Building Value Chains: Helping Customers Define Value - Coursework Example

College Building value chains: Helping s define value Introduction and literature review A value chain is a form of venture in which business organization incorporate in order to come up with the maximum benefit of a product or service to their customers. This concept of value chain was discovered by Michael Porter who described it as the value added during the production and final transportation of a product to the consumers. Building value chains requires participation of the customers so that they may give their vendors an insight of the value they acquire from the service or the product. Value chains include overseeing all the activities from production of the goods and services to the actualization where the consumers pay for the product at minimal costs. The process of coming up with the correct data for a value chain must therefore involve the cost of raw materials, the cost of production and processing and thereafter the delivery of the product to the customer. The delivery must give the customers utmost satisfaction where they acquire the product with ease in terms of transport and at an affordable price. Customers are most likely observed to shop or get their services from less costly vendors hence the importance of value chain. (Moore, 2013) Value chain includes the after sale delivery of a product to the customers doorstep. For big organizations the cost of delivery is minimal to the total profits acquired from the sale. In view of this, delivering a product to the consumer is a strategy for value chain as the customers views the service as an added advantage of purchasing the product. Finding new methods to build the value chain is the top most strategy employed by most businesses thus improving the customer loyalty to their business. Value chain of a service is built by delivering the service to customers. The service provider goes to the desired location of the customer and accrues the transport cost which the customer views as beneficial and offers the service in the comfort of their customer. For instance a masseuse business can adjust to fit their customers’ needs and time plan by going to the homes or offices. The idea behind finding the customer and not vice versa is for the customer to feel valued and at the same time save their transport costs and time as well. Any little aspect that may seem beneficial to a customer despite the minimal cost should be added to the value chain. A value chain is the therefore the list of all the activities that a product or service goes through till it’s ready for purchase by the customers. It is important to note that a business determines its value chain as the total costs of all the activities of processing and producing the product or service until it reaches the consumer. However, this value chain of one organization is inclusive of other value chains of other complementary organization that assist in the success of production and transport. The firm that provides raw materials for a business has its value chain which they carry forward to the business that receives the raw materials. The different value chains result into one value system thus all businesses must look at the entire value system before releasing the product to the customer. The value system determines the cost of the good or product to the customers. Through this, the businesses establish selling price to their customers. (Horngren, 2012). On the other hand, value chain has been categorized into two main forms of activities where we have the physical value chain and the virtual value chain. The physical value chain includes all the necessary substantial labor required for production and processing of a product or service. This is the direct effort of dealing with the service or good before it reaches the customer while virtual value chain is the amount of effort done via the computers or any other digital form of work. In essence, virtual value chain is said to be less than the physical value chain and to reduce the cost of the service to the customer, companies are adapting the use of virtual value chain to minimize their costs and thereafter gain the maximum profits with ease. Virtual value involves spending less time on the production and in business the time saved is converted to monetary value where one uses that time to work on other matters. To improve a value chain, business organizations determine methods in which they can cut off costs they incur with their intermediaries before the end product reaches the customer. The value system analysis gives businesses a chance to establish the most important costs to the unnecessary costs which they cut off and consequently lead to a reduced market price to their final consumer. The purpose of a value system is therefore very significant as it can result to reduced prices of products. Dealing with the necessary matters at hand during production and transport then cutting off the excesses is a trend adapted by business in order to maintain their customers. Moreover, the value system is important for the strategizing bodies of a business company. The value added throughout the market scene from inputs to output and all the activities involved make up the value system. Through this, and strategists will help the business develop easier and cheaper ways to acquire their inputs and to deliver their output to their customers. While taking into consideration the end value that a product or service gives to the customers, a business strategist will use the value system to provide a more conducive environment for both the company to male their products and for the customer to access the products. This system is meant to give the companies equal advantage as their customers and in this case minimal after sale services like deliveries take place. Through the value chain, the end product is meant to give the consumers maximum value so that the customer may continue purchasing the product or service. Therefore consumer value is the measure of importance a product or service gives to the desired customer. This is the value of a good or service to the end