Measuring and managing costs from the perspective of value-for-customer in B-to-B companies

Strategic cost management emerged in recent years as an approach for linking value-for-customer to the cost of the product. When it comes to the immaterial components of the value proposition, strategic cost management tools provide little guidance about how to identify key elements providing value to customers, link them to firm costs, and manage firm activities accordingly. In this paper we propose a framework to understand, analyze and manage the relationship between firm costs and value-for-customer in B-to-B companies, where often value is delivered throughout bundled value propositions embodying products as well as services and other immaterial and relational elements. Basing on the three cases analyzed, one in the mold industry and two in professional services sector, the paper shows that service components along with product attributes might constitute a key medium to link variations of activity.