Putting The Premium On Value-Added Products

It may sound like a paradox as far as traditional models go, but emphasizing the importance of value-added products is key in modern businesses. In this internet age of quick and easy access to buyers, maintaining customer engagement, support, and satisfaction is a tall order.

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It all begins with what the business can add to the purchasing experience and transaction. Value-added products go a long way in image-building and branding. Added touches, improved features, or a discounted price generate loyal customers who will overlook the basic offerings of the competition. Value-added means an improved customer perception of the product’s value.

It is crucial in the digital age to gain competitive advantage. Many businesses provide services like one-year support for repairs or product replacements, which often spell the difference for successful transactions in a highly discerning modern market.

Nowadays, it’s not so much what the product is, but what the product can provide to the customer. This is the important shift: understanding what buyers value, from the processing methods and environment-friendly packaging to the fast delivery of a company’s products.

Think of perceived value as paying more for an Adidas or Nike pair of shoes over other sneaker brands. Or opting for a more expensive BMW car because of the quality associated with the company’s vehicles. Pricing is determined based on what customers are perceived to value and are willing to pay for. All in all, value added is the refinement of a product with the customer fully in mind.

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Jon Queen is currently a part of Amatex Capital, a Ukraine-focused private equity firm that places emphasis on the sectors responsible for gas and oil production, agriculture, production of value-added products, retail, and commercial real estate. Jon has worked with two leading Kyiv-based investment banks as Managing Director and Head of International Sales. More on Jon and his work here.

Understanding Value-Added Products

Some agricultural produce are sold as is, without having to undergo further processes, whether natural or otherwise. Examples of these are fruits and vegetables that are up for sale after they have been harvested. By themselves, they already have value. But if they are changed or transformed from their original state, they become value-added products.

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There are many reasons for value-added products, and one of them, and probably the most essential, is that there is a demand for them. 

For example, consumers need flour. Thus, producers refine wheat to create them. Fruits that are made into jams are also considered value-added products. Grains that are modified into biomass for energy purposes are also an example. When biotechnology is introduced to the processes of preparing agricultural goods, the finished product is considered a value-added one. 

Even the consumers’ increasing preference for healthier alternatives has led to many organic farming business models, whose products have also been defined by the U.S. Department of Agriculture as value-added. Although, this is still an on-going debate as some point out that even though organic products have more value, they are technically not “added,” and they are inherent to the processes of organic farming. 

There are various approaches to adding value to farm products, but they generally fall into two categories, namely, innovation, which emphasizes the improvement of existing processes, products, and services, and coordination, which focuses on the arrangement between the entities that create the farm products and that market them.

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Jon Queen is at present a part of Amatex Capital, a private equity company from Ukraine that pursues investment opportunities in various fields, including agriculture, production of value-added products, and more. Learn more about Mr. Queen by visiting this page.