What Is Product Development Strategy?

A customer value chain is a business concept that depicts the process of creating value for a customer. It is analogous to the supply chain, which depicts the many steps of manufacturing and supply from raw materials through the sale of the finished product to the end consumer. The main distinction is that, although a supply chain frequently monitors costs, a customer value chain is predicated on the increase in value to the end user. Another view of this value chain focuses on actions made to retain current consumers.

The delivery of a bed is an illustration of the difference between a simple supply chain analysis and a customer value chain. From a strictly supply chain standpoint, delivery is a minor consideration: it makes no real difference to the bed itself, and the expenses are quite modest for a major corporation with its own distribution network. However, the value of the delivery is high in the eyes of the client. Most consumers do not have the ability to transfer a bed, and without a delivery service, they would be forced to choose between having the bed rendered worthless, investing the time and money to hire a self-drive van, or paying a large fee to have a third-party firm pick up and carry the bed.

Customer value chain analysis entails breaking down each phase that leads to the customer’s ultimate pleasure. A corporation may utilize this type of study to find all of the instances when its operations contribute to this level of pleasure. The firm may therefore enhance its position in two ways: by improving existing incidents to increase satisfaction and by discovering future incidents in which it can play a contributing role. A company, for example, might acquire a raw materials supplier or a distributor in order to expand its footprint in the value chain. It might also increase the quality of its products by refining its production method.

Another way to respond to the customer value chain is to focus on the processes between the final product and the consumer. This strategy is intended to maximize existing clients rather than focusing on marketing to get new consumers. Building solid relationships with clients, for example, through after-sales care and assistance, and giving discounts to returning customers are examples of such procedures. Existing customers may even suggest the product and maker to friends and colleagues as a consequence of such effort.