Organizations which deliver the highest quality of service or products are the ones who receive the most customers. Prominence is therefore important. But ability is also important, if prominence brings customers to organization, ability helps organizations to retain the customers. Ability of the organization tells who they are. So the eminence and ability consist of four operational processes volume, variety, variation and visibility. Organizations survive when operations management lays in the hands of able managers to manage core activities that transform key resources into deliverable products or services.  The process of creating the products and services are based fundamentally in creating value in each operational management processes.

Volume

This refers to how much production of a specific product is required to satisfy its overall demand in the market.  This refers to the physical number of units or items produced.  A high volume manufacturing service example would be a fast-food joint like Dominos. They sell quite literally millions of pizzas and other related food items every day around the world, and one of the known characteristics of Dominos is that they have a very high degree of consistency in all of their products and their service delivery. 

Alternatively, a low-volume example might be an artist who produces specially made commissions and pieces of artwork. They are entirely unique, which are likely to take a very long time to produce and which cannot be easily replicated or repeated exactly, if at all. This is highly resource intensive and often long-term process. Scarcity is often used to boost sales, but it can also be used to create massive brand lift. It plays on the customer’s fear of missing out. Please remember this fact that marketers use limited-time offers like daily deals, limitations on quantities, or one-time only promotions to create a sense of urgency and leverage scarcity.

Volume is significant tool because it shows the confidence of buyers in a product or service. Though volume should never be used alone to determine price or selling patterns, but it is a base to gain insight into the markets and determine the next strategies.

Variety

This relates to the variety of goods/services to be produced and sold to customers. This V is all about diversity. Selling a variety of products or services helps organizations to increase sales and profit potential and reduces their dependence on one or two products, which can lead to business closure if demand for that product ends or wanes out.

For example HUL sells 44 brands spanning 14 distinct categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers, the Company is a part of the everyday life of millions of consumers across India. Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf excel, Rin, Wheel, Glow & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pureit. HUL has a product to offer each segment of the society. In an given product category its has maintained variety.

The high variety gives more flexibility to produce goods services to match the customer’s requirements. Variety and volume correlate, the higher the variety the lower the volume of the products or services.

Variation

This refers to how much the level of demand changes over some time due to external factors. However, several factors make it difficult to predict variation. For example, a natural disaster such as Covid 19 pandemic struck the world which made the entire world go topsy-turvy in all walks of life. Most business processes do not exist as singular entities but rather as a plurality of variants that need to be collectively managed. Most of these approaches are built on the assumption that the variation points and variation drivers are given as input. The question of how process variation is drawn and conceptualized in the first place has received relatively little attention. It takes lot of experience and maturity of managers to fill the gaps. When processes fail to follow a precise pattern, it causes quality issues both in transactional and production processes.

Visibility

This refers to value chain of a company’s all processes put together. The customers need to experience the company’s product/service. The service industries have a high level of visibility compared to the manufacturing industries. For example, Amazon has a track and trace software on their website which enables their customers to have visibility of where their packages are at any given time. It is important that potential customers can locate the company they are looking for. Most people have had the experience of being lost. It is truly  frustrating driving around unable to find the location a customer is searching – may be its company’s workshop, warehouse, retail store, head office, customer care centre anything.  Organizations must make sure that their signage is clear and visible so visitors can easily locate. Otherwise the experience can turn into a negative one. High-visibility signage has already helped easy to find repeat customers.

Unilever’s operations management is responsible for keeping the four Vs integral with high productivity throughout the global organization. Operations managers develop procedures and processes to support the organization in achieving higher volume, variety, variance and visibility. The operations team of Unilever directly supports marketing, sales, financial and HR performance. It essentially addresses concerns in all strategic decision areas to maintain high productivity. As a leading consumer goods firm, Unilever has evolved operations management approaches to keep all four Vs highly productive.

Functional Value is what an offer does; it’s the solution an offer provides to the customer.

Monetary Value is whether the function of the price paid is relatively comparable to perceived worth of a product. This value invites a trade-off between other values and monetary costs.

Social Value is the extent to which owning a product or engaging in a service allows the consumer’s connect with others.

Psychological Value is the extent to which a product allows consumers to express themselves or feel better.

