Value
How to Create Value
When you begin thinking of increasing the speed at which you deliver your product or service, improving the quality, add value at every stage of production, increasing the convenience for your customers, giving better customer service, catering to changing lifestyles and trends and finding ways to reduce the actual cost, you will be astonished at the incredible number of ideas and possibilities that exist around you.
In order for your company to stay competitive, your strategy — defined here as the combination of your product and service offerings, business model and revenue model — needs to create benefits for your customers.
Creating value for customers helps sell products and services, while creating value for shareholders, in the form of increases in stock price, insures the future availability of investment capital to fund operations.
Marketing’s purpose is to create the right volume of customers willing to pay for a good or service in a way that will ensure the long-term profitability of the business.
Understanding your customers also means knowing which customers to keep and which to let go. The old axiom “the customer is always right” is not a bad starting place for entrepreneurs, but in reality it makes little sense to invest in difficult customers that offer little return.
"If customers value innovation and high performance, then the skills, systems, and processes that create new products and services with superior functionality take on high value.
On the right-hand side of the model, you identify your target customer segments, how you develop relationships with those customers and the channels by which you reach them, supported by the revenue streams generated from that interaction.
Many business operators now focus on value creation both in the context of creating better value for customers purchasing its products and services, as well as for shareholders in the business who want to see their stake appreciate in value.
Tradition - One of the largest problems in business today is that many business owners and entrepreneurs find themselves getting “stuck” in their current strategies and struggle with creating new value creation strategies, ones that will take their businesses to the next level and expand their customer bases.
Although the intangible factors that drive value creation differ by industry, some of the major categories of intangible assets include technology, innovation, intellectual property, alliances, management capabilities, employee relations, customer relations, community relations, and brand value.
Strategic benefits include competitive advantage through differentiation, a unique position in the market and the creation of superior value for the customer, market share, brand and reputation.
So it may make sense not to Create Value by creating a product or service, but by connecting existing products and services with the customer.
Strategic benefits also include the future potential that a certain offering, business model, or revenue model creates for your company.
Whether you are a startup business or you have been in business for years, these value creation strategies will help any business in any industry improve value, deliver better value, and drive customer engagement.
The benefits include the advantages or quality of the product, service, image and brand of the company or the brand of the product, values, experience, success one gets in using the product and so on.
When your prices are so low that customers can’t imagine how you make a profit, they will start to question the quality of your product or service.
Create intensity - This means that your business delivers a product or service—whether brand new or existing—with additional strength and power.
And it builds muscles that will help you make the right decisions about your own products and services and the way they connect with your customers. Remember, while it may be difficult, you know that building deep service and deep value into a product is possible.
A good way to articulate a product’s embedded value is to demonstrate what life would be without your product or service (insert infomercial here!).
Your average customers will estimate how much they are willing to pay for your product or service and then subtract what you are actually charging.
A fifth way of creating value and increasing wealth is by improving customer service.
Remember, if everyone is offering the same thing, these factors of the product or service become the basic minimum, or the expected norm in the market.
The first step in achieving an organization-wide focus on value creation is understanding the sources and drivers of value creation within the industry, company, and marketplace.
Next, the company must create an environment for scalable learning, where all participants can learn faster and achieve greater collective value.
"If customers value consistent quality and timely delivery, then the skills, systems, and processes that produce and deliver quality products and services are highly valuable to the organization," Robert S.
This involves finding ways to sell higher and higher volumes of products and services to more and more people at lower and lower prices.
When broadly defined, value creation is increasingly being recognized as a better management goal than strict financial measures of performance, many of which tend to place cost-cutting that produces short-term results ahead of investments that enhance long-term competitiveness and growth.
Now that you have a better understanding of the three types of value, you can create value by impact, intensity, tradition or application, and focus on customer engagement rather than on revenue.
In a world of mounting performance pressure, businesses will need to evolve into movements, mobilizing large numbers of participants in a collaborative quest to discover new ways to create value.
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The value of products and services today is based more and more on creativity — the innovative ways that they take advantage of new materials, technologies, and processes.
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