consumer and not the customers’ value to a business. It is the work of a business organization to maintain the highest customer value it can afford to give to a consumer so as to ensure their consumers loyalty. The consumer value includes customer care services, affordable prices and also the delivery or accessibility of a good or service to the customers. The value the customer gets from the goods and services include all the differences of the cost and the access of the good to the customer. Additionally this difference may be minimal but the customer still refuses to purchase the product the service or the good must have an importance to the consumer. The importance of thee products can improve customer value or cause its decline depending on the business offering the product and the consumers economic status. However, some services and goods come with urgency and these include the primary wants and their availability to the consumers should be constant and at an affordable price. Customer value of these goods never depreciates and therefore the businesses always make profit from such products. To enhance customer value, the businesses must provide the best services to their customers and this will give more potential customers a chance to purchase. Creating the correct avenues to the customers gives the businesses profitable incomes form their sales. The idea of creative marketing is employed by the businesses so that the maximum number of customers can acquire the services. Creative and innovative measures are taken by the company management so that they may improve the value of their goods and products. The improvement may come in annual changes of the appearance of a product, taste or even the color. Customers embrace change so long as the product remains available and affordable. Therefore it is necessary to enhance customer value by improving the nature of a service or product. Another method to ensure customer value is upheld is by checking what the organizations in the same line of business offer their customers. Maintaining competition and keeping up with the pace of other related businesses is crucial in order to give your customers the highest quality of products and services to the customers. The idea of competition is dealt with by giving the best in the market so as to get the highest number of customers in the market as compared to the other firms. Giving the customers the best enables the competition in the market to be kept at the highest level possible. It is through creative measures that competition is upheld as customers shop and gets their services from the best in the market. Customer value is maintained and improved by a business by giving the customers promises of the best offers in the market and a set of benefits from purchasing their products and services. The benefits come in form of the enjoyment services give the consumer and also the affordability of the products. The prices of services and products give the customers a chance to choose where to shop from and through this the most affordable provides the business with the most customers. The cheaper services and products give the consumers a chance to save and use the money on other useful necessities. Nonetheless, the enjoyment that a service gives to a customer provides them with the inability to choose against buying the product. The product may be very expensive but the enjoyment may be inevitable to some customers hence despite the prices. For a well developed business, knowing the value their services give to the customers is important and carrying out consumer research and surveys is always a factor to be considered. The idea of how the service or products benefit the consumers helps the management of a business realize the amount of profit they acquire compared to the benefit the products give the customers. In case of very low prices that give consumers maximum benefits, the business companies may opt to increase the prices of these products so that the value they give to consumers may equal their profits. The essence of increasing the price is to come up with maximum profits that ad up the value of the products. On the other hand, customer value is created and improved by promoting a product or service through awareness to the potential consumers. The promotion is part of helping the customer discover the value of goods and services and can be carried out in diverse ways depending on the nature of the target group. Both the customer and the business companies assist in developing the customer awareness for a product. Spreading the awareness is carried out by both parties where the business does the main job while the customers share the information among themselves. These efforts provide basis for improving consumer value. Customer value is now described as a form of realization by customers compared to the earlier known theory of the sacrifices that customers make to purchase a service or product. With this thought the customers are said to buy goods and services taking into consideration the benefits they acquire form their purchases and not the sacrifices they make to acquire the goods and services. Following this realization the customer value is improved by the customers themselves as they are now aware of why they necessarily purchase some goods and services. The awareness of all the benefits and the period of time a good or service will be of help to a consumer is a hint to the business companies to give their best shots to please their customers and attract more potential shoppers. The business organizations therefore carry out thorough research from their customers to attain the information they need to survive in their highly competitive businesses and come up with the correct strategies to develop maximum customer value from their loyal and potential customers. (Bettencourt, 2010). Research questions Building value chain by assisting the customers determine the value from the products and the services they purchase can be done through research. Several research questions are prepared by the business organizations that want to carry out their research and inform the customers of their