Value Proposition

What is a Value Proposition?

A value proposition is a promise of value stated by a company that summarizes how the
benefit of the company’s product or service will be delivered, experienced, and
acquired. Essentially, a value proposition specifies what makes the company’s product
or service attractive, why a customer should purchase it, and how the value of the
product or service is differentiated from similar offerings.

Generally, the value proposition is addressed to the company’s target customers

or target market segment. The proposition takes the form of a short, clear, and concise
statement of the tangible and intangible benefits that will be delivered to customers. The
perfect proposition must quickly transmit the values to potential customers without the
need for further explanation. Each proposition must be unique, as it is a method to
communicate the differentiation points of a company to the target customers.

The value proposition must not be confused with slogans and catchphrases, as the
latter two may not clearly convey the benefits of a company and its products.

Why Value Propositions Matter

A value proposition statement is vital for a company because it defines what the company
offers to its target customers. It helps to differentiate the company from its competitors and
communicate the most important benefit of doing business with them.

When considering your slogan as a part of your marketing strategy, it should be specific to
your company and appeal to a certain subset of customers. It’s a great way to market your
product/service and can help you focus on what makes you unique.

Identify the most impactful statement, and your proposition will reach and resonate with your
target customer.

Importance of a Value Proposition

The development of a value proposition is a vital part of a company’s business strategy.

Since the proposition provides a company with a method to influence the decision-
making of customers, it is frequently displayed on the company’s marketing materials,
such as a website.

A value proposition is the marketing and sales statement combined into one. It is a
statement on which a brand positions itself in the market. It serves as a guide to
drive product sales, marketing, and other promotional activities. It is a tool to build
customer loyalty as the brand shares what value it wants to deliver to the customers.
The potential customers, who can identify with the communicated value, will potentially
become long-term customers.

The basics of a good value proposition.

the value proposition canvas is just a customer archetype you can reference when creating
your value prop.

Every value proposition should address some need that your target market experiences.
Hopefully, you know these needs based on your past brand strategy and marketing
research. Your goal is to identify and reflect one or two of these needs and reflect that in a
branded slogan.
Remember that we base these value propositions on how your target market defines your
value, not necessarily how you represent your value. For example, consider Taco Bell’s
above mantra, “Live Mas.” (Spanish for “Live More”). Taco Bell might distinguish its
company from competitors like Del Taco or Chipotle on its low prices, efficient supply chain,
or authentic Mexican recipes. But they do not push these values forth in its value
proposition.
Instead, the company speaks to its audience with the Live Mas mantra, offering a loftier
value that promises a more upscale experience. And while plenty of people certainly shop
Taco Bell for its low prices, this aspirational ideal helps differentiate it from similar low-
budget quick-service restaurants.

The best value props don’t meet a customer’s expectations; they exceed their expectations.
A level of fantasy is involved even in a simple case such as “save money. Live better.”
Saving money meets expectations, but living better exceeds them.

Characteristics of a value proposition

*Clarity:*
It should be clear and easy to understand, avoiding jargon or ambiguity. Customers
should quickly grasp the unique benefits offered.
*Relevance:*
The value proposition must directly address the specific needs and desires of the target
audience, demonstrating a clear understanding of their preferences.
*Differentiation:*
It should clearly articulate what sets the product, service, or brand apart from
competitors, highlighting unique features or benefits.
*Credibility:*
A strong value proposition is credible and supported by evidence, whether through
testimonials, data, or the brand's reputation.
*Conciseness:*
It should be succinct and to the point, conveying the key value in a brief statement that
is easy to remember.
*Customer-Centric:*
A successful value proposition focuses on what matters to the customer, showcasing
the benefits and outcomes they can expect.
*Consistency:*
The value proposition should align with the overall brand messaging and be consistent
across various communication channels.
*Emotional Appeal:*
Depending on the target audience, incorporating an emotional element can enhance the
connection with customers, fostering loyalty.
*Adaptability:*
A value proposition may need adjustments based on market changes, customer
feedback, or shifts in business strategy, showing adaptability.
*Measurability:*
Whenever possible, elements of the value proposition should be quantifiable or
demonstrable, allowing for measurement of the delivered value.

