Which of the following should be adopted by the company?

A company is analysing its existing product’s components and aims at reducing costs without damaging customer value proposition. They want to check which components are critical and which are unnecessary.

Which of the following should be adopted by the company?
A . Under specification
B. Value engineering
C. Value analysis
D. Variety reduction

View Answer

Answer: C

Explanation:

In marketing, a customer value proposition (CVP) consists of the sum total of benefits which a vendor promises a customer will receive in return for the customer’s associated payment (or other value-transfer).

Value analysis is concerned with existing products. It involves a current product being analysed and evaluated by a team, to reduce costs, improve product function or both. Value Analysis exercises use a plan which step-by-step, methodically evaluates the product in a range of areas. These include costs, function, alternative components and design aspects such as ease of manufacture and assembly.

Value engineering is concerned with new products. It is applied during product development. The focus is on reducing costs, improving function or both, by way of teamwork-based product evalua-tion and analysis. This takes place before any capital is invested in tooling, plant or equipment.

In this scenario, the company’s objective is cost reduction, then value analysis or value

engineering is more likely to be applied. The products are existing, so value analysis is the

best option.

LO 3, AC 3.4