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Up and to the Right is the no nonsense podcast where we blend your passion with proven business principles and practical tips. We cover things that matter to small business owners, startups and people interested in becoming entrepreneurs. No buzzwords and no hyped up trends.Read more »

@beyond50percent
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Adding Value as a Small Business | Up and to the Right | Episode 045

Jun 25 · 34 minutes

Introduction The competitive landscape is becoming increasingly complicated. Small businesses often find themselves competing with so-called ‘big box stores’ and online retailers who can run more advertising, negotiate more aggressive pricing when they purchase their raw materials or products; and have stores of cash to weather difficult economic periods. It’s more important than ever to really understand not only what value we currently add to our customers but find new ways to add or change that value to stay competitive. Let’s get valuable! Reminder: What is a Business Principle? When I talked about what made a business principle I ended up here: A business principle is a concept that is both foundational and relevant to all businesses. This set a pretty high bar when it came to identifying what were business principles and what were strategies, missions and tactics. Communication made the cut and that’s what I want to cover today. What is Value? According to Merriam-Webster the definition of “value-added” is: “a product whose value has been increased especially by special manufacturing, marketing, or processing” I want to change the word “marketing” to “experience”. Marketing is a tool to communicate but it’s the experience that changes the value of a product. Why is adding value a business principle? Value qualifies as a principle because of the fundamental requirement to offer something that your customer values more than the money they wish to exchange for it and it is universally applicable to all businesses. Examples of Value-Added Intrinsic Value – Commodities A commodity is an item that can be easily compared on price and is generally just as easily replaceable by another, similar product. Examples might be automobile gasoline or general food items. Luxury Products On the opposite end of the spectrum we have luxury items which are difficult to compare on a cost base and are less replaceable than a commodity. Differentiating Commodities and Luxuries Of course, the scale between a commodity and a luxury item is wide. One of the key goals of marketing is to differentiate brands from competitors but also from the nearest commodity. This increases the overall perceived value of a product with the intent of increasing sales volume, margins or both. A practical way to look at value-added is simply how we separate what we have to offer from the nearest commodity. Consistent Quality Sometimes you just want to be sure that you know what you’ll be getting every time you use a product. Many ‘mass produced’ products rely on this characteristic. Fast food restaurants and automobile gasoline for example. Functions & Features Specific product functions, features and capabilities are a common way to differentiate your products and services from both competitors and commodities. The Swiss Army Knife differentiates itself by adding the value of a combination of useful tools to the standard pocket knife. Durability ...

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