Component 1-18. added value

What is the definition and equation for added value?

The difference between the cost of purchasing raw materials and the price for which the finish good is sold for

Selling price- cost of raw materials

How can the value be added to a product?

Reduce the costs of inputs either by using cheaper materials or by benefiting from purchasing economies of scale so that products can be produced at a lower price

Increase the perceived benefits of the product in the eyes of the customer, allowing a higher price to be charged

How can a business increase the perceived benefits of a product in the eyes of the customer?

Can include branding, using convenience of the product, or adding additional services or benefit for the customers

List an example of a brand for using branding to increase perceived benefit of a product and how they would achieve it

A business that could use branding to achieve increased benefit of a product is Apple, as they have high brand loyalty meaning the price is increased their sales would stay the same