Before the theme of ‘Value Addition’ is taken for further elaboration, it is considered important and relevant to make an attempt at what is precisely understood by the term ‘Value Addition’. Any effort to enhance the value of a product or service should from the perspective of a buyer or a customer should be considered to be an apt explanation. For instance, a banker delivering a draft at a customer’s door instead of asking him or her to come over to the bank and collect it, is an apt example.  ‘Value Consciousness’ on the part of consumers these days is on a steady rise. And taking due note of this development there are relentless efforts by companies to factor in the changes in consumer behavior and accordingly develop products and build marketing network reaching out to them to fulfill their value-based needs. 

Marketers in earlier times used to focus their attention and efforts to engage the notice of customers through advertisements in various media based on psychological profiling what could be termed as ‘neuro -marketing’.  Here is a clear case of thinking purely guided by the belief that choice of customers could be significantly influenced by repetitive advertising exercises which may not succeed in ultimately winning over them as they are in possession of superior knowledge provided by digital revolution and such constant refrain of advertisements might invite suspicion leading to postponing their final decision to purchase. They would rather prefer to pursue a policy of ‘wait and watch’ than rushing to book online after seeing a smartly-designed website with its well-crafted catchy words. The customer have lived with the reality of superfluous and exaggerated advertisements being routinely bombarded  and learned to ignore them  to fine-tune their art of making rational choices based on value and effectiveness of a product or product and services. And here lies the overriding importance of realization to add value in wooing customers on the part of the different organizations. 

Internet connectivity has been a boon in the realm of marketing. On one hand, customers and buyers have been blessed with direct access to all sources of knowledge about products – their distinctive and intrinsic qualities providing them the means to judge their suitability and effectiveness in meeting their distinctive needs, on the other hand the producers or  service providers are afforded a technological marvel to build up direct bridges with them giving rise to the concept of ‘Customer Relationship Management’ (CRM).  In a scenario which is completely dominated by ‘explosion’ of knowledge and striking development in the domain of technology, marketing effort must be underlined by superior thinking with added importance on meaning behind these efforts.   It is no wonder then that all talk of marketing strategies revolve around novelty and creativity which add to unique values.

In this regard, the views of Mr. Princy Bhatnagar, Business Head, Consumer Computing – HCL Infosystems  Ltd. are worth examining. The need to expand the market for its diverse computing products has led it to break down the urban-rural divide in the demands for them.  Developing desktops which can run on tractor batteries or developing laptops which function effectively in non-AC keeping in mind the thermal criteria is reflective of its efforts towards adding value. Its marketing efforts are similarly characterized by the awareness of this concept. Feeding the customers located over a vast geographical spread with telephonic calls, webcasts about the latest features of their products and arming the sales personnel with focused training, the company has been going from strength to strength.         

Building Bridges With Customers Through Value Addition – Success and Failure

The success story of McDonald’s in India is a living proof of success having been based on the concept of ‘Value Addition’. Many an attempt by other MNCs met with failures to establish itself in the quick service restaurant market in India hinged upon their inability to adapt to the conditions of Indian markets. But McDonald’s marketing strategy evolved out of patience and keen observation of the fragmented markets in India led to setting up of its business through a 50-50 joint venture saw expansion of its retail outlets in different parts of the country has been rewarded with huge success primarily because men who mattered wisely made a thorough and complete study of the Indian psyche always gripped by mental discomfort arising out of uncertainties associated with their purchase decisions  involving foreign brands. McDonald’s uniqueness and innovation lie in the fact that it concentrated to build rapport with its Indian customers by taking due note of Indian traditions and customs. It has drawn on imagination liberally to introduce products like ‘McAloo Tikki burger’, ‘Veg. Pizza McPuff‘, ’Chicken McGrill burgher’ to endear themselves to Indian customers to treat them as their very own. Here lies a perfect example of value addition establishing McDonald firmly in the landscape of quick service restaurant in India. 

In sharp contrast to McDonald’s  remarkable success in positioning itself as almost an Indian brand, Kellog’s foray into nutritional space was marked by sharp highs and lows and the reasons are not too far to seek . Kellog’s an unchallenged global player in cereal and convenience foods selling more than 80 brands  in 180 countries  with total revenue of more than 12 billion US dollars, tasted  grand success in selling its breakfast cereal to its Indian consumers.  But it utterly failed to read the minds of Indian consumers who bought it more out of a desire to purchase as a ‘novel product’ than replacing their existing traditional breakfast stuff.  Its expensively priced ‘Corn Flakes’ which found initial takers  met with  flagging demand later and the company refused to learn the right lessons and went on to launch a slew of products like ‘Wheat Flakes’, ‘Frosties’, ’Rice Flakes’, ‘Honey Crunch’ etc. miserably failed to enthuse the Indian buyers overlooking some very basic facts about the  psychological aspects associated with Indian breakfast.