products. Creating awareness is task full and earlier preparation is thoughtful so as to get the correct data and meet the desired objectives. The research questions are compiled by the management and a team of the employees in the business especially those that go out to the field to meet the customers. The research questions must have a diverse form and asked through online methods or physical contact where the team of surveyors meets their customers. (Thomas, 2012) The most popular question in the array of questionnaires the businesses prepare for their customers is on timing. The time customers started using a particular product or the service is a crucial part of research for any business especially for those that are monopolistic and offer the service or goods solely. The use of a product or service give the company a clear insight of the number of customers who discovered the service or products as early as when it was brought to the market. This type of question gives the company a sense of recognition in its time line as they create a record of their progress. This type of question can also give a clear picture of the number of customers who have been loyal to a service or purchasing a product and through this the company can award the customers hence improving the customer value. Another possible question to customers is asking them on the most exciting offer they have experienced from the purchase of the product or the service. Giving the customers a chance to answer this question gives the company diverse answers and they are able to realize the offers that were most attractive and therefore focus on other offers in the same line to improve the customer value. The question is extended on the length of time the customers prefer their best offers to last and their preferred seasons. The customers could list the seasons when they inarguably have money to spend and would do anything for an offer. The business team captures the time when they can make the maximum profits from their customers and hence fix that in their calendar of events. On to other areas of concern, the business includes in their list questions the negative implications that a service or good is thought to have on the customer. The view of the customer on a service or product is rather important as the company is able to clarify any form of negative rumor form the public and hence build a sense of trust in the use their products to their loyal customers. Any clarification would contribute to the creating a new group of customers and hence maximize the profits of the business and improve customer value. The market may be full of all sorts of rumors from potential competitors and a clarification to customers renews the trust of customers in a business. A question on the quality of a product or service to the customers is a must have in the research. Customers must develop a good relationship with a business in order to give their honest views on the quality. Having the participation of customers on the quality of the products is important as they feel important members of the business as a whole and through the answers the business may make the necessary adjustments to suit the taste of their customers. Caution on the business negative critics must be upheld as some customers are more interested in the failure of business for reasons known only to them. Therefore it is important to ask customers if they are satisfied with the quality of the service or product. The other critical area during the customer survey is the question on the pricing of a product or a service. However this question is difficult to analyze as the customers will always want a reduction in the market price of any commodity or service. It is therefore important to note the argument given by customers as they may reduce the profit margin of a business. A large organization however may reduce the price to please the customers if it does not greatly affect their profits. The pricing must however be dealt with as this is the most attractive factor to most customers. Evaluating the value system and cutting off some costs to reduce the market price can help improve the customer value. The thoughts of the customers on the availability and accessibility of a service or commodity to the customer are of importance to improve the customer value. The customers may argue on the shortage of commodities during a certain season especially when they are in high demand. The customers may suggest for the business to increase the availability of a commodity as the business may not have realized how many people suffer on its shortage and have to buy other alternatives. This is a serious point to note for any business as shortage of their product or service gives their competitors a chance to get their customers. An insight of what the customers turn to during shortage is therefore important as they most likely turn to their competitors. Asking customers on their accessibility to a service or commodity is also of value as they may want after sale services where they are not offered or free deliveries in case of the small fee customers pay for some deliveries. Using the value chain, businesses look into such concerns of the customers. The customers can also be interviewed on whether they would prefer rewards or offers for participating in the highest purchases. The customers are given a chance to basically make their suggestions on what they would like from the business. Asking on the popularity of their service or product is important as some public members might shockingly not be aware of a service or product. Through this questions awareness is created to those who had zero information on the existence of a business. The research questions are then put together by the managers and the team of surveyors for the customer value research and several methods are put in place to conduct the questionnaires. Methodology Improving the customer value is done through several methods and serves the purpose of offering the customers with the best quality of services and products. The methodology used during a research for customer value starts with the sampling of the questions