Page 205 - 101 Ways to Market Your Business

101 WAYS TO MARKET YOUR BUSINESS

96 What is ‘value adding’ and can you use it?

One of the buzz marketing terms of this decade is ‘value
adding’. What this means in simple terms is that rather
than discounting your products to attract customers you
value add the purchase by offering an extra service or
product as part of the sale.

For example, imagine if you are a builder trying to sell
houses in a new property development. You could offer a
$10 000 discount on a house or land package or, alterna-
tively, ‘value add’ the property by including a free pool.

Value adding has a number of advantages over discount-
ing. First, it gives your business a point of differentiation
over your competitors. If a price war erupts you can avoid
it by value adding your products instead of joining the war.

What normally happens in price wars is that the com-
pany with the biggest cash reserves lasts the longest and
everyone else goes broke. Price wars have no winners other
than the consumers because businesses end up doing lots
of work for no money. If you are not making money, why
bother being in business?

The other advantage of value adding is that you can
advertise the retail price of the add-on product, but in fact
you would normally be paying wholesale. Using the builder
example mentioned previously, a flat discount of $10 000
is exactly that—$10 000 in cold hard cash that you will
no longer have. If you are offering a free pool to the value
of $10 000, being a builder you would probably buy and
install the pool for $7000. Hence you get the benefit of a
$10 000 incentive that only costs $7000.

Another advantage of value adding is that it makes your
customers feel they are getting something for free. They
feel like winners. A happy customer will keep coming back.

There really are very few businesses that could not take
advantage of value adding their products or services. Some
examples include:

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