Title: Gaining competitive edge through strategic value addition: a cost-function value model

Authors: Jayashree Dubey

Addresses: Indian Institute of Forest Management, P.O. Box 357, Nehru Nagar, Bhopal – 462003, India

Abstract: Purpose: A cost-function value model has been proposed as a guiding tool to devise strategies for value addition intended to acquire, retain, and expand customer base during a product life cycle. Methodology: An exhaustive analysis of market life of various products from different product segments was conducted. The impact of various strategies that were adopted on the market sales of respective products was analysed. Finding: Promotion strategies are increasingly being applied at various stages of product life cycle to increasing competitiveness as competition intensifies. However, not all promotional strategies prove to be effective in realising the goal. The reason lies in the failure to balance cost and functional values of product, leading to adverse customer perception and losing them to competitors. Further, the impact of a strategy can differ at different stages of product's life cycle. A judicious mix of cost and functional values in product that is responsive to customer needs, competitor's strategies, and market realities is essential to ensure customers' delight and marketers' profitability. Value: The model will help marketers to prolong brand's market life by continual differentiation in synchronisation with changing customer needs and competitive forces.

Keywords: value addition; cost-function value matrix; product life cycle; product differentiation; value added; modelling; promotional strategies; cost; functional values; customer perceptions.

DOI: 10.1504/IJPLM.2012.046430

International Journal of Product Lifecycle Management, 2012 Vol.6 No.1, pp.33 - 50

Received: 23 Oct 2010
Accepted: 13 Oct 2011

Published online: 08 Apr 2012 *

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