By Richard AGYEKUM
Early this year, in my normal routine walk, I saw an old VW Beetle parked in front of a house. Surprisingly, I noticed that the owner has fixed a reverse camera at the back of his car.
When I enquired from the owner, he replied: “I need to ensure that the car still remains relevant and fit for purpose”. Being excited about his answer and sense of creativity, I understood why some notable businesses are now paying attention to Value Addition. Considering value addition as a business strategy is key to remaining relevant in this ever-changing market space.
So what is value addition?
Value addition is the process of increasing the value of a product or service by enhancing the features, benefits and overall experience of that product or service to meet or exceed customers or end users’ expectations. This can be achieved through innovation, improvement and enhancement.
For example, the new Volkswagen Amarok is a modern technology and redesigned robust pickup with unique features, including a 10-speed automatic transmission and powerful engine options. According to the manufacturers, the vehicle has multiple trims and models, featuring luxurious interiors, cutting-edge safety systems and enhanced off-road capabilities. It has adaptable transmission as well as wide range of accessories.
Why value addition is necessary today?
In today’s competitive business environment, it is not enough to simply produce a product or service. Consumers today want to receive value for the products or services they purchase and ensure it is worth their money.
In their mind, they want to be convinced why they should forego an alternative product or service and remain with brand-A and not Brand-B. One of the challenges that businesses face is that they mostly stick to their comfort zone. Having enjoyed sales and profit for a while does not mean you should be complacent. You must sustain your gains and offer customers a range of products and services beyond what your competitors can offer. The point is, value addition is no more an option; but a necessity!
Value addition is necessary because consumers have become so sophisticated, highly unpredictable and need-oriented. This is based on a combination of factors, including high interest rates, high inflation and political decisions on taxes which have impact on spending and growth.
Since the onset of COVID-19, many businesses have struggled to survive; and others folded up due to consumers’ outlook and response to surging prices and the economy in general. So the reality is that the focus of businesses should go beyond improving internal controls, compliance and improving business units. The solution is to focus on improving the organisation based on value.
Who should consider value addition?
It’s enlightening to note that value addition should be considered by everyone, including individuals, private and public entities. I am certain that the sustainability of businesses largely depends on the improvement of their products and services. Therefore, any employee, supervisor, manager and executive management that does not consider value addition in its short, medium to long-term plan is not worth their position. It shows you care more about your salary than the sustainability of the business.
Some key ways to enhance value addition
- Pay attention to consumers’ feedback and ask for ways to improve your product/services. Consumers are the end users of products and services. Businesses know the essence of consumers; therefore, paying attention and addressing their concerns might save the face of the organisation. This is very crucial, especially in the era we found ourselves – the technology and information era. A customer’s review posted on social media can either enhance your sales or cause dissatisfaction to your product/services.
- Pay attention to market research and trends. Market research and market trends are vital sources of information and movements in the market. Some of the key advantages are that it helps a business to analyse consumer buying patterns and identify areas of improvement of the products and services based on thorough business data analysis. Researchers conclude that considering market research/trends recommendations correlates positively to brand value. This approach enables businesses to produce to meet customers’ aspirations and as a result, enjoy long-term profitability.
- Consider knowledge branding. Branding knowledge goes beyond designing components of products and services. This is when the information of organisations’ products or services trickle down from executive management to the very least in the organisation. As the organisation looks forward for an effective marketing, information of a company’s products and services should not be left with only the marketing and public relation functions. You should consider to share with all stakeholders why your products or services are valuable. This type of branding ensures collective ownership with clear understanding of the products or services of the organisation.
- Choose the right tools and medium to market your products or services. Once the target market and audience have been defined, I think another key thing to do is to decide on where target consumers would easily see the products or services. In the good book the Bible, it is stated that: “No one, after lighting a lamp, puts it under a bushel basket”. Currently, there is no argument that social media is a common platform where the big, small, corporate, government and all persons easily meet. An organisation which is not accessible on key platforms – websites, emails, social media, trade shows, fora and strategic gatherings to market its products or services to potential buyers is on the highways to failure. Let your products or services be accessible to your potential customers. This is what value addition is all about.
- Consolidate your strengths. The strength of the organisation should be jealously protected and cherished. I think it would be irresponsible for any organisation to joke with its strengths to the fact that your competitors have an upper hand of it. You need to focus on your strength, make budget allocations and ensure that the necessary resources are available to enhance your work. Build controls around the processes to mitigate potential risks and weaknesses in the system. For example, the experienced human resources of an organisation should be paid well, motivated and encourage to stay because high-skilled personnel attrition is costly – both in the short and long run – for companies.
- Set a realistic price. What is a realistic price? In my view, a realistic price is customer-oriented pricing. This pricing begins with a complete understanding of the value that a product or service creates for consumers. In setting your price, you must understand how much value consumers place on the benefits they receive from the product or service. Therefore, since price influence consumer decision-making, SMEs or large companies must find a way to tell their story – why should anybody buy your products or services. There is lots of unrealistic and outrageous pricing in the markets. Such misleading pricing practices should be avoided and you should not be part of this ‘get quick’ pricing practices.
Benefits of focusing on value addition
- It brings satisfaction to consumers: When consumers are highly satisfied with a product or service, they are more likely to become loyal advocates for the business’ brand. I am convinced that a brand cannot die when its customers are perpetually satisfied by the products and services they enjoy. Understanding what the consumer needs is key to the survival of any business. The customers voluntarily share the benefits of the products or services to prospective buyers. This is also called positive referrals.
- It provides competitive advantage: In every market, there is competition; unless the market is a monopolistic market where only a single company fully controls the market. In a competitive market where everyone wants to stand out and be the number one ‘go to’ for their customers and potential customers, it is crucial to have a unique selling proposition that will make a business stand out and differentiate itself from other businesses. Value addition is one of the strategies businesses employ to achieve this. By offering additional features, improved quality, tailored solutions to customers’ preferences, businesses can stand out and attract more customers than their competitors.
- It fosters trust and credibility with consumers: Consistent value addition enhances the reputation of a business. Before consumers consider spending money on a product or service, they first examine the reputation of the business. If a business has a bad reputation, it makes them less famous and less preferred by customers. However, if a business consistently goes the extra mile to exceed customer expectations, meeting customer needs and wants, they establish a strong reputation for reliability and customer satisfaction. When a business builds a strong relationship by exceeding customer expectations, practices open and transparent communication and maintains a customer-centric approach, it fosters trust and loyalty. The customer will always prefer doing business with brands that they can trust. If a business cannot be trusted to provide quality products and services, it may have negative impact on the business’ operations.
- It can increase business revenue: Another benefit of focusing on value addition is increase revenue of the business. While value addition seems to focus more on customer satisfaction, it also has a reciprocal benefit of increasing the revenue of the business. This is because there is an assurance of constant sales and inflow of cash. Championing value addition as a business strategy with business mindset will certainly determine whether you will enjoy a long term of profitability. Interestingly, the financial records will always be available to show to all stakeholders your performance. Businesses become liquid when value addition is thoughtfully pursued by producing quality products and ensuring durability and flexibility of the product or service.
Conclusion
Doing business today with value addition as a strategy will lead to consumer satisfaction, gaining competitive advantage against competitors, building trust and credibility, adapting to the constantly emerging trends and increasing in business revenue. Wherever you are in your business, the path to your sustainability is to consider value addition. Pay attention to consumers’ feedback, market research, market trends, knowledge branding; focus on your strengths and set realistic pricing.
The writer is a Business Coach with 10 years’ experience in Internal Auditing and Executive Director of Expert Skills Development Centre. He can be reached on 0506082542 – [email protected]
