Value Proposition
A value proposition is a statement that communicates the unique benefits and value that a product or service offers to its customers. It outlines what sets the offering apart from competitors and why it is the best choice for the target audience. A strong value proposition addresses customer needs and pain points, ultimately influencing purchasing decisions.
7 Key excerpts on "Value Proposition"
eBook - ePubSelling Your Value Proposition
How to Transform Your Business into a Selling Organization
- Cindy Barnes, Helen Blake, Tamara Howard(Authors)
- 2017(Publication Date)
- Kogan Page(Publisher)
...But it has also been misappropriated and misused. Various people have chosen to use the phrase ‘Value Proposition’ to mean a wide variety of different things; the most common misuse being to treat ‘Value Proposition’ as synonymous for ‘sales proposition’ or simply the ‘packaged product’. So the next few paragraphs will clearly spell out what a Value Proposition is and what it enables a company to do. First, the definition: a company’s Value Proposition is: Figure 2.1 The definition of a Value Proposition The definition of a Value Proposition The Value Proposition is a blueprint for the whole organization, market entity or business unit, which enables the business to deliver genuine value to its customers. The Value Proposition helps a company to become more customer-centric. It is not a sales message, or a packaged offering, or a smart marketing story. A company’s Value Proposition provides the foundation for creating powerful sales propositions: sales stories and commercial offerings directed right at the heart of customer issues. In most instances, these will be aimed at individuals within the prospective customers who have issues to be resolved or needs to be met. Often, Value Proposition work will mean deploying a different sales approach as well as a new, underlying market strategy...
eBook - ePubThe Business Models Handbook
Templates, Theory and Case Studies
- Paul Hague(Author)
- 2019(Publication Date)
- Kogan Page(Publisher)
...They seek to understand the needs of the market and to develop products and services that satisfy those needs. They want their customers to come back for more. Marketing companies sell the sizzle rather than the steak. They push the benefits of their products and services and not just the features. Crucially, they aim to sell value. They want their customers to feel that the products and services they have bought are good value so that they become long and loyal advocates. It is the philosophy of marketing that has led to the term customer Value Proposition (CVP). This rather pretentious term refers to the offer with the emphasis on the words ‘value’ and ‘proposition’. There is recognition that products and services present a proposal to a customer – possibly a solution to a problem; certainly something to meet a need. Very often the CVP is a promise of a reward if the purchase is made. These components of the CVP are all the things that are valued by customers and for which they will pay a premium. Communicating products and services as Value Propositions gives the customer a reason to buy and justifies the price. A good CVP will differentiate a product and give it a competitive edge. There are a number of steps in developing a CVP and these are shown in Figure 14.1. Figure 14.7 Checking the CVP against the 3Ds Checking the CVP against the 3Ds Step 10: launch, monitor and adjust the CVP The CVP will need to be communicated internally so that everyone within the company uses it in the same way. Consideration needs to be given as to how it will be presented to customers on the website and in marketing materials. Responsibility needs to be given to people for each implementation task together with deadlines...
eBook - ePubCreating and Delivering Your Value Proposition
Managing Customer Experience for Profit
- Cindy Barnes, Helen Blake, David Pinder(Authors)
- 2009(Publication Date)
- Kogan Page(Publisher)
...For more on how the Value Proposition is used as a qualification tool, see Chapter 13. To sum it up… A Value Proposition statement is a clear, compelling and credible expression of the experience that a customer will receive from a supplier’s measurably value-creating offering, where Value = Benefits minus Cost. It is not a description of what your organization does for a customer. The broad components of a VP are: Capability: what you can do for a customer. Impact: how that will help the customer to succeed. Cost: what the customer must pay for the privilege. A Value Proposition is a tool that can tell you if you are likely to succeed: A Value Proposition must be compelling and believable. Value Proposition development needs to be carried out at the top level, market, opportunity and functional levels. VPs work because they force focus. The struggle is important: it’s the tool that helps you focus your own business and more reliably win business in any sales situation. That’s particularly important in tough economic times because you need to be sure that whatever resources you commit to sales have the best possible chance of winning. Notes 1. Delivering Profitable Value, Michael J. Lanning, Perseus Publishing, 1998. 2. Delivering Profitable Value, Michael J. Lanning, Perseus Publishing, 1998. 3. Business Market Management – Understanding, creating and delivering value, James C. Anderson and James A. Narus, Pearson Education International, 2004. 4. As in any business activity, risk is present at every stage, but it is important to differentiate between operational risk (that is, risk relating to your organization) and customer risk (the risk or risks that a customer may experience). 5. Gartner, as reported by Baseline, June 24, 2005. 6. The distinction between a lead and an opportunity in the box is referenced from Claus-Peter Unterberger of Oracle, quoted by Neil Rackham....
