The Elements of value Harvard Business Review
Introduction
Value is not simply quantifiable as dollars saved or profit
margin. Value can also be characterized by a service's ability to satisfy an
individual. Tools, knowledge, and the right approach to analysis value can be
found in ideas and innovation that yield an intelligent solution to a complex
problem. These are just some examples of how Value derived from a business is
realized through superior innovation.
In this case study analysis, we will analyze to identify the
elements of Value it demonstrates how great businesses are built upon ensuring
customer satisfaction through their products/services. This can be by way of
providing the customer with a product that is needed. A product and service that
does what it says it will do and offers excellent Value to its customers both
in terms of quality and price
Based on the analysis, the elements of the values model have
a limitation on ignoring the negative aspect of the products. For instance, if
we have to analyze two companies (A and B) with the concept of the element-value
model, then we are not allowed to examine the product's negative quality but rather
only limited to the positive and good sides of the product are compared.
Currently, there are many products of renowned companies which are operating in
the small market segments or completely short downed, considered the failure
due to their negative side. The best example can be the product of Samsung
company – the Samsung galaxy note 7, which still delivers superior customer
values despite the reputation of a negative value proposition based on
functionality
Background
When defining what services or products a business should
provide, it starts with defining which problem(s) they want to solve. These
problems can be thought of as conditions where consumers do not know what they
want to buy, which leads them to seek out companies (manufacturers) for help in
finding satisfactory solutions for basic needs like clothing, electricity and
food. Potential customers will eventually decide how much Value a product or
service has for themselves, depending on their needs and their ability to
afford the price. It is with this in mind that the tools of identifying an
innovative solution to business problems can be found.
Let’s take the same Samsung note 7 phone examples after the
burned house of a South Carolina household the company sales plunged by 15% due
to the intense media coverage
Figure 1 Samsung Targeted its Customer Value Elements
Evaluation of the Case
The evaluation of the case describes how there are four
different types of Value a company can provide:
·
Tangible Value - also known as a functional
value, this is when a product does what it was designed for (i.e., providing
light by a flashlight).
·
Relational Value - by building customer
relationships, trusting relationships will be created over time, and the
customer's inherent need for Value is met through the business's offerings.
·
Emotional Value - or emotional satisfaction, is
created by the brand's ability to create an emotional tie with customers that
they will be drawn to return to.
·
Experiential Value - Experiments are created
through innovative products and services that allow the customer to do
something they've never done before.
Furthermore, the case also highlights the fundamental
elements of Value that talk about four kinds of needs. Functional impact- the
customer will evaluate the product by analyzing how much the product will save
time, whether it will reduce risk or might reduce cost, and other functional characteristics
are considered. The emotional impact is more focused on rewards, fun and mental
peace. Under life-changing impact, the customer will ask questions like the
product could full fill my unrecognize needs like self-actualization
A business goes about creating Value for their customers by
identifying where these different types and elements of Value can be derived
from and how their products can be improved upon to provide a solution for this
need for Value. Then with commitment and patience, introducing changes over
time will allow the brand to build on the reputation it has grown to develop a
more solid foundation from which it builds upon with new offerings and make
improvements over time.
Proposed Solution/Change
By analyzing and evaluating the case, we have identified two
critical problems in the case. The first problem is that the case only focuses
on the positive side of consumer value and neglects to address the negative
aspects of customer value holistically. The second problem is that customer
lifetime value analysis doesn't consider risks inherent to consumers, such as
obsolescence or uncertainty about customers' future behaviour. We have proposed
the following changes and solutions, which we think, if implemented in the case,
lead to perfection.
·
How to Address Customers' Value Problems
The first step in addressing customers' values issues is to
examine the business model and strategy from a holistic perspective. The second
step is to look at the customer's Value and think about how you might improve
it, which is completely ignored in this case. The third step is to examine your
costs and resources and consider any positive or negative impacts that may
result from your management options. Only then should the management come up
with a strategy to address customers' values issues in which the case will sign
if these concepts are implemented after the element value and need hierarchy.
·
Solutions for Value Issues
The costs of a product or service need to be compared with
its Value among consumers. If the product provides too much Value relative to
its cost, then there is a reason for concern. If we do not have enough sales
volume comparable to costs, there may be less opportunity for profits. In the
element of value case, the customer value of the product will increase concerning
its cost. There are many ways to reduce cost, and one is to decrease R&D
expenditures to have a quick-mover advantage. Another way is to outsource some
production activities from China- currently the global manufacturing hub
because it will create economies of scale and lower overall costs.
Recommendations
Finally, we need to make a strategic decision about how much
profit we want in each product category instead of thinking about always
maximizing profits. For this focusing only on the customer value element might
not be enough as it only focuses on the creating needs and value of the product
and once its full filed the questions is what’s next. The company like Costco could have collapse
if it has only focused on fulfilling the customer needs and creating value for
its customers. According to the Q1 report form the Costco financial report
2022, 35.26% of the net income of the company comes form the membership
The competitive analys has the elements which donot neglect
the negative side of the, it focuses both potivie and negative side of the
product. Along with that, the SWOT analysis after producted finanlazation could
be the perfect combination of both words. This can be futher be highlighted in
the give figure 2.
Figure 2 Product Development phases after
Element of value and need analysis
References
Almquist, E., Senior, J., & Bloch, N.
(2016,Sep). The Elements of Value. USA: HBR.
Clark, M. (2021, June 10). 11 Organizations with
Negative Brand Images and How They Overcame It. Retrieved from etactics:
https://etactics.com/blog/organizations-with-negative-brand-images
Costco. (2022, 08 08). FINANCIAL REPORTS.
Retrieved from investor.costco:
https://investor.costco.com/financial-information/annual-reports
Passey, J. (2022, 08 06). Everything You Need to
Know. Retrieved from Perceived Value:
https://www.gemawards.com/perceived-value-everything-you-need-to-know
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