to be asked to the customers. The questionnaires listed are documented in both soft copy and hard copy so as to reach all the members of a society. The main purpose of the questionnaires is to give information to the customers and to also acquire information that will help build the value chain of a business. Questionnaires give the best results in terms of feedback from the customers. Questionnaires are done both online and in the physical manner. The online questions are posted in the business website for online followers of the business to answer. Online questionnaires are mostly posted by businesses that encourage online shopping of goods and booking of services. Through this, the customers are able to see the questionnaires as they shop for items. The online survey is fast and easier to capture by looking at the number of responses from the questionnaire. The questionnaires can be yes or no answers which will be easy to analyze. Physical questionnaires are done through face to face interviews or through a phone call. Face to face interviews can be done while the customers visit the business to shop or get their preferred services. The interviews must be short and precise as customers might be in a hurry to shop and leave. The face to face questionnaires are random and for customers who visit the business premises to get services the questionnaire may be conducted by giving them a pamphlet in which they answer the questionnaires. The face to face questionnaires are more accurate than the online or telephone method of conducting questionnaire. Telephone questionnaire are more or less close to online surveys as one is not able to see the reaction of the customer. They normally occur with business firms that deal with phone calls or mobile service providers. This is because they have the telephone numbers of their customers unlike other businesses. Another method to carry out a survey is through an advertisement. Television advertisements capture more customers than the gazette or radio advertisements. A television advertisement must be as entertaining as possible to capture the attention of the viewers and through the advertisement the business displays their products and explains the importance of the product or service to the viewers. An advertisement gets to all people not necessarily the loyal customers and through it a business acquires more customers who may not know of the existence of the business. While conducting an advertisement, stating clear the major factors of the product such as the price and the location of the business is quite important. Through the idea of marketing a business, the customers are educated on the need to have the service or the particular product. As stated earlier any form of negative criticism in form of rumors is clarified while conducting the marketing and the customer satisfaction evaluation. The employees of a firm are rather important as they are the people who come into close contact with the customers. Therefore, interviewing the employees is a good strategy to use and educating them more on the business is important. All employees must have full information of the business regardless of their department and through them the company gets feedback and also markets its ideas properly hence improving customer value. Results The results of any research on customer satisfaction and value surveys are always inclusive of positive and negative comments. The answers given by the customers are based on how the view the business and the satisfaction they acquire from the service or the commodities. It is therefore important to note the honesty levels of the customers as some come out with much criticism which is not constructive and such should not be considered as valid results. Measuring customer satisfaction is difficult but with the correct team and professionals the data collected can be put in valid results. The main answers from questionnaires give complements and complaints to the organization. For a large well staffed business, few complaints are collected from the research team rather most customers give suggestions. The main complaints collected from the field are always on pricing. The market price of any service or good is mostly affordable but for most customers they prefer a decrease in price after every season so as to suit their economic status. The other complaint can be on the customer service where most customers may complain of their slow rate of service to them and this occurs mostly in large businesses where the customers are in plenty. The other complaint gathered from a research may be on accessibility of a service to customers who are located far from the business premises as they fail to acquire their desired goods or services or have to travel long distances to get it especially with new businesses with no branches in different locations. More answers or results gathered from a customer value survey are on complements. For an organization which has existed for a long time, the customers responding may be loyal customers who have shopped or received services from the business for a long time. Such customers encourage the business management to continue with the pace while others give their experiences with the products or services. The complements are followed with short or long answers whereby the short answers give simple words such as amazing, very good job and others simply give a thank you connotation to the questionnaire. Most complements are as well followed by suggestions. Through these complements the company is aware of the satisfaction level of their business to their customers. Analysis of the results An analysis of the results from the research team is the last part of building value chains by helping the customers determine the value of the goods and services they purchase. A serious scrutiny of the results is made by the management strategists and the purpose for an analysis is to come up with methods to improve the customer value by ensuring the value chain uses the minimum costs possible for the purpose of the customers. An analysis is simply a development of the way forward for a business to improve in all its