The biggest challenge for a firm therefore is for delivering value to their customers, they must consider what they are offering the customers. The perceived value of a brand includes the reputation of the organization, staff representation, product benefits, and technological characteristics as compared to competitors’ market offerings and prices. Value can thus be defined as the relationship of a firm’s market offerings to those of its competitors. Marketers must therefore get in the consumer’s shoes, then observe, listen and understand how they think, act, feel and behave. The fact is customers don’t always express in words what they expect from a brand; they have many innate or instinctive desires which they are unable to express always. They have their own fears, complexes, frustrations, ambitions and desires which they can rarely explain.

For example, if you are starving in the afternoon and need to have a quick bite and you pass by a food stall where you see various types of ready-made sandwiches in the window. What will make you buy one of them? You purely go by the looks of the sandwich? Will you buy a whole grain bread sandwich or the organic ingredients? While your hunger drives the initial buying behaviour (the benefit), there are other, more subtle, components to selecting one sandwich from the assortment: the freshness, aroma, the tossing used in it, the size, shape, butter/mayonnaise layer, whether your want a toasted sandwich or plain…. As customers, our needs are layered and complex and marketers must primarily identify consumer needs, and then ensure benefits which will fulfil those needs and features that offer advantage.

In another example, if you are travelling with your friends to a hilly destination in rainy season, on the way you all stop at tea stall for having piping hot tea, and you hear one of the nostalgic songs on the radio with your friends. All of you love the song, and it brings back some old memories, the tea becomes ‘valuable,’ though it may just cost ₹ 5/- each cup. The atmosphere, the feeling, togetherness with friends, rains everything adds to the value of a cup of tea.

Value in marketing is defined by both qualitative and quantitative measures. On the qualitative side, value is the perceived in terms of individual’s emotional, mental and physical condition plus various social, economic, cultural and environmental factors. On the quantitative side, value is actually counted in terms of how much amount the customer spent to buy the good/service which includes his cost of time.

Perceived customer value is marketing and branding related concept which indicates that success of a product is largely based on whether customers believe it can satisfy their needs or not. When marketers devise promotional strategies, they must understand that customers ultimately determine and interpret and react to marketing messages based on their experience of life. Therefore, companies spend significant time researching the market to get a sense of how customers think and feel. Satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a products performance in relation to the person’s previous experience and expectations of performance. Most expectations are derived from past buying experiences: opinions of friends and peers, reputation of marketer, available substitutes, and promises made by marketers, and performance.

The USP of Indigo Airlines is ‘’On Time Performance, Lowest Price” India is becoming one of the fastest growing aviation industries in the world. Because of the introduction of no frills air services, low cost air services are catching up fast. The air tickets are comparable with the railway tickets literally. Some of the factors that have resulted in higher demand for air transport in India include the growing purchasing power of middle class, low airfares offered by low cost carriers and the growth of the tourism industry.

Indigo is a no-frills carrier, but insists on reaching its passengers to their destination in time. The airline is at number one in India at the moment, because its customers are experiencing consistency in their services of reaching destination in time.  It outsources in-flight catering/eatables from an outside vendor. These are presented to customers on payable basis. This strategy is helping the airline in keeping the cost of operation low and passing on the benefits to end customers. In 2015, a survey conducted for ranking various airlines, Indigo scored highest ranking in most parameters but vitally on these two: time taken to deliver baggage & In-cabin maintenance. On the factors of ‘value for money’ and ‘on-time performance’ Indigo stood out as a winner.

Marketers must realise a fact that a person is twice as likely to tell others about a negative product or experience as they are about a good product or positive experience. Dissatisfied customers can also have a negative impact on employee morale.

Value Proposition: To comprehend customer’s perceived value, marketers must understand value proposition. A value proposition is a comparison of the benefits offered by a company’s product to its customers in relation to its price it asks customers to pay. Companies usually influence the value proposition in some ways: they use long-term brand building advertising to emphasize key traits of the brand and products. And, they can also offer a relatively low price to enhance value. Ultimately, the key is that customers perceive the product’s merits exceedingly to justify its price.

