The Evolution of the Value-Added Service Concept

The value added service concept has become popular recently although it has been existent for the past few decades. The concept was formally introduced by the telecommunication industry, a term they used for non-core service offerings that they were offering consumers in order to provide the consumers an incentive for purchase and as a differentiation factor for their business.

Some of the characteristics of value added services are that they are usually the non core service or product offering for the business. However it is still possible for the value added services to stand alone operationally and be offered as a separate product. Another important characteristic for a value added service is that although it enhances the basic product/ service offering it should not attempt to cannibalize the main product/service offering for the business, i.e., take the customers away from the main product.

The most commonly used value added services include the following:

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Offering different types of packaging and sizes for the product

Providing specific service levels for the products with specific service level agreements for services
Rewarding the consumers for their loyalty to the brand by giving them gifts and developing frequent buy programs
Providing specific training and education for the product and service or a value added service center like a help line or a customer support center for the clients. “They are about performing all of those activities as close to the end consumer as possible.” (‘Impact of Value Added Service Center’, 2002) Provide different types of qualities for the product according to the requirements of the consumer. Premium pricing can be charged on these quality levels. Providing efficient and speedy delivery service with order tracking facility

In the recent years however the concept of value added services has changed. Previously consumers expected the core product to be the product itself, but now consumers tend to expect the product to have specific type of additional services and characteristics in them which were previously only considered value added services. These value added services have now become rudimentary in nature and the consumers now expect the product to have the value added services.

Moreover the value added characteristic has also changed talking form of customization for the consumer. An example explaining this change is previously we used to have mobile phone with the basic capability of dialing for calls and receiving calls on a mobile device. Then the SMS, a VAS, was introduced which enabled consumers to send text messages to other people. Now the mobile phone have digital camera, mp3/mp4 players and an operating system which also were introduced as Value added services but now have become an integral feature of the product it self.

The reason for the change in the dynamics relating to value added service offering has been mainly due to the consumers’ perception of the products and their expectations. They have come to expect certain kind of vale added services to be a component of the product itself, even though it is actually a value added service. This has lead to customization for many consumer goods taking place where business are using niche marketing strategies to provide products and services which are very specialized and customized and in nature

The value added services offered have evolved largely also due the technology available to the companies as well. They have tried to differentiate their product/ service offering by making their operations more efficient and investing in technologies which have let them achieve comparative advantage. One of such technological investment has been in the packaging industry.  “Evolution isn't a theory in packaging; it's a fact of life. Corrugated and folding carton converters stake their survival on evolving their menu of value-added services to meet the changing needs of their customers. That can require a substantial investment in technology.” (‘The Evolution of Relationship Selling’, 2005)

In the future as well as the dynamics of consumer consumption decisions and purchase decisions change the value added services offered by corporations and businesses will tend to evolve and change in order to respond to the latent and apparent needs and requirements of the consumer.

References:

(2005), The Evolution of Relationship Selling, Paperboard Packaging.

Mylonopoulos, N. A., Sideris, I. A., (2006), Growth of Value Added Mobile Services Under Different Scenarios of Industry Evolution, Electronic Markets
(2002), The Impact of the Value Added Services Center, Warehousing Management
Dupin, C., (2002), Sales Evolution, JoC Week

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