What does the term 'value chain' refer to?

The term 'value chain' refers to the steps and processes a company follows to deliver products to the market. This concept was introduced by Michael Porter and outlines the full range of activities that businesses engage in to bring a product or service from conception to delivery and beyond.

The value chain includes everything from the initial development and design of products, through sourcing raw materials, manufacturing, logistics, marketing, and sales, up to after-sales service. The goal of analyzing the value chain is to identify areas where the company can improve efficiency, reduce costs, and enhance the value delivered to customers. Each activity in the value chain adds value to the product or service, which allows the company to gain a competitive advantage in the marketplace.

Understanding the value chain is crucial for marketers because it helps them see how various functions contribute to the overall customer experience and value perception. This comprehensive approach to analyzing a company’s processes enables better decision-making in areas such as pricing, marketing strategies, and operational improvements.