How can you make your businesss stand out? And what’s the difference between adding value and just adding stuff
Think of a number, any number. Now multiply it by several million. This is the approximate answer you get when you google “adding value” (or most other things for that matter).
Added value is a much used phrase but what does it actually mean in the context of letting your customers know about your organisation?
The standard method of analysing added value is in the form input-process-output. The process part is the so-called “black box” where value is added. Initially this was applied solely to manufactured goods with the input being raw materials, the process being manufacturing and the output a whizz-bang widget.
It became apparent that this approach left out a whole range of internal processes, systems and knowledge-bases. This led to various ideas of how to incorporate added value to cover not just from a manufacturing process but services and other intangibles such as innovative design systems, patented technical wizardly or the expertise of staff. This is the basis of leading strategy thinker, Michael Porter’s value chain which attempts to take account of all these internal areas.
Looking at added value through marketing eyes, it becomes about establishing competitive advantage through differentiation
The first thing to realise is that you are not looking to analyse and add value simply for the sake of it - it’s for the benefit of your customers and hence for your own bottom line.
Looking at added value through marketing eyes, it becomes about establishing competitive advantage through differentiation. Differentiation is the process of showing customers that your product or service is different and better than your competitors.
First of all you need to understand your customers. How are you different from your competitors? In reality, if your widget is the same as everyone else’s but in blue, and doesn’t actually make a tangible difference to your customer, then you may need a re-think.
This is where market intelligence is vital; understanding the size and structure of each market sector you operate in, knowing who the main customer groups are and understanding what they want. Don’t forget to factor in potential market changes. There’s no point being able to design and build the best widget if the market suddenly dries up - remember the school building programme.
One way of differentiating your product and services is psychological - simply tell people enough times how good you are and eventually they’ll believe it
Establishing a competitive advantage via differentiation may be difficult; for example, if you are dealing with commoditised products then your differentiating point may be after-sales service, speed of delivery or reliability rather than the characteristics of the actual product.
One way of differentiating your product and services is psychological - simply tell people enough times how good you are and eventually they’ll believe it. Of course, this is a slightly cynical approach and for long-term success needs to be backed up with consistency in terms of product quality and performance.
Of course, competitive advantage can also be derived from having a world-beating product but the point is that your potential customers still need to understand how this will benefit them. Use your marketing team to shout about how it’s bigger, faster, more reliable, uses less energy, has a shorter build time than anything else on the market.
The long-term aim is to become their supplier of choice. Think of this in consumer markets; how many times have you been to a particular supermarket simply because the last time you went, the shopping experience was fine or the price was competitive.
The long-term aim is to become their supplier of choice.
The lesson is that once you have established that your brand is different then you can start building trust with your customers. All of this means that adding value through differentiation requires a good deal of consideration. Get it right and you’re laughing; get it wrong and you’re Woolworths, C&A, Ratners, Laker Airlines and De Lorean.
David Mycock is the Head of Marketing for Shepherd Gilmour, an international engineering consultancy based in Manchester, a national committee member of CIMCIG, the Chartered Institute of Marketing’s Construction Industry Group, and a committee member of TARGET, a construction marketing organisation based in Leeds. For further details visit www.cimcig.org and www.targetmarketinggroup.org.