Added Value

Question 1

What is adding value?

Answer 1

The difference between the actual price charged for a product or service and the actual cost of all the components and assembly of the product or service

Question 2

How do businesses add value?

Answer 2

Additional features are added to a product to allow it to be sold at a higher price

Question 3

Why do businesses add value?

Answer 3

In order to increase profit margins

Question 4

How does added value work?

Answer 4

Consumers are likely to be prepared to pay more for additional features, the cost of adding value must still e lower than the price to make a profit

Question 5

How can promotion be used to add value?

Answer 5

By gaining a distinct brand image and making the product appear more valuable which allows a higher price to be charged

Question 6

How is value often added in hospitality or retail?

Answer 6

Through customer service

Question 7

How is added value useful?

Answer 7

• Can charge a higher price and potentially higher profit
• Can enhance the brand reputation
• Can act as a USP

Question 8

What are the disadvantages of adding value?

Answer 8

• Cost of adding value may be too high and reduce margins
• An increase in price may reduce sales
• Competition may make it difficult to increase price