- July 2, 2017
- Posted by: pblafrica
- Category: Blog
There is no better way to command the market and payout than to command the demand for your products and services. An enterprise that has a firm hold of a market niche will always live true to the moniker “going concern” – its life will be unending into the future. Businesses that we admire today like Coca Cola, Nike, etc, have mastered the art of commanding the market by doing this.
Once you target a segment of the market you intend to capture, it would be important you undertake a need analysis and see what the consumer really wants and how best to satisfy that need. A business that satisfies no demand is not in business.
Many are the times we sell products to the market raw without any processing which in a way, creates a middle link between the producers and the end consumer. What it therefore means is there is some value we forego or transfer to the middle man which they exploit and maximize. Literally speaking, a producer the raw material is working to enrich the middle man. Take chicken for example.
Chicken farmers usually go into pains of raising their stock and input a lot of money to sell off their matured birds to middle men. The middle man would acquire the birds, slaughter and sell off as processed wings, or even fillet or maybe process chicken burgers. The offal is sold to pig farmers as food also. At the end of the day, if you undertake a cost benefit analysis of being the farmer vis a vis being the middle man, the value is higher for the middle man who buys the raw material from the farmer. All the middle man does is sit back and get down to the farmer at the bottom of the chain to negotiate for prices, buy the raw materials, process and sell it off. The actual increase in value that a business creates by undertaking the production process is what is referred to as value addition.
Value addition makes the processor command the market. He commands even the prices of the entire industry. Agricultural based industries that learnt this secret went full stream into value addition and have outlasted their competitors. An example is the Delamaire Dairies and Egerton University Dairies which are big milk producers. Rather than sell milk, they chose to dwell on value addition and over the years, despite turmoil in the dairy industries, they have been doing sustainable business producing their hallmark yoghurt brands. KCC initially was purely a milk reseller and went down since they could not command the market with the entry of new players. What happened afterwards? They now produce Yoghurt, ghee and cheese amongst other milk products.
As a small scale entrepreneur you can also choose to command your market. What uniqueness can you introduce into your product offering to hold onto your consumer? If you are that estate kales seller, do you sell your vegetables as you bought them from the farmer or do you add value to it by maybe cut them into pieces to be sold as buy-and-cook portions in smaller packages for the working community? Maybe you package your vegetables and sell them a bundle of kales, onions and tomatoes, etc? Maybe brand them exquisitely? As a service provider, what extra thing are you offering beyond the usual service that any other player in your industry is offering? I love going for a weekly shave at a local kinyozi where apart from doing my hair as I like it, they do massage and even do a facial for me for the price of a normal shave. And trust me I have never gone to any other kinyozi apart from that.
The beauty about value addition is the client is ready to pay for it even if its premium priced. Once one sees they are getting a benefit beyond what others normally offer, they would be ready to pay, alongside building product loyalty for your firm and establish your brand as a market player.
Smart enterprising demands that you look at the big picture rather than just concentrating on the immediate activity, which may be tilted with changes in the external environment. Value addition is a great way to hedge it from such shocks and guarantee business sustainability. To be smart, always look at your business from the big picture.
The writer is the author of “Passionpreneurship Demystified”, a practical book on how to exploit passion for actualizing dreams. He is also the convenor of ‘House of Passion‘, and online coaching platform for entrepreneurs and professionals.