departments and consequently give the best to the customers in the competitive market. (Kotler, 2002) One way of analyzing the results is taking a close look at the suggestions given by the customers and the complaints equally. It is through the complaints that an organization rectifies their wrong paths and takes into account the mistakes hence improving on the areas. The complaints involve diverse departments in a business and the necessary caution is taken to avoid the occurrence of the same complaints raised. Complaints with major effects on the company are not disregarded rather the team of managers conduct meetings to come up with solutions to keep their customers loyalty. The complaints on pricing of the goods or the services are particularly looked at all dimensions and the value system is analyzed so as to ensure the costs incurred by the business is minimal and this leads to some progress in the market price thus improving the customer value. Suggestions are at all costs embraced by the managers of any businesses. It is through the suggestions that customers give the ideas of how they want the products and services. Making adjustments to suit the customers need is necessary and any business prefers coming up with ways to achieve all the suggestions as long as they still maintain the profit margin of the business. Giving the customers a chance to make suggestions and further implement them is satisfying and attracts loyalty of a customer. The customer satisfaction spreads as they tell more people about the service or commodities hence widening the market of the business. It is through taking care of the customer feedback that keeps customers in one business thus avoiding the high competition for customers from related businesses. As for the complements made by the customers from the customer satisfaction research, it is important to appreciate the customers using various methods. The company can recognize their names and document the complements in their websites. Any member of the public can use the complements to start shopping for services and goods at the business. Moreover, the complements can be taken into account and the areas mentioned are recognized in the business. For instance if the complement is given to the packaging department of a production business, the company may come up with rewards for the department so as create and improve their working morale. Following the complements by the customers, the business can create a consequent advertisement in from of appreciation to their customers. Al the customers watching will therefore improve in customer value and pass on the information to other people hence widening the market for the business. The advertisement may include a list of the complements made by the satisfied clients as solid proof of job well done. This will inevitably attract more people in the business as they feel appreciated and part of a growing business. The idea of attracting a wider market is recognizing the effort of the current customers so as to help the customers define value of acquiring products and services from the business. The analysis of the results from a customer value research must involve all the shareholders of the company or business. Participation of all the parties gives the company a sense of unity as they all are entitled to an opinion and can acquire equal benefits if any from the business research. The members of the management assist in decision making especially in issues regarding complaints of the customers. Following this participation of all the members of one business, the necessary measures are put to improve and develop the business without any form of disputes arising as the development projects are underway. Conclusion Building a value chain is essentially a core factor to look into by any business or profitable venture. It is through the value chain that the managers strategize on the best methods to take in business with the least amount of costs involved. The value chain involves a number of other chains that must be considered while coming up with the market price of a good or service. The whole essence of managing a value chain is to provide the customer with satisfaction with the least price in the market. Affordability of a service or commodity is the main objective of strategizing a value chain in any business. The best value chain is one with no excess costs that can be easily avoided. After building the correct value chain, the customer value comes up where the business must look at the satisfaction they give to their customers. The measurement of customer value or satisfaction can easily be done through a customer value survey where the customers give their opinions on a product or service. The opinion on pricing and the quality of a service or good and several other factors is given by the customers through a research where a set business team is sent to the field to meet the customers. The customers give their honest opinions and all the data is analyzed to ensure progress is made. An analysis of the research made on customers is basically to ensure the needs of the customers are met by the business. The idea of building the value chain is provide the customers with the best services and products in the markets with maximum benefits. The benefits that customers obtain from the purchase of a good or service is what makes up the customer value. Therefore, customer value can be maintained through customer value surveys and hence give the consumers knowledge on the benefits of their purchases. References Bettencourt, Lance. (2010). Service Innovation: How To Go From Customer Needs To Breakthrough Services: How To Go From Customer Needs To Breakthrough Services. McGraw-Hill. Horngren, C. T., Datar, S. M., & Rajan, M. V. (2012). Cost accounting: A managerial emphasis. Upper Saddle River, N.J: Pearson/Prentice Hall. Kotler, P. (2002). Marketing management. Princeton, N.J: Recording for the Blind & Dyslexic. Moore, M. H. (2013). Recognizing public value. Cambridge, Mass: Harvard University Press. Thomas, B., & Tobe, J. (2012). Anticipate: Knowing What Customers Need Before They Do. New York: Wiley. Read More