The end result was rejection on the part of Indian buyers. Marketing is all about building a meaningful relationship with customers and buyers through a single focus on identifying their needs and fulfilling them to the mutual benfits of both. Putting the sellers’ perspective across the customers in competitive business environment requires both imagination and dedicated efforts on their part. Marketing efforts should be geared up to discover something which goes to add value to the lives of customers.  Instead of being laid-back the marketers must strive to forge more direct relations with customers with vigorous initiatives factoring in variables characterizing the purchase behaviour of individual  customers and buyers.  Finding customized solutions to their peculiar needs calls for adding value to existing services.The most appropriate illustration highlighting the need for value addition could be clear from the conduct of various banks operating in the banking space in India. The sharp contrast noticed in the conduct of Public Sector banks whose ownership is dominantly held by the Government of India and that of Private Sector banks are worth noting in this context. A majority of nationalized banks are poor victims of marketing deficiencies involving  lack of intiatives in identifying the needs of their customers  incurring huge losses year  after mainly arising out their incapability to move up with times  by adopting a proactive attitude to reach out to customers with value added services.  

The scenario is just the reverse in the case of privately-owned banks.  These banks have healthy financials with a strong focus on providing customized solutions to their customers catering to their diverse needs . In sharp contrast to portfolios of loans and advances of privately-owned banks , the Public Sector banks are saddled with huge NPAs ( Non-Performing  Assets ) resulting in their chronic shortages of capital leading to frequent recapitalization by the government. The reason is too far to seek as the management of privately-owned banks follow a hands-on policy in  the matter of identifying the credit needs of their customers by going out of their way with a positive interface with customers. Their personnel explain to the customers the pros and cons of their loan products and customize them to suit the specific needs of a wide gamut of customers. Thus, their focus is clearly on adding value to their existing products and retaining them for a long term. It has been established beyond any shade of doubt that growth in sales  could be better ensured by serving the existing base of customers as in the incremental sale their roles are pivotal. 

One more example which is apt to be highlighted in this context is the experience of one of the leading corporate giants,  ITC limited. It is one of the established leaders in the FMCG space.  Its steady progress with robust financials over the last few decades is an eloquent testimony to its monumental achievement built around the concept of ‘Value Addition’.   Although the Company still derives a significant portion of its revenues from tobacco products – mainly cigarettes but it has been steadily and successfully reducing its dependency on its existing line of revenue.  It has been making forays into other fields like agro, hotels and consumer durables with great success through innovation and value addition. 

E-Choupal Scheme of ITC limited is a case which deserves mention in this context to emphasize the importance from the perspective of any organization. The term ‘Choupal’ is a term in Hindi which is the spoken language of a vast geographical part in India denoting a place where villagers meet. The Company in its scheme of things accorded great importance to the fact that a large body of rural people meet at such gatherings and thought of an innovative way of setting up e-choupals with computers and internet connectivity.  The step was primarily directed at procuring farm products at prices which would ensure fairness for both parties – the procurer and the farmers. In doing so ITC Limited conducted a detailed research on the the existing system of agriculture which is marked by market fragmentation and presence of intermediaries depriving the farmers of their rightful prices. The internet connectivity which ITC limited established helped the Company to have a direct interface with farmers informing and educating them about the prevalent prices of their produce.  The existing mechanism in the transfer of farm produce to the ultimate consumer is tortuous and long. A farmer is forced to sell his farm produce to a small trader who in turn sells it to a bigger one with the process repeating. The e-Choupal Scheme which is one of the largest Rural Networking Project in India has so far gone well enough to ensure fair pricing for farmers and the ITC limited gained tremendously by procuring the farm products at a relatively cheaper prices due to elimination of intermediaries down the supply chain. Addition of value to these farm products using ITC Limited’s brand strengthened the financial performance of the Company.  

How deeply has ‘Value Addition’ influenced the current crop of entrepreneurs could be evident from a recently published report in one of the prominently dailies in India ‘The Telegraph’. Two young IT professionals well-settled in their cushy jobs in Bangalore did some smart thinking on the prospects of providing mobile ‘Foot Spa’ services by converting a ‘Nano’ car fitting it with all facilities by building a team by convincing their parents into taking a plunge. Their project is a grand success very effectively proving the importance of the concept of ‘Value Addition’.

The facts cited above go to establish the proposition that in the current scenario ‘Value Addition’ would dominate the minds of marketing thoughts in the coming days and organization would have to identify the areas in which value addition can be effectively done not only to increase their base of customers and buyers but it is also necessary to ensure their survival. It ensures remunerative prices, protects from competitors and lays a strong foundation for stable growth for the future.   Finding innovative ways for ‘Value Addition’ should be one of top priorities of a successful organization.  In the quest for excellence, a closer study of customer behavior and the functionalities of different products are absolutely necessary.


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