VALUE-ADDED
Value for a product or service is created by consumer demand.
Primary products must undergo some transformation for value to be created. The transformation may be physical, or geographical. Physical transformation changes the characteristics or features of a product. Geographical transformation alters value by locating the product in an environment where demand is increased. This is the basis of trade.
A supply chain is represented by numerous participants, with individual motivations and distinctly separate goals. Supply chain output is generally of a commodity nature. Much of New Zealand’s agricultural and horticultural export remains of a commodity nature. Fonterra’s milk-powder “auctions” are an example of commodity mentality.
A value chain is represented by consumer expectation and desire, commonly shared goals amongst the participants in the supply chain, and an integrated set of activities that all add value to the product. Relationships within the participants of the supply chain will almost inevitably be of a long-term nature, with risk and reward shared.
“Maslow’s hierarchy of needs” assists in the critical examination of what drives consumers and promotes the opportunity to add value by creating products that satisfy those needs. Some of the companies highlighted in the following resources have managed to create value-added opportunities by targeting niche markets and satisfying exacting consumer expectation. Low income and “emerging markets” will predominantly be targeted with commodity product, where little or no effort is made to add-value. Importantly, adding costs, does not add value...value is always determined by the consumer.
For a product to be value-added it must satisfy a need that the consumer is prepared to pay a premium for; have some feature, technological difference, or differentiation from other similar products; be unique, specialised and not easily substituted; be exacting to the individual specification of the consumer etc.
The role of strong branding, reputation, responsiveness, corporate responsibility, sustainability, resource efficiency, global citizenship, authenticity, and reliability are cornerstone to added-value success.
So too, industry structure, market research, science and innovation, and industry scale. From a marketing perspective it is critical to be in the right market, at the right moment with the right product.
The more successful companies and initiatives featured in the following resources demonstrate the importance of building brand loyalty and creating opportunities for the consumer to connect with products. The connection must not so much satisfy a need (commodity mentality), as create a sensory, emotive alliance.
The role of AsureQuality is not only to provide services that satisfy phytosanitary requirements under WTO for the import and export of product, for market access. Along with being heavily involved in pest eradication and animal health regimes, they have a role to play in the value-added initiatives of exporters. Predominantly, exporters receiving a premium for product will need to satisfy consumers of the superior nature of their product – claims must be able to be supported by science. This service is provided by AsureQuality.
Collaboration between industry participants, “think-tanks”, Government support for “incubator companies”, mentoring and entrepreneurship are all required for value-added outcomes.
The New Zealand Institute report “A goal is not a strategy” by Boven, Bidois and Harland (August, 2010) indicated that Denmark’s food and agricultural exports per capita are similar to New Zealand’s, and agricultural productivity performance similarly low, and yet due to differentiated goods and services, Denmark is a much wealthier country.
Rick Boven’s report “Fresh Ideas for a productive economy” indicates that increasing global demand and scarcity of resources is a launching platform for economic prosperity for New Zealand. Future export growth, he maintains, must be in high value, differentiated, goods and services. To achieve this will require policy changes, reduction in exchange rate volatility, investment in education and a highly skilled workforce, infrastructure development, reduced government and individual debt, and lifting the productivity of domestic (internal) industries. Certainty of supply is critical to establishing and maintaining the markets and “supplier of preference” arrangements that underpin niche added-value products. This is very obvious in the article on Rissington Breedline and Marks and Spencers.
Value-added requires innovation, intense scrutiny of market opportunity and heavy investment in research and development. Ultimately, critical to success is knowing who the consumer is, understanding and appreciating the requirements of the consumer, and delivering on the consumer’s expectation, on time, every time.
Value for a product or service is created by consumer demand.
Primary products must undergo some transformation for value to be created. The transformation may be physical, or geographical. Physical transformation changes the characteristics or features of a product. Geographical transformation alters value by locating the product in an environment where demand is increased. This is the basis of trade.
A supply chain is represented by numerous participants, with individual motivations and distinctly separate goals. Supply chain output is generally of a commodity nature. Much of New Zealand’s agricultural and horticultural export remains of a commodity nature. Fonterra’s milk-powder “auctions” are an example of commodity mentality.
A value chain is represented by consumer expectation and desire, commonly shared goals amongst the participants in the supply chain, and an integrated set of activities that all add value to the product. Relationships within the participants of the supply chain will almost inevitably be of a long-term nature, with risk and reward shared.
“Maslow’s hierarchy of needs” assists in the critical examination of what drives consumers and promotes the opportunity to add value by creating products that satisfy those needs. Some of the companies highlighted in the following resources have managed to create value-added opportunities by targeting niche markets and satisfying exacting consumer expectation. Low income and “emerging markets” will predominantly be targeted with commodity product, where little or no effort is made to add-value. Importantly, adding costs, does not add value...value is always determined by the consumer.
For a product to be value-added it must satisfy a need that the consumer is prepared to pay a premium for; have some feature, technological difference, or differentiation from other similar products; be unique, specialised and not easily substituted; be exacting to the individual specification of the consumer etc.
The role of strong branding, reputation, responsiveness, corporate responsibility, sustainability, resource efficiency, global citizenship, authenticity, and reliability are cornerstone to added-value success.
So too, industry structure, market research, science and innovation, and industry scale. From a marketing perspective it is critical to be in the right market, at the right moment with the right product.
The more successful companies and initiatives featured in the following resources demonstrate the importance of building brand loyalty and creating opportunities for the consumer to connect with products. The connection must not so much satisfy a need (commodity mentality), as create a sensory, emotive alliance.
The role of AsureQuality is not only to provide services that satisfy phytosanitary requirements under WTO for the import and export of product, for market access. Along with being heavily involved in pest eradication and animal health regimes, they have a role to play in the value-added initiatives of exporters. Predominantly, exporters receiving a premium for product will need to satisfy consumers of the superior nature of their product – claims must be able to be supported by science. This service is provided by AsureQuality.
Collaboration between industry participants, “think-tanks”, Government support for “incubator companies”, mentoring and entrepreneurship are all required for value-added outcomes.
The New Zealand Institute report “A goal is not a strategy” by Boven, Bidois and Harland (August, 2010) indicated that Denmark’s food and agricultural exports per capita are similar to New Zealand’s, and agricultural productivity performance similarly low, and yet due to differentiated goods and services, Denmark is a much wealthier country.
Rick Boven’s report “Fresh Ideas for a productive economy” indicates that increasing global demand and scarcity of resources is a launching platform for economic prosperity for New Zealand. Future export growth, he maintains, must be in high value, differentiated, goods and services. To achieve this will require policy changes, reduction in exchange rate volatility, investment in education and a highly skilled workforce, infrastructure development, reduced government and individual debt, and lifting the productivity of domestic (internal) industries. Certainty of supply is critical to establishing and maintaining the markets and “supplier of preference” arrangements that underpin niche added-value products. This is very obvious in the article on Rissington Breedline and Marks and Spencers.
Value-added requires innovation, intense scrutiny of market opportunity and heavy investment in research and development. Ultimately, critical to success is knowing who the consumer is, understanding and appreciating the requirements of the consumer, and delivering on the consumer’s expectation, on time, every time.