Senior executives should build value creation in their business strategies. To act otherwise is only asking for trouble. In the infancy of a business’ existence, a good value proposition for customers is essential.
Mark Johnston and Greg Marshall, authors of Relationship Selling, argue that value-added selling changes much of the sales process. Value is defined as “the perceived experience and worth gained from a product or service.”
Phillip Kotler and Kevin Keller, authors of Marketing Management, maintain that it is important for businesses to understand customer perceived value: “Buyers operate under various constraints and occasionally make choices that give more weight to their personal benefit than to the company’s benefit….Consumers have varying degrees of loyalty to specific brands, stores, and companies.”
Customer-perceived value is related to the difference between benefits the customer gets and costs the customer assumes for different choices. Yet, customer-perceived value often is a graded approach.
For example, if an individual wants a cheap, fast-food option, he or she may select McDonald’s. In this case, the buyer’s expectation for quality food is lower than eating at a five star restaurant. Customers are very understanding when the seller’s value proposition is clear.
Given that market framework, perceived value is in the eyes of the customer and varies from business to business. Kotler and Keller further note, “The marketer can increase the value of the customer offering by raising the economic, functional, or emotional benefits and/or reducing one or more costs.” 
Therefore, organizations are challenged by selling value. Consequently, managers must better align themselves strategically to provide long- term value for customers, rather than focusing only on short-term profitability.
Being strategic conscious about these business relationships is not simple. Ken Favaro, author of Put Value First, further explains that putting value creation consistently first requires leadership skills, discipline, and perseverance.
He further challenged organizations to demand higher standards from managers who could jeopardize these business relationships. Favaro further adds that sharing information widely within the management team builds a shared sense of commitment toward building value for customers and shareholders. Customers and all members of the supply chain should provide input so that the expectations are clear.
Businesses that pay more would get more benefits (i.e. certain perks, discounts, etc.). Therefore, the value proposition would be enhanced. Yet, all good business transactions start with trust.
Johnston and Marshall argue that customers expect and deserve consistency in the way an organization’s value-added message is put forth. When a customer begins a relationship with you, he or she already has a specific set of expectations.
Sadly, unproductive firms put little strategic thought in the matter of value creation. Nat Martin, III, Director of Purchasing and Concept Support, Darden Restaurants, Inc. notes: “If the value exceeds expectation, the customer is highly satisfied. If the value falls short of expectation, the customer is dissatisfied.”
Value creation can be considered the powerful engine that energizes sustainable growth. Therefore, value creation for businesses must be strategic and deliberate for any sustainable growth.
Please discuss your professional experience with company’s value creation initiatives.
© 2013 by Daryl D. Green