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: Aravind’s self-sufficient model is achieved through strict cost control, appropriate utilization of resources and highly efficient processes.
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How they do it: McDonald’s product, supply chain and restaurant design is kept standardized and simple, allowing for efficient sourcing, food preparation and a high degree of standardization as well as cheap prices across restaurants. Compared to standard restaurants, the customer has to serve and clean up the table himself.
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How they do it: Craigslist functions as a simple classified platform organized by categories. The nature of postings is simple and straightforward making listing and finding easy.
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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: 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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