#Business #theprocessofaddingvalue
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Adding value is the process of taking raw materials and using them in such a way that the end product created is worth more than the cost of the raw materials used to create it - value has been added.
The added value is the difference between the price that is charged to the customer and the cost of inputs required to create the product or service.
○ E.g. Customers are prepared to pay more for potatoes when they are packaged as oven chips than they would be willing to pay for a bag of potatoes.
○ If value is not added to the materials and components that a business buys then fixed costs cannot be paid and no profit will be made.
The greater the added value, the more successful the business is likely to be and the higher their profits.
Some of the methods of adding value allow for product differentiation, which allows the business to charge a higher selling price
Product and marketing teams will constantly explore ways in which to increase the added value.
○ The most common methods have been summarised in the diagram and include branding, offering more convenience to customers, improving the product quality or design, and building out the unique selling points.
Examples of Added Value
How can businesses use customer feedback to enhance value?
What are some strategies for adding value through improved customer service?
How does the supply chain contribute to the value-adding process?
What are the benefits of adding value for both the company and the customer?
How can technology and digital transformation help in adding value?
What are some examples of companies that have successfully added value to their offerings?