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A Beginner’s Guide to Understanding Value Management

“The final question needed in order to come to grips with business purpose and business mission is: “What is value to the customer?” It may be the most important question. Yet it is the one least often asked. One reason is that managers are quite sure that they know the answer. Value is what they, in their business, define as quality. But this is almost always the wrong definition. The customer never buys a product. By definition the customer buys the satisfaction of a want. He buys value.”

Peter Drucker, Management: Tasks, Responsibilities, Practices, 1993        

What is value management?

Value management is the discipline of providing value to customers while also ensuring that the providing value results in profit. Essentially, this is a holistic approach that will result in alignment between the product management, marketing, sales, pricing and other business processes. The goal of value management would be to ascertain sustainability and profitable revenue growth.

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How to ensure customer value management?

Customer value management is vital to all organisations and with the right implementation of value management, this is quite possible. Today, companies have gradually begun to realise the significant costs that can be incurred by a customer and therefore, work to better understand, manage, measure and also improve customer retention. As such five steps have been identified in customer management as shown in the diagram below.

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What does value management really do?

As a beginner, what you have to understand, is that value management is used to motivate people and develop skills and innovation so that the overall performance of the organisation can be increased. It is also a method for maximising the value for money, which is the best combination of whole life cost and quality to meet the client’s requirements and objectives. The utilisation of value management will help any user achieve actual value for their money in a few different ways;

  • Discussing the project main objectives in detail
  • Identifying clearly, the need for the project
  • Obtaining the design from the decided framework of the project’s main objectives and goals
  • Providing a better understanding of the business needs
  • Improving team working
  • Increasing innovation in design
  • Reducing unnecessary costs

What are the applications of value management?

Value management has been applied successfully in many different sectors that range from specialty chemicals and building materials, to software and medical technology. It also can be used in both B2B and B2C cases. They can also be applied in;

  • Value based marketing – marketing that has been based on the insights about customer value and can include everything from segmentation to targeting to the construction of specific value messages.
  • Value based pricing – this is designed and communicated in such a way that all parties can understand, recognise and accept the clear worth of products and services purchased in the transaction and can also, participate optimally in the gains that have been created by their use.
  • Value based product management – this refers to the use of customer value to shape decisions on product and feature investment and to guide understanding of the target customer’s business needs.
  • Value based selling customers – these customers are targeted based on the value drivers and differentiation value. Information about customers and competitors that can be used to evolve value models is captured in the selling process. Offers are constructed and prices negotiated based on differentiation value.

Why not start a career with value management?

Our MoV® Foundation Certification Examination in Value Management will help you learn the right principles, processes and techniques that are required to make sure that organisations and individuals maximise on the benefits that are available to them through projects, programmes and diverse portfolios. You will be taught how to use the resources you possess in an efficient manner. A highly valuable certification which will help boost your career in the industry.

So join Study 365 today and begin your learning towards a lucrative career. You can also contact us on

June 18, 2019

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