Value creation focuses on what is necessary to deliver the core value proposition of a product or service, typically as basic as possible. Cost savings are shared with the customer, usually resulting in a customer base with lower purchasing power or purchasing willingness.
How they do it: IKEA offers different product lines for each category, including a basic one, letting customers with a low purchasing power buy furniture in their stores. Products in the self-service area are presented in a simple way comparable to a warehouse.
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How they do it: In recent years Nokia introduced multiple ”no frills” phones opposing the general smartphones. These phones allow their users to text and call but don’t provide access to the internet. In addition they have a great battery live.
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How they do it: Denner presents its products in a simple way, sometimes even in still on the pallets instead of on shelves. In addition it has only few or one options for every product choice and few brand products,
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How they do it: Automakers such as Ford started manufacturing no frills models to also target customer groups with low purchasing power. No frills automobiles often have only minimum convenience equipment, a less powerful engine and are fully trimmed on cost savings. Other areas of saving are for example less sound-proof material, plastic dashboards instead of rubber and less options to adjust the seat.
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How they do it: Swatch introduced timepieces that transformed how people interpret watches. On average, priced at $50 to $100, these watches are fashion accessoires and are kept as basic as possible.
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