A strong value proposition is crtical to your business
18th of January, 2022
An important goal in a business is to convince customers that they are getting many more benefits.
Customers will never buy a product or service if they don't feel like they are receiving the best possible deal. Therefore, the value proposition is important to businesses and their success.
A value proposition is a business or marketing statement that describes why a customer should buy a product or service
A value proposition will provide convincing reasons why a customer should buy a product, and also differentiate your product from competitors. Gaining a customer's attention and approval will help build sales faster and more profitably.
Creating a value proposition is a part of business strategy. Kaplan & Norton say "Strategy is based on a differentiated customer value proposition. Satisfying customers is the source of sustainable value creation."
Developing a value proposition is based on a review and analysis of the benefits, costs and value that an organisation can deliver to its customers, prospective customers, and other groups within and outside the organization.
It is a positioning of value.:
Once businesses determine what makes this item or service so exceptional compared to competitors, it can begin to guide a business more clearly. This can lead to marketing concepts and ideas. The value proposition helps the business understand what their primary focus and goals are within the business and help to understand the consumer's needs.
How the businesses’ offer differs from its competitors and explains why the customers buy from the company. Your value proposition helps to differentiate you from your competitors.
It defines the relationship between:
- the performance attributes of products or services
- the fulfilment of the needs of particular customers
- the total cost.
A value proposition is a statement which identifies clear, measurable, and demonstrable benefits customers get when buying a particular product or service. It should convince customers that this product or service is better than others on the market. This proposition can lead to a competitive advantage when customers pick that particular product or service over other competitors because they perceive greater value.
A customer value proposition is a promise of potential value that a business delivers to its customers and is the reason why a customer would choose to engage with the business. It is concise statement that highlights the relevance of a product offering by explaining how it solves a problem or improves the customer's situation, the specific value against the customer's needs and the difference to competitors.
The phrase "value proposition" is credited to Michael Lanning and Edward Michaels, who first used the term in a 1988 staff paper for the consulting firm McKinsey and co. In the paper, which was titled "a business is a value delivery system", the authors define value proposition as:
"a clear, simple statement of the benefits, both tangible and intangible, that the company will provide, along with the approximate price it will charge each customer segment for those benefits".
Labeaux defines a value proposition as:
“a statement that clearly identifies what benefits a customer will receive by purchasing a particular product or service from a vendor.”
Your value proposition is one of the most important elements of your business. It’s your strongest selling point, the main reason why someone should buy your product or service.
Getting your value proposition right should be a key part of your marketing strategy, but there are so many businesses that get it wrong. For a new business, in particular, getting your value proposition right is a must. To determine your value proposition, you need to:
- Establish the benefits of your product or service
- Communicate the value of these benefits
- Pinpoint a problem a consumer could be facing
- Relate the problem to the value provided by your product or service
- Communicate why you should be the chosen provider of this product or service
If you want to develop a new or updated value proposition for your business, please contact us.
