Meeting needs and wants and adding value

Business Enterprise Process of identifying new business opportunities and then taking advantage of them. Purpose of Business enterprise is to meet users needs and wants and to add value.

Goods and services What is the difference between a good and a service?

E.g. TV, shoes, car, washing machine, mobile phone. Goods: Are products which can be felt (tangible). E.g. TV, shoes, car, washing machine, mobile phone.

Services: Services are intangible (cannot be felt). Are where you pay for the skills of somebody. Services are intangible (cannot be felt). E.g. Electrician, plumber, hairdresser, lawyer, teacher, etc.

Meeting customer needs and wants Meeting needs of customers means products or services are likely to sell. e.g. customers need transport to work so rail services are in demand. Meeting wants means persuading customers to buy a product or service that is not needed, but wished for. e.g. buying a large screen mobile phone Meeting wants requires money spent on advertising and customer service.

How businesses meet customer wants Employ staff based on their ability to form close relationships with customers. Invest heavily in research and development to create new products and technologies.

Adding Value

Adding value: It is the difference between the cost of making a product and the price it is sold at.

Why Add value? Increases the worth of a product & allows you to sell at a higher price Makes your product stand out from competitors Encourages repeat purchase through loyalty

Example: Sunglasses How much would you spend on sunglasses? £10-£15?

Now it has a brand name- ray ban. How much will you now spend on it

Leonardo Di Caprio wears ray ban sunglasses in a film Leonardo Di Caprio wears ray ban sunglasses in a film. How much will you now spend?

This is called adding value. Each time you add something to the product, you are able to charge a higher price. This is called adding value.

Which factors add value? Quality Design & formula Convenience Speed & quality of service Branding Unique selling point (USP) Write these down, you will need them later.

How do businesses add value? Convenience and speed, e.g. take away subway sandwiches cost much more than homemade Good design, e.g. Dr Beats compared to a normal set of headphones High quality manufacture or service, e.g. 2D cinema compared to 3D cinema Brand name is the way a business identifies its products distinctively from others of the same type e.g. the Nike swoosh on trainers Innocent is a well-known maker of fresh smoothies

Unique selling points A unique selling point (USP) can be used to create something different about a product. Customers demand products that are different. Different products that meet customer needs and wants can add value due to this demand. For example, virtual reality headsets provide a different way of playing games and allow for greater added value.

Activity How can you add value to this plain bottle of water. Use the 6 factors which can add value which we wrote down. For example, how could you change the ‘design & formula’ of this bottle of water? Which one method do you think would add the most value? (which would mean that people would pay more money for the bottle?)