Copyright

Value in Business: Definition, Visibility & Management

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: Marginal Value in Economics: Definition & Theorem

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
 Replay
Your next lesson will play in 10 seconds
  • 0:04 Value and Cost
  • 1:44 Making Value Visible
  • 3:11 Making Value Timely
  • 3:49 Value Goes Both Ways
  • 4:37 Lesson Summary
Save Save Save

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Log in or Sign up

Timeline
Autoplay
Autoplay
Speed Speed Audio mode
Lesson Transcript
Instructor: Scott Tuning

Scott has been a faculty member in higher education for over 10 years. He holds an MBA in Management, an MA in counseling, and an M.Div. in Academic Biblical Studies.

Although value is a common concept, it is often incorrectly defined and understood. This lesson explores an accurate understanding of value and provides methods for maximizing it in any type of organization.

Value and Cost

Imagine that your car is on its last leg. After a minor fender-bender, it's pretty clear that you should just replace the tired old auto for something that's newer and a bit more reliable. When you arrive at the car dealership, you're greeted by the salesperson, who asks what kind of vehicle you're interested in. You answer by saying, ''I want the cheapest car you have.'' That doesn't make much sense, does it? Well, why not? After all, you probably do want an inexpensive car. The reason your answer seems so implausible is because it's confusing cost with value. Cost tells us what our money will buy, but value tells us whether we got the best deal.

One of the most common mistakes made by new business owners is trying to offer the lowest price rather than the highest value. To help solidify this concept, take a quick peek at this list of well-known products that are successful because of the value they offer rather than their price point.

  • The Apple iPhone is one of the most expensive mobile devices on the market, but its features and capabilities offer enough value to override the impact of its higher cost.
  • Target stores, on average, have higher prices than their competitors, but their shopping environment adds enough value for customers to choose it over other, lower-cost retailers.
  • Hybrid automobiles are significantly more expensive than their non-hybrid versions, but the reduction in fuel costs makes them appealing anyway.

When working as a front-line leader, remember that value trumps cost and everything else because value speaks to whether the customer is making the best use of their limited resources. Regardless of industry, front-line leaders should make decisions and enforce policies that bring value, not merely reduced price, to the products their company is selling.

Making Value Visible

So how do you help customers recognize value when they have a lack of product and industry knowledge? A car salesperson knows that a car made with one particular engine type is superior to a car made with a different engine, but the customer has no such knowledge. How can you let a customer know that the slightly higher cost is more than worth the difference in quality and reliability?

Helping customers see value that might otherwise have remained unknown is called making value visible. Making value visible is especially important when customers are looking for value in products that are complex or technical in nature. If you're brainstorming ways to give value a higher visibility, consider options like:

  • Asking customers to attest to value on social media and in reviews. (''We didn't know how important it was to have a composite shingle roof until ABC roofing put one on our house. . .'')
  • Using some marketing dollars to raise value awareness and visibility. (''Most auto body shops just pound out dents, but that method doesn't protect against rust. We use the XYZ tool so that. . .'')
  • Using business partners for mutual benefit. (''Most computer repair shops have just one technician for everything. We have relationships with experts in nearly every computer brand on the market. . .'')

As you make decisions, enforce policies, and shape the operations of your department, always keep in mind that your company's customers don't know as much about the industry as you do. Whenever possible, make decisions and take advantage of opportunities to make value visible to potential customers.

To unlock this lesson you must be a Study.com Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create an account
Support