Strategy types like to talk about “Value Propositions” and “Value Chains”, these are important concepts for communicating who all is involved in producing and selling a product, and how well each gets compensated for their contribution. A simple value chain would look like this Component manufacturer -> Original Equipment Manufacturer ->Distribution Company->Big Box Retailer->Consumer. In this chain (think of some electronic gizmo for simplicity) each of the participants in the chain add some value to the product as it moves along, and for that they receive a price paid by the downstream member of the chain. Whether this price yields a good profit is subject to some of the factors we have already discussed, e.g. how many competitor component suppliers are there, or how much purchasing power does the big box retailer have? By understanding the chain, and your place in it, you can see how you need to develop your offering (value proposition) to be more successful. If you were a component manufacturer, while you might think that the most important thing is to have a whiz-bang product to sell, you might find that cost is more important than features, or that your inventory logistics are more important to your OEM customer.
As you can imagine, value chains can get quite long and complex, and the things that matter to the consumer at the end might not always square with the things that matter to upstream chain members. The key is to use the Porter framework to understand the power-equation (i.e. who is in charge) If your component happened to be a high performance microprocessor, and you happened to be Intel, you might very well be in charge!
Michael Porter explains all this much better in his book