Marketing Insights From a to Z: 80 Concepts Every Manager Needs to Know

“The value decade is
upon us. If you can’t sell a top quality product at the world’s
lowest price, you’re going to be out of the game.”
McDonald’s used to say that it is in the 
fast food business
. Later
it said that it is in the 
quick service business
. Today it says that it is in
the
value business
.
A company’s ability to deliver value to its customers is closely

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tied with its ability to create satisfaction for its employees and other
stakeholders.
Value ultimately depends on the perceiver. A child came upon
three masons and asked, “What are you doing?” “I’m mixing mor-
tar,” said the first. “I’m helping fix this wall,” said the second. The
third one smiled: “We’re building a cathedral.”
Smart companies not only offer 
purchase value
but also offer 
use
value
as well. You invest $30,000 in an automobile and you expect
the dealer to help with respect to maintenance, repair, and answering
a host of questions. Ryder, the truck leasing company, not only rents
a truck but provides a free book on how to pack and move. Nestlé
not only sells baby food but has a 7/24 service to answer parents’
questions about baby food.
Companies worry about spending more money to satisfy their
customers. They need to distinguish between 
value-adding costs
and
non-value-adding costs
. A hotel may consider adding afternoon bed-
turning service that would raise the cost per room by $2. Before do-
ing this, it should survey whether its customers would be willing to
pay $2 for this service. If the answer is no, then bed-turning service is
a non-value-adding cost. But if the hotel puts an ironing board and
iron in each room at a cost of $2 and guests think it is worth $3, then
this would be a value-adding cost.