For example, Hindustan Unilever promotes diverse ideas of beauty of women through their soap brand Dove. The campaign talks what beauty is all about. Confidence, career, self-reliance, education, power, multi-tasking, self esteem all of this makes a woman more beautiful. Dove commercial always promotes the real worth of women power. Their latest advertisement in India is no different. This advertisement brings out the fact that in a anthropologically diverse country like India, there cannot be one standard of female beauty. The ad is appealing to the women folk so much that Dove is one of the most admired soap brands! Unilever is pragmatic and knows the country’s cultural roots. India is experiencing a real movement towards female empowerment, and that is captured in their ad.

Marketing Research: Media plays major role all over world. Companies who understand that they must touch the pulse of customers focus on research. It is critical to understand how certain types of customers will respond to certain messages and therefore choosing the right media vehicle becomes crucial. Smart companies use focus groups, surveys and test markets, along with other research tools, to get a sense for what customers want and do not want from products in a given industry.

Right messaging: To influence value perceptions, companies try to deliver messages indicated by their marketing research, which would create desired sense of value with customers. Smart companies understand that they need to connect with their customers regularly. They therefore, express messages such as best quality, best service, unique features or environmentally friendly continuously. To influence the customer value perception, marketing messages must be consistent. The real crux of marketing campaign is to reach the right audience with the right message at the right time. And, in the digital marketing sphere, there is nothing called as a single and a big. Digital marketing campaign has a far and wide reach.

Strengthening value chain is key function: The basic objectives of employing value chain management in a business are to integrate communication and increase cooperation between various functions such as production, supply chain, sales, and marketing, after sales service, R&D and firm’s infrastructure. When firm’s value chains strong, quality, price, delivery time of product and after sales service helps in increasing value proposition.

The concept of the value chain was coined and explained by Michael Porter in his popular book “Competitive Advantage: Creating and Sustaining Superior Performance” in 1985. Value chain is a sequence of activities or practices which aims at creating and adding value to a product or a service. Value is added at every process of doing business. Businesses aim at enhancing their margins and thus they need to work on their operating procedure carefully. Businesses work to change input into an output by adding greater value in it. Thus the logic behind it is simple; the more value a company creates, the more profitable it becomes. When more value is created, the same is passed on to the customers and thus further helps in combining a competitive edge. One happy customers gets ten more customers. Value adds brand loyalty and brand awareness in markets. The primary activities of value chain are inbound logistics, operation, outbound logistics, marketing & sales and after sales service. These primary activities are supported by procurement, technology, human resource management and firm’s infrastructure. Products pass through a chain of activities in order, and at each activity the product gains some value.

Processes that go in primary and supporting activities of value chain are as follows:

Primary activities:

Inbound Logistics: involves relationships with suppliers and it includes all activities required to from placing order for raw material, receiving it, storing it, stacking it and circulate inputs. Inbound logistics is associated with receiving, storing, disseminating inputs for the operation such as material handling, warehousing, and inventory control, vehicle scheduling and servicing the suppliers.

Operations:  involves all the activities required to transform inputs into outputs (products and services). For example machining, packing assembly, equipment maintenance, testing, printing pasting, stacking and facility operations.

Outbound Logistics: is associated with distribution. All activities required to collect, store, and distribute the finished product. It includes reaching the finished goods to the point of consumption.  Warehousing, material handling, routing, selection of routes, mode of transport, order processing and scheduling.

Marketing and Sales: activities include market research, segmenting market, sales promotional activities, developing, positioning and branding. Marketing and sales activities inform buyers about products and services. The activities in marketing facilitate the purchase with advertising, promotion, sales force size, training and developing, channel selection, channel relation and pricing.

After Sales Service:  includes all the activities required to keep the product or service working effectively for the buyer after it is sold and delivered. Such as installation, repair, training, parts supply and product adjustment

Support activities: 

Procurement: is the acquisition of inputs, or resources, for the firm.

Human Resource management: This consists of all activities involved in recruiting, hiring, salary, training, developing, compensating, motivation and performance appraisal. A transparent, ethical Performance Appraisal system is never demoralizing or inhuman. What’s inhumane is failing to make the organization’s standards and values clear and transparent and not letting people know where they stand.

Technological Development: It pertains to the equipment, hardware, software, procedures and technical knowledge brought to bear in the firm’s transformation of inputs into outputs. The digital revolution has created an Information Age.