- Harvard Business Review(Author)
- 2020(Publication Date)
- Harvard Business Review Press(Publisher)
...Your customers—pressured to control costs—seem to care only about price. But if you lower prices to stimulate sales, your profits shrink. So how can you persuade your business customers to pay the premium prices your offerings deserve? Craft a compelling customer Value Proposition. Research potential customers’ enterprises, identifying their unique requirements. Then explain how your offerings outmatch your rivals’ on the criteria that matter most to customers. Document the cost savings and profits your products deliver to existing customers—and will deliver to new customers. The payoff? You help your customers slash costs—while generating profitable growth for yourself. One company that manufactured resins used in exterior paints discovered this firsthand. By researching the needs of commercial painting contractors—a key customer segment—the company learned that labor constituted the lion’s share of contractors’ costs, while paint made up just 15% of costs. Armed with this insight, the resin maker emphasized that its product dried so fast that contractors could apply two coats in one day—substantially lowering labor costs. Customers snapped up the product—and happily shelled out a 40% price premium for it. Three Kinds of Value Propositions We have classified the ways that suppliers use the term “Value Proposition” into three types: all benefits, favorable points of difference, and resonating focus. (See the exhibit “Which alternative conveys value to customers?”) All benefits Our research indicates that most managers, when asked to construct a customer Value Proposition, simply list all the benefits they believe that their offering might deliver to target customers. The more they can think of, the better. This approach requires the least knowledge about customers and competitors and, thus, the least amount of work to construct. However, its relative simplicity has a major potential drawback: benefit assertion...
eBook - ePubThe One-Hour Business Plan
The Simple and Practical Way to Start Anything New
- John McAdam(Author)
- 2013(Publication Date)
- Wiley(Publisher)
...Price is what you pay. Value is what you get. — Warren Buffett, American investment entrepreneur and philanthropist Module 1 What Are You Offering? Create a Value Proposition That Makes a Stronger Business Model I nvestopedia defines a Value Proposition as “a business or marketing statement that summarizes why a consumer should buy a product or use a service. This statement should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings.” (See Figure 1.1.) Figure 1.1 The One-Hour Business Plan™ Foundation—Five Essential Business Plan Cornerstones The word consumer in the definition is inherently interchangeable with business to accommodate both business and consumer purchases. The second sentence in the definition defines the foundation and the reason consumers or businesses purchase specific goods and services—to add value or solve problems better than other available offerings. If the statement convinces the purchaser that value is added or a problem is solved, then the purchase benefits both buyer and seller and a transaction should naturally occur. Well done, Investopedia ! In summary, the Value Proposition defines what the organization does and its purpose for being—to add value and benefit the purchaser. Unfortunately, articulating a Value Proposition is a challenge for most of us. You might think that larger organizations articulate their Value Propositions better than smaller organizations. Not in my experience. As a test, if you want to embarrass the CEO of a large organization, take a tape recorder to random employees and managers in the organization and ask, “What does this organization do?” Play the recorded answers back for the CEO and watch the facial expressions unfold. Fun stuff if the CEO has a sense of humor; otherwise, not so much...
eBook - ePubA Practitioner's Guide to Account-Based Marketing
Accelerating Growth in Strategic Accounts
- Bev Burgess, Dave Munn(Authors)
- 2021(Publication Date)
- Kogan Page(Publisher)
...The purpose of the statement is to get potential buyers to take action to learn more. That action can be going to your website, picking up the phone to call you, attending a webinar or reading a case study. Marketing typically composes the segment-based Value Propositions and communicates them to wide audiences using broadcast communication vehicles such as your website and collateral. Nevertheless, they can be useful as a starting point for your client-specific proposition, if only to ensure that you are ‘on message’ with the wider communications to market. Role-based With more contextual information about buyers available, Value Propositions become more targeted to sub-segments and specific roles within organizations, such as chief information officers (CIOs), sales management or business unit leaders. Such individuals often have different perceptions of value based on their roles and responsibilities. For example: IT manager: staff augmentation or access to capabilities; functional vice president: solution to an operational problem to increase productivity; business unit general manager: entrance to a new market and access to new streams of revenue. Role-based Value Propositions resonate when they address the specific business needs of the buyer personas (see Chapter 8 on the power of personas) the company is trying to reach. They require a deeper level of understanding of the like-minded groups of people the company is communicating with, including their needs, desires, motivations, expectations, goals, fears, skills and biases. Role-based Value Propositions are usually ‘narrowcast’ via targeted advertising, media relations, analyst relations, speaking opportunities at third-party hosted conferences and seminars, company-hosted events and so forth...
eBook - ePubYou Should Test That
Conversion Optimization for More Leads, Sales and Profit or The Art and Science of Optimized Marketing
- Chris Goward(Author)
- 2012(Publication Date)
- Sybex(Publisher)
...Chapter 5 Optimize Your Value Proposition Don’t bunt. Aim out of the ball park. Aim for the company of immortals. —David Ogilvy Your Value Proposition is the first, and most important, of the six conversion factors in the LIFT Model. It’s the driver of your conversion-rate potential. It’s the reason your customers buy from you. The Value Proposition is often approached as a logical exercise to determine your most important costs and benefits, but it also must include the emotional attributes of your company and product. The intangibles are just as important as your tangible appeals and detractions. Your brand essence plays just as much of a role as the features of your product or service. Consider for a moment the effect of trust and credibility in the unfortunate case of Steve’s Detailing in Manhattan, New York. It’s a detailing shop, so you may assume that attention to detail is an important part of their Value Proposition. Do you think they instill confidence in their attention to detail when their sign is misspelled Detaling ? start graphic end graphic For you, as for Steve, what you say can be less important than how you say it. The medium is the message, as Marshall McLuhan said. Just as your choice of advertising medium can communicate and reinforce your message, the choices in your communication design and content give cues to your Value Proposition. Everything counts. Your prospects are looking for clues in every area of your business to either make a decision whether to buy or reinforce their decision post-purchase. In this chapter, you’ll learn about the components that make up your Value Proposition, how your prospects perceive your offering, and how to identify opportunities to strengthen and test your Value Proposition. The Value-Proposition Equation In Chapter 4, “Create Hypotheses with the LIFT Model,” you saw that your Value Proposition is a balance between your product’s or service’s perceived benefits and costs...
