a decoration it also has rare properties. The intrinsic value isn`t the money....it`s the rare metallic and decorative properties. In past jails, cigarettes were assigned the symbol of "money."

New business owners get distracted trying to sell their items on the basis of "assumed" values. For example, someone might put a frozen meats business together. They could sell the food and flavor value---the intrinsic value---or they can passively sit back and believe that they`re selling "what everyone wants to buy."

This idea of a descending chain of value based on someone else`s marketing spin is where we need to step back and re-think. People try to sell clothing on a generic Web site, believing that they have a product "because lots of people sell clothes." Is that a value? Is that the intrinsic value of clothing---that lots of people buy clothes? No.

Inherent value is based on descending premises . That`s not what the dictionary says, but then the dictionary makes little distinction between many similar-but-not-equal words. Inherency, familiar in the term "inherited money," is this mistake selling the wrong type of value based on an assumed inheritance.

"This house is worth $450,000 because the house down the street that`s similar sold for that price." In other words, the so-called value of the house is inherited from some other house on the basis of nothing at all other than possible similarity.

You can`t "create" instrinsic value. That`s the whole point and concept that`s under discussion. The takeaway is that until and unless you articulate the intrinsic (innate is a decent synonym) value of whatever it is, you can`t really develop a strong marketing plan.

"What really are we selling?" That`s the question so many people miss, in my opinion.

Paula, in your new project (having seen the site), you`re selling a sense of physical community. Not online, virtual community---physical community. The intrinsic value is the basic socialization need and structure of human nature. The unique sales position is that it is NOT a worldwide, vague, anonymous set of businesses. It`s the "anti-Online" getting back to the roots kind of interaction.

Without knowing the intrinsic value, it`s much more difficult to bring into sharp focus your integrated marketing strategy. Understanding intrinsic value helps strip away the distractions, and brings key selling points into that focus.