Task 1.1: Produce a report on explaining what ‘added value’ means in terms of customer service
As Sherrington (2016) notes, value addition can either increase the product’s price or value. For example, offering one year of free support on a new computer would be a value-added feature. Additionally, individuals can add value to services that they perform, such as bringing advanced financial modeling skills to a position in which the hiring manager may not have foreseen the need for such skills.
In the digital age, when consumers can have access to any product they want and have it delivered in record time, companies are struggling to find a competitive advantage. Companies are constantly challenged to find a way to add value to justify their pricing to a more discerning market (Thomas, 2015). Companies are learning that consumers are less focused on the product, and more focused on what the product will do for them. Finding out what the customer truly values is critical to how the company produces, packages, markets, and delivers its products.
For example, Bose Corporation has successfully changed its focus from a company that produces speakers to a company that delivers an uncommon sound experience. When a BMW rolls off the assembly line, it sells for a high premium over the cost of production because of its reputation for high performance and sturdy mechanics. The value-added has been created through the brand and years of refinement.
Added value is the difference between the price of a product or service and the cost of producing it (Andresen, 2016). The price is determined by what customers are willing to pay based on their perceived value. Value is added or created in different ways.
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On the other hand, the Added value is equivalent to the increase in value that a business creates by undertaking the production process. It is quite easy to think of some examples of how a production process can add value. “Adding value = the difference between the price of the finished product/service and the cost of the inputs involved in making it”.
There are lots of advantages of added value which are:
Building a brand: to create reputation the quality and value which the customers are prepared to pay for. Nike trainers sell for much more than Hi-Tec, even though the production costs per pair are probably pretty similar (Church, 2015).
Delivering excellent service: high quality, attentive personal service can make the difference between achieving a high price or a medium one can deliver the excellent service
Product features and benefits: Such as additional functionality in different versions of software can enable a software seller to charge higher prices; different models of motor vehicles are designed to achieve the same effect (Church, 2015).
Task 1.2: Recognize the opportunities to add value to a customer interaction
Added value is an important tactic that can be used by small businesses to acquire and retain customers, increase brand awareness, and differentiate one’s place in the marketplace (Egan, 2016). The five ways to create added value that can be easily implemented into the business plan to the customer interaction are described as below……………..