Benefits of value addition | Sunday Observer

Benefits of value addition

5 June, 2021

The value addition is simply described as the monetary or non-monetary augmentation an organisation can give its products or services before selling them to the customers. Adding value is an important strategy of a commercial entity as this process provides incentives to customers to purchase their products that in turn increases the bottom line of the business. Carefully thought-out value addition can provide immense benefits to the customer whilst increasing market visibility for the business. 

Value-added selling is described in Wikipedia as one of the several sales techniques that rely on the inherent value of a product or service. Thus, the value adding technique is a more flexible and customised approach where sales and marketing teams of an organisation can easily outline the company’s value proposition to customers in their presentations.

The term ‘Value Added’ is described as the difference between the price of a product and the cost incurred to produce it. The price is determined on the market criteria based predominantly on the competitor’s price. The product’s positioning against similar products in the market has to be considered to decide the price of such a product.    For example, an extra feature can be added to the product to increase value and the additional value-added can be used to influence customers to purchase the product. For example, an extra one-year service warranty offered free of charge to a customer who purchases a new computer, television or any other electronic product can be an immensely powerful motivator. In a fiercely competitive market where companies relentlessly struggle to attain the competitive edge, extra added value can be tremendously beneficial.  

Various methods

Value-added selling implies the initiative taken to proactively search for methods to increase the value of a product, service, brand, or business.

Companies apply various methods to increase the value additions such as enhancing the service delivery, improve customer convenience, and include additional items, volumes, or quantities.  

As the first step in deciding the method of value-added selling, it is imperative to understand what the customer values with the product offered to sell. The transactional customer, who concentrates only on instantaneous purchasing, wants the right product at the lowest price. The customers who are having a relationship, whether long or short, need the understanding of the seller while informational customers need as much information possible from the seller before making the buying decision.  

Research reveals that ninety-six percent of customers consider integrity as the most important criteria they expect from the seller. When they purchase goods, they need the trustworthiness of the company, particularly the salesperson who is attending to them. Customers also value the understanding of the staff from beginning to end of a transaction regardless of the time it takes to complete an order.

This mindset applies whether the product is a small consumer item or a large property sale. The knowledge of the staff with their commitment to the task is always appreciated by the customers tremendously.

All these norms are traditional non-financial added values customers admire and appreciate from an organisation.  

Successful companies with strong brand equity increase the value of their products by using their logos. For example, entities such as Coca-Cola, Nike, Mercedes-Benz, and Toyota are increasing the value of their brands by sponsoring major social events or by funding sports activities and professional sports teams. e-retail giant Amazon adds value to its business by offering automatic refunds for unsatisfactory service, offers free shipping, and price-guarantee on pre-ordered items. 

Apart from incentivising by way of tangible additions, companies add value to their products by offering useful services to customers.

This also is almost equally effective. Support services with enhanced quality are one of the methods organisations use very often as value addition. Twenty-four-hour customer service hotlines, extended warranties, and free deliveries are some of them. 


Marketers also offer consulting services free to customers for some products or services. For example, when a customer purchases a refrigerator, a member from the technical staff is sent to the customer’s residence to educate him or her about the usage and other technicalities a user must know, relieving the customer from going through complicated details of a handbook or user manual. Most of the major Sri Lankan electrical and electronics goods retailers practice this method successfully.  Offering personal services after purchasing, ideally through the sales team member engaged in the sale, can enhance the value of a product as well as the business. These types of acts not only increase the trust of the customer but also create a long-lasting relationship between the two factions. Simply inviting the customer to call if a problem arises with the product can go the extra mile.  

In certain types of businesses, the customer can be assisted through promotional services. Usually, this method is effective in Business-to-Business (B to B) selling situations.

Offering the customer business advice, providing contacts, point of sale material, free samples, additional tools, and technical guidance are some of the value additions companies can put in place.

To facilitate value-addition in day-to-day selling activities, businesses need creativity and innovation to counter competition. Without getting into a price war with competitors, companies can devise methods to attract customers by resourceful value addition. 

Products can be offered as a bundle with an additional item attached such as a gift. Alternatively, companies offer products at a  discounted price when the customers purchase two or more similar items.

Also, frequent buyer incentive programs are given to patrons for purchasing goods from a company regularly. Most of the airlines use this incentive for frequent flyers. The intention is to keep the customer from moving to a competitor.   

Providing opportunities for recurrent buyers by recognising them periodically is another successful value-added concept applied by companies.

The company motivates the buyers to identify themselves as outstanding customers. As is human nature, customers like being recognised. 

Dedicated staff member

Companies’ that market technical products or professional services often appoint a dedicated staff member to provide services from the beginning to the end of a transaction with their clients. This is a very strong value-addition method for customers who purchase technical products or services where they need frequent support from the seller. By appointing a single committed employee to serve, they not only become satisfied but also build up an unconditional trust with the product purchased or the service obtained.    

Speed of delivery of a product also is a solid value addition to certain product categories. For example, Pizza delivery companies offer free products on late deliveries.

Timely delivery is a strong component related to any product as value addition.    

Consumers today are more knowledgeable than ever before. They spend time comparing product offers by reading reviews and seeking referrals from others. With the information easily accessible through mobile phones and the relentless feed of information in social media, customers are aware of the best available in the market.

They invariably hunt for value-added products and services. Customers also have become more demanding now and question even the slightest issue from the seller.  Creating a meaningful and effective value-added service can take time. However, value addition is not merely offering ‘extras’ to make customers happy, although the customers are always on the lookout for free gifts in any market.

However, smart marketers find ways and means to go deeper on the concept of added value to obtain profound mutual benefits to the seller and the consumer.