Elements of a Value Proposition

  Identify the target market – The first step in setting a value proposition is
identifying the target market. For this purpose, the demographics of a market
need to be considered. The company must clearly understand the customers it
wants to cater to. This means identifying the problems and the needs of potential
customers.
 Determine the value – Once the company has identified the target market, it
must focus on the value it wants to provide to those customers. At this point, the
company already knows what its target market needs and problems. The primary
goal here is to determine a value that fulfills the target market's requirements. For
instance, if the target market is quality conscious, the company must create its
value proposition around that.
 Communicate and deliver the value – At this stage, the company must
communicate and deliver the proposed value to the customers. Communicating
the proposed value clearly and consistently is vital to catch the target audience's
attention. The second part is about delivering the communicated value to the
customers.

How to Create a Value Proposition

1. Know your customers

Before creating your value proposition, you must analyze the market and potential
customers. Identify your target customers and target market segment to understand
their desired benefits.

2. Understand your costs and benefits

Identify and assess the benefits delivered by your company and its products or services,
along with the costs incurred to provide them. It is important to do this because the
value to your customers is essentially the difference between the benefits and costs of
your product or service.

3. Don’t forget about your competitors

After the analysis of target customers and your own company, evaluate the competitive
landscape in the market. Determine the strengths and weaknesses of your major
competitors and identify ways you can differentiate your business from them.

4. Be clear and concise

Don’t forget that an effective value proposition is clear and concise. Your target
customers must quickly grasp the message you want to convey. It should not exceed
two or three sentences.

5. Design is king!

Make your proposition visible and appealing on all marketing materials (e.g., website).
Remember that if you have created a powerful value proposition, but no one can see it,
the effect of the proposition will be zero!

Unique Value Proposition

 Many of us often confuse value proposition with unique value proposition. At first,
it might seem that these two terms are similar, but there is a key difference between
them. As mentioned before, a value proposition is more like a brand’s promise to the
customers that it can solve their problems with its products or services. Whereas the
purpose of a unique value proposition is to make a brand stand out from its competition.

Example

BMW's value proposition is the “Ultimate Driving machine.” It promises its customers
that they will experience the best drive in their cars. Whereas its USP revolves around
combining technology and luxury.

Types of the Value Proposition

 Brand value proposition – In this type, the brand promises the customers that
the association with the brand would benefit them. It focuses on how the brand
wants to create value for the customers. For instance, a brand promises to use
environmentally friendly practices. The customers who value such a position will
likely connect with the brand on a personal level.

A brand value proposition - communicates the unique value, benefits, and qualities a
brand brings to its target audience. It sets the brand apart from competitors and outlines
the reasons why consumers should choose that brand. The brand value proposition
goes beyond individual products or services, encompassing the overall brand
experience. It often emphasizes the emotional and functional aspects that resonate with
the values and preferences of the target market, fostering a connection and loyalty
among consumers. Essentially, it is a promise that the brand makes to its customers,
conveying what they can expect and why the brand is a preferable choice in the market.

 Product value proposition– This type of value proposition is based on the

product. It aims to create an association between the product and the customers.
The company communicates that using a certain product will help customers in
their lives.

A product value proposition - articulates the unique benefits and value a specific
product offers to its target customers. It communicates why customers should choose
that product over alternatives in the market. It highlights the key features, advantages,
or solutions the product provides, addressing the specific needs or problems of the
intended audience. A well-crafted product value proposition serves as a compelling and
persuasive message that differentiates the product and convinces customers of its
worth.

 Category value proposition – When a company wants to focus on a specific

product category, it develops its value proposition and communicates it to the
target market. If the value proposition resonates with the target market, the sales
of that product category will improve.

A category value proposition - is a concise statement that articulates the unique

value, benefits, and advantages of a specific category or group of products or services
within the market. It highlights what sets that category apart from others, addressing the
specific needs or desires of the target audience. Unlike a product value proposition that
focuses on a single offering, a category value proposition encompasses a broader
range of similar products or services. It serves to differentiate the entire category and
convince consumers that choosing products or services within this category provides
distinct advantages or solutions. This proposition is crucial for marketers to position a
category effectively in the minds of consumers and drive preference within a competitive
landscape.

 Functional Value Proposition: - Focuses on the tangible benefits and features

of the product or service. - Emphasizes what the offering does and how it solves
a problem or fulfills a need.

