Assignment 1

Cost is not changing & Value / Price goes up: Value Discovery

Examples:
Yoga getting rediscovered due to people’s shift towards a healthy life, Use of Cement (PFA) containing ash,Cadbury promoting chocolates as sweets for auspicious occasion like Diwali, Cadbury promoting chocolates for older generation (via cricket ad) in mid 90s, Lifebuoy changing its strategy to come up with Lifebuoy gold to target premium segment in 90s, Snickers chocolate (Hungry goal keeper eating chocolate as lunch and saving goal)

Cement – Portland Pulverized fuel ash cement (PFA – Portland fly ash cement), which was not used earlier,is used in construction of one many of the structures in Malaysia including Petronas Twin Tower, Damansara city project, widening of Penang bridge (Properties:Good resistance to chloride and sulphate attack for marine solution and helps in reducing the core temperature of big concrete structure, thereby avoiding thermal cracking of concrete).

Cost is decreasing while the value is increasing: Breakthrough

Aim: Total cost in value chain comes down

Examples: ATM (Automated Teller Machine), Internet Banking, Assembly line technique rediscovered by Henry Ford – 1, Ikea Furniture, outsourcing of activities by companies, change of trend from big sized cars to more fuel efficient small size cars during early 1970s due to middle east oil crisis, online money order (Indian Postal Department) via savings account
Ikea Furniture – Cost of assembling, transportation and complaints from customer is decreasing (which in-turn has decreased the overall cost), but price is increasing as now-days customer prefers not bulky but easy to transport and least maintenance furniture (which can be easily exchanged, sold or relocated)
1. Low assembling cost –Do It Your-self (DIY) is the motto of Ikea, where customer takes pride in assembling the product by themselves
2. Low transportation cost – Due to the box type size, more units can be easily packed and transported with least damage
3. Least complaints – Since, customers are assembling themselves, hence no complaints regarding incorrect / incomplete assembling can be made to Ikea
Assembly Line (Ford) – Model -T developed by Ford motors in 1912 (Aug-Sep) was the 1st outcome of assembly line (mass produced with interchangeable parts, targeted for middle class, only in black color - cheapest).