1. Adding Value
This is being able to charge more for the output than the total cost of the inputs (i.e. 1+1=3).
The act of production can ‘add value’ and so does good marketing. The finished product must have an image or meet a need so a consumer is willing to pay more.
e.g.1: to produce a replica football shirt costs £5-£7, yet they cost around £35. The additional cots is image created by marketing.
e.g.2: fast foods are more expensive as within the production process the time- consuming work has been done for the consumer.
UNIQUE SELLING POINT (USP)
This is what differentiates one product/service from the next. It gives the firm a competitive advantage. This can be real or imagined.
REAL USP: a physical difference which gives real benefit (may be protected by patent).
IMAGINED USP: effective promotion can create this, but is often expensive. To be a success it must:
distinguish the product
live up to the image
have a good, all round marketing mix.