Added Value | 5 ways a business can add value

Summary

This video explains how businesses add value to their products and services to justify higher prices and attract customers. It outlines five key methods: enhancing convenience, building strong branding, offering superior quality, designing aesthetically pleasing products, and creating a unique selling point (USP). Examples include pre-packaged watermelon, Nike's iconic branding, and Lush's ethical stance. By employing these strategies, companies not only differentiate themselves but also encourage customer loyalty and increase profit margins. This process of adding value is essential for driving sales and achieving business growth.

Takeaways

• 😀 Adding value allows businesses to sell products for more than it costs to produce.
• 😀 There are five main methods businesses use to add value: convenience, branding, quality, design, and unique selling point (USP).
• 😀 Convenience is one way to add value by making products easier to use or consume, like pre-chopped watermelon.
• 😀 By enhancing convenience, businesses can charge premium prices for the same product.
• 😀 Branding can add significant value to a product, as customers are often willing to pay more for trusted, recognizable brands.
• 😀 Quality is a major factor in adding value, as businesses can charge more for products that promise better quality, like Marks & Spencer's higher-end food.
• 😀 Product design, including features and aesthetics, adds value by making items more appealing or functional, as seen in Gymshark's gym wear collections.
• 😀 A strong USP differentiates a business from its competitors, helping it to charge higher prices for unique offerings.
• 😀 Lush's ethical stance, focusing on environmental issues and animal rights, created a strong USP that allowed them to charge more for their products.
• 😀 Adding value incentivizes customers to make purchases, increasing a business's revenue and profitability.
• 😀 Regardless of the method used, adding value is crucial for businesses to grow and sustain competitive advantage in the market.

Q & A

What is the primary reason businesses can sell their products for more than the cost to produce them?

The primary reason businesses can sell their products for more than the cost to produce them is by adding value. By increasing the perceived worth of a product or service, businesses make it more appealing to customers, allowing them to charge higher prices.

How does convenience add value to a product?

Convenience adds value to a product by making it easier or more efficient for the customer to use. For example, a business that cuts and packages watermelon into ready-to-eat cubes offers a convenient option for customers, which allows the business to charge a premium price.

Why does branding have such a strong impact on the value of a product?

Branding adds value by creating trust and emotional connection with the customer. A strong, recognized brand like Nike makes customers willing to pay more because they associate the brand with quality, reliability, or even positive feelings, even if the actual product is similar to cheaper alternatives.

What role does quality play in adding value to a product or service?

Quality adds value by ensuring that a product meets or exceeds customer expectations. For instance, Marks & Spencer charges higher prices for food by offering superior quality and high-standard ingredients, which customers are willing to pay for.

How can product design influence a business's ability to add value?

Product design adds value by making the product more desirable through its features and aesthetics. Gymshark, for example, designs its gym wear to have unique features like flexible, comfortable materials or sweat-wicking fabric, which makes their products more attractive and justifies a higher price.

What is a Unique Selling Point (USP), and how does it help add value?

A Unique Selling Point (USP) is what sets a product apart from its competitors. By offering something distinct, like Lush's ethical stance on environmental issues and animal testing, businesses can appeal to customers' values, enabling them to charge a premium for their products.

What can businesses learn from the example of pre-cut watermelon?

The pre-cut watermelon example demonstrates how convenience can add significant value to a product. Although the watermelon itself costs only a small amount, by offering it pre-packaged and ready to eat, businesses can increase the price dramatically, simply by making the product easier to consume.

Why are customers willing to pay more for branded products like Nike footwear?

Customers are willing to pay more for branded products like Nike footwear because the brand evokes trust, perceived higher quality, and positive emotions. The logo itself adds value, making customers feel that the branded product is superior to non-branded alternatives.

How does the concept of quality differ between Marks & Spencer and Aldi?

Marks & Spencer focuses on providing higher-quality food products, which they market as a reason for their premium pricing. In contrast, Aldi sells similar food items at a lower price by focusing on more basic quality, appealing to budget-conscious consumers.

What is the significance of a business’s USP in a competitive market?

A strong USP is vital in a competitive market because it allows businesses to stand out and charge higher prices. For instance, Lush's ethical reputation attracted customers who valued sustainability, setting them apart from competitors and justifying higher prices for their products.