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Energy Marketing: Is There Added Value in Value Added?

Fortnightly Magazine - September 15 1997

least, to persuade customers to buy his commodity rather than hers. Although whole texts have been written on the theory and measurement of customer value, the term value added has been used with a wide variety of meanings, some of which are more precise than others:

• Offering customers tangible economic benefits, such as offsetting market inefficiencies and risk management;

• Guiding customers' decisions by, for example, reducing decision-making costs by offering data, calculations, measurements and surveys;

• Selling profit-enhancement and problem solutions. AT&T developed tele-selling by explaining its advantages and showing customers how to do it;

• Providing psychological benefits to customers, notably developing brand images, bundling or unbundling products and prices, innovating and changing products and relationship marketing; and

• Developing complementary services to distinguish similar products and enhance the basic product. For example, in the telecommunications field, companies with wholesale transmission now offer voice mail, call forwarding and waiting, teleconferencing, etc., all of which help to sell transmission. In most definitions of value added, the aim is to increase the bundled price of a particular product. With complementary services, however, the aim is to sell additional products and services to gain revenue from the basic product. Some complementary services grow so attractive to both the customer and supplier that the basic service is sold at a discount to support it (e.g., computers have been sold cheaply to sell software and maintenance contracts).

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