The Importance of Value Chain Analysis for the Marketer

As a the markets for many products and services are reaching closer to saturation

or the competition is getting tough with each day passing, its only the service, economies of scale and innovation and cost effective distribution strategies and above all customer centricity with excellent services support can make you not only survive in the market but you will win a chunk of the market share.

In order to serve/acquire new customers, a marketer must know what is the meaning of Value Chain Analysis andHow much importance does it carries on marketing process? This concept was popularized by management guru Michael E. Porter in late 1980s. Kaplinsky and Morrisdefine it as "A value chain describes the full range of activities which are required to bring a product or service from conception, through the different phases of production, delivery to consumers, and final disposal after use." If we look at this definition, we can easily understand how crucial the understanding of value chain for a marketer is!

Why don't we have a practical view on the importance? If you are a marketer you have to identify the business prospects and you can only identify them if you have the thorough knowledge of your product value chain, its feature, competitive advantages and most important customer feedback which helps in retention business. Marketing and sales is the primary component of the value chain which not only supports the forward value chain but also the backward flow as well by providing feedback from the customer to the senior management which helps them to formulate the strategies.

Concepts like Stage Gate Processetc have come up to control the product quality and development expenses. A Stage Gate Process is a technique of phased development process in which development process of product, services, systems etc divided into the separated gates. Until one development phase (gate) is completed to the satisfaction of the management, they will not proceed with the next phase. Thus this model saves the time, resources and by making product economical and quality oriented, it gives a competitive advantage over competition. Researches show that more than 70% organizations are using gate process for new product development and benefitted with it as they received far better reviews and could utilized resources in optimized ways compared to those have limited compliance of the model.

The Importance of Value Chain Analysis for the Marketer

By: Tushita Roy

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