Company’s infrastructure: this facet shows a company physical infrastructure, intellectual infrastructure, human infrastructure, digital infrastructure etc. In short, it refers to internal strengths of the company and how well connected it is externally.

Example of Starbucks for a better understanding of value chain:  The Starbucks journey began with a single store in Seattle in the year 1971 by three partners who met while they were students at the University of San Francisco: English teacher Jerry Baldwin, history teacher Zev Siegl, and writer Gordon Bowker. To become one of the most recognized brands globally, Starbucks planned a mission statement “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” To achieve the mission the organizations concentrates on all primary activities such as:

Primary activities:

Inbound Logistics: The inbound logistics for Starbucks refers to selecting the finest quality of coffee beans from the coffee producers in Latin America, Africa and Asia. In the case of Starbucks, the green or unroasted beans are procured directly from the farms by the Starbucks buyers. These are transported to the storage sites after which the beans are roasted and packaged. The ready beans are sent to the distribution centers few of which are company owned and some are operated by other logistic companies. The company itself does the procurement to ensure high quality standards right from the point of selection of coffee beans.

Operations: Starbucks operates in 65 countries either in the form of direct stores operated by the company or as licensed stores. Starbucks has more than 21,000 stores internationally which includes Starbucks Coffee, Teavana, Seattle’s Best Coffee and Evolution Fresh retail locations. According to its sales figures, the company generated 79% of the total revenue during fiscal year 2013 from its company operated stores while the licensed stores accounted for 9% of the revenue.

Outbound Logistics: There is very little or no presence of intermediaries in product selling. Majority of the products are sold in their own or licensed stores only. As a new venture, the company has launched a new range of single-origin coffees which is sold through some leading retailers in the U.S. such as Guatemala Laguna de Ayarza, Rwanda Rift Valley and Timor Mount Ramelau.

Marketing and Sales: Starbucks invests in superior quality products and high level of customer services than aggressive marketing. However, need based marketing activities are carried out by the company during new products launches in the form of sampling in areas around the stores. At Starbucks at a point in time, some of their executives visited their coffee shops and noticed that good employees were losing their poise when faced with agitated customers. Instead of coming down on the individual employees, they developed new training material that eliminated the stress of these situations. The executives at Starbucks found that when they empowered their employees with tools they needed to serve customers happily, their employees gained their smiles back.

After sales service: Starbucks aims at building customer loyalty through high level of customer service at its stores. The retail objective of Starbucks is, as it says in its annual report, “to be the leading retailer and brand of coffee in each of our target market by selling the finest quality coffee and related products, and by providing each customer a unique Starbucks Experience.”

Support Activities:

Infrastructure: This includes all departments like management, finance, legal, etc which are required to keep the company’s stores operational. Starbucks well designed and pleasing stores are complemented with good customer service provided by the dedicated team of employees in green aprons.

Human Resource Management: The Company’s committed workforce is considered a key attribute in the company’s success and growth over the years. Starbucks employees are motivated through generous benefits and incentives. The company is known for taking care of its workforce and this is perhaps the reason for a low turnover of employees, which indicates great human resource management. There are many training programs conducted for employees in a setting of a work culture which keeps its staff motivated and efficient.

Technology Development: Starbucks is very well known for use of technology not only for coffee related processes (to ensure consistency in taste and quality along with cost savings) but to connect to its customers. Many customers use Starbucks stores as a make shift office or meeting place because of the free and unlimited wifi availability. The company in the year 2008 also launched mystarbucksidea.force.com as a platform where customers can ask questions, give suggestions and openly express opinions and share experiences. The company has implemented some of the suggestions given via this forum. Starbucks also uses Apple’s iBeacon System wherein customers can order their drink through the Starbucks phone app and get a notification when they walk in the store. Thus, Starbuck uses the available technology to their fullest strength.

Procurement: This involves procuring the raw material for the final product. The company agents travel to Asia, Latin America and Africa for the procurement of high grade raw material to bring the finest coffee to its customers. The agents establish strategic relationship and partnership with a supplier which is built up after reconnaissance and communication about the company standards. High quality standards are maintained with direct involvement of the company right from the base level of selecting the finest raw material which is coffee beans in case of Starbucks.

Conclusions: Starbuck’s rivals benchmark their business processes.