A functional value proposition - It focuses on the practical and utilitarian aspects that
address specific needs or problems of the target audience. This type of value
proposition emphasizes what the offering does and how it provides a functional solution
or advantage compared to alternatives in the market. The functional value proposition is
particularly effective when customers prioritize practical benefits and seek clear,
measurable outcomes from the product or service. It aims to convince customers that
choosing the specific offering will result in functional superiority, efficiency, or
effectiveness.
 Emotional Value Proposition: - Appeals to customers' emotions, aiming to
create a positive emotional connection. - Stresses the feelings, experiences, or
lifestyle associated with using the product or service.

An emotional value proposition - aims to connect with the feelings, aspirations, or

lifestyle preferences of the target audience. It emphasizes the positive emotional impact
that choosing the product or service can bring, fostering a strong and meaningful
connection with the brand. This type of value proposition is effective when customers
make decisions based on personal, subjective factors and seek a product or service
that resonates with their emotions, values, or desires. It aims to create a lasting and
positive emotional connection, influencing customer loyalty and brand preference.
 Cost-Based Value Proposition: - Highlights cost-effectiveness and economic
advantages for the customer. - Demonstrates how the offering provides savings
or efficiency compared to alternatives.

A cost-based value proposition - highlights the economic advantages and cost-

effectiveness of a product or service. It communicates the tangible savings, efficiency,
or financial benefits that customers can expect by choosing a particular offering over
alternatives. This type of value proposition is grounded in the practical aspect of
delivering value through cost savings or optimized resource utilization. It appeals to
customers who prioritize financial considerations and are looking for a solution that
provides economic advantages. The cost-based value proposition is particularly
relevant in markets where competitive pricing and efficiency play a significant role in
customer decision-making.

 Social Value Proposition: - Stresses the societal or community impact of the

product or service. - Appeals to customers who prioritize social responsibility and
community contributions.

A social value proposition - emphasizes the positive societal or community impact of

a product, service, or brand. This type of value proposition is grounded in the idea that
choosing a particular offering contributes to social responsibility, ethical practices, or
community well-being. It appeals to customers who prioritize making socially conscious
choices and seek products or services aligned with their values. The social value
proposition aims to create a positive perception of the brand, fostering a sense of
purpose and community impact beyond the functional or emotional aspects.
 Unique Selling Proposition (USP): - Focuses on a specific, unique aspect that
sets the product or service apart from competitors. - Identifies a clear and
distinctive reason why customers should choose the offering.
A Unique Selling Proposition (USP) - is often centered around a key benefit that is
both compelling and difficult for competitors to replicate. It serves to differentiate the
offering and create a memorable and persuasive message that resonates with the
target audience. The USP is a critical element in marketing strategy, helping to capture
customer attention and build a competitive advantage.
 Service Excellence Value Proposition: - Emphasizes exceptional customer
service, support, or post-purchase experiences. - Aims to differentiate the
offering through superior customer care.

A Service Excellence Value Proposition - This type of value proposition focuses on

the quality, responsiveness, and customer-centric approach to support, ensuring that
customers receive superior assistance and satisfaction throughout their interaction with
the brand. The Service Excellence Value Proposition aims to differentiate the offering by
highlighting the dedication to addressing customer needs, resolving issues promptly,
and providing a level of service that goes above and beyond expectations. It is
particularly relevant in markets where exceptional customer service is a key
differentiator.
 Exclusivity or Luxury Value Proposition: - Targets customers seeking
premium or exclusive products or services. - Highlights the luxury, exclusivity, or
elite status associated with the offering.

An Exclusive or Luxury Value Proposition - targeting customers who seek a

sophisticated or elite experience. This type of value proposition often emphasizes
superior quality, craftsmanship, and a sense of exclusivity, creating an allure that goes
beyond basic functionality. It aims to appeal to a niche market that values prestige,
luxury, and the status associated with the product or service. The Exclusive or Luxury
Value Proposition is designed to evoke a sense of indulgence and exclusiveness,
positioning the brand as a symbol of refined taste and lifestyle.
 Convenience Value Proposition: - Stresses the convenience and ease of use
associated with the product or service. - Appeals to customers looking for
straightforward and hassle-free solutions.

A Convenience Value Proposition - emphasizes the ease of use, accessibility, and

timesaving. The convenience and hassle-free experience that customers can expect
when choosing a particular offering. It targets customers who prioritize straightforward
solutions and seek products or services that simplify their lives. It often highlights
features such as user-friendly design, quick access, or time-efficient processes. The
Convenience Value Proposition aims to position the offering as the most convenient
option in the market, catering to the needs of busy or efficiency-focused consumers.