Which Value Chain Function Would Include Advertising Costs?
The value chain is a concept often used in business which looks at which areas of the business process add value for its customers. The individual parts of this process are known as value chain components. Advertising is a vital part of doing business, and fits into the value chain concept.
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Value Chain Function
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The value chain is broken up into different categories of activities that make up the individual functions of the process. The five components of the generic value chain are inbound logistics, operations, outbound logistics, marketing and sales, and service. Advertising fits into the marketing and sales function of the generic value chain. Advertising and marketing go hand-in-hand in the business world, working together to ensure that the company has enough customers to be profitable.
Marketing Component
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The marketing component of the value chain is a process which involves identifying the needs of customers and eventually generating sales. The marketing function looks at what customers need, then tries to match up products or services to those needs. Ideally, this should be evaluated before the company comes up with a product or service, so that it can determine if there is a market. Then, once a product or service is developed, it is marketed in such a way as to solve a problem or fill a need for the target market.
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Advertising Mediums
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As part of the marketing function of the value chain, companies must choose methods of advertising. Depending on the type of business, the medium chosen to advertise could make a big difference in a business's overall success. Some businesses choose to invest money in print and radio ads, while others prefer putting money into television advertising. When choosing the medium, it is important to evaluate the company's target market and what medium would be most likely to reach it.
Promotion
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Advertising plays an important role in the promotion aspect of the business. In order to market effectively, a business may choose to run a number of promotions to bring customers in the door. This could involve including a coupon as part of an advertisement or offering a certain percentage off items in the store. The promotion must be integrated seamlessly into the normal advertising so that customers understand what is being offered and where to find it.
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