Value Proposition Definition
A value proposition is the value that the company ensures to offer to consumers, provided they decide to purchase their product. It can also be referred to a statement that tends to make customers aware of the company’s vision, brand, products, the way it operates, and the reason they should consider buying its products.
A value proposition can be considered as a marketing tool that enables a company to inform customers about its products or services, and give them significant reasons to buy it. If a company makes an effective value proposition statement, it can influence customers to choose their products or services over those of its competitors. The statement should make them believe that the product is worth the money, and will offer a better solution to the problem.
(Note: An excellent value proposition enables a company in differentiating its products from others, and further tells the customers about how well the product or service can live up to their expectations.
A Little More on What is a Value Proposition
A value proposition is a promise that a company makes to its target customers. The proposition lets a customer know why he or she should purchase a specific product or service from a specific firm. A company should frame its value proposition statement in such an effective manner that the customer understands how a product brings value to their lives, provide detailed benefits that its features would offer, and further explain how their product is better than similar offerings out there. A feasible value proposition is precise and brief, and works as one of the factors that drive customers to make their buying decisions.
This statement allows a company to focus on customers who will gain a major advantage from that product. This ultimately enables the company in having a competitive advantage over others. The term ‘value proposition’ was created by Warren Buffett from Berkshire Hathaway. He mentioned that the higher the competitive advantage a firm has, the more competitive it is for other firms.
Working of a value proposition
A company creates value proposition statement in order to explain why the target customers should buy their product. Hence, it is important for the company to display it specially on its official website as well as other consumer touch points such as stores, showrooms, etc. It needs to be intuitive in nature so as to make it convenient for customers to absorb the relevance of statement in a matter of seconds
Successful value propositions follow a specific structure. It includes a catchy and comprehensible headline that tells customers about the benefits offered by the product. The headline should comprise of a single sentence, phrase or a tagline that customers can retain for a longer time. After creating a fantastic headline, the company needs to come up with a sub-headline that will be included beneath the headline. The sub-headline will offer information on how the product will deliver value, and will further include a particular example in order to make the product stand out from the rest of products in the market. An effective sub-heading should be up to 2-3 sentences. Its main objective is to entail the valuable features and elements of the products, and the firm can also use bullet points in order to highlight impressive points about its offering.
This amalgam of main headline and sub-headline helps a customer in quickly identifying the key features of the product. If impressive visuals are included in the value proposition, it enhances the chances of effective communication between customers and company.
Different companies can have different structures for value propositions. Overall, they should be unique, easy-to-understand and informative. They should inform about the results that customers will receive from using that product or service. They mark a difference between a company’s product or service and the competing products. Value proposition strategy should be free from any marketing jargon and should tend to offer value in a short period of time.
Key points to remember
- The value proposition statement of a company gives customers the primary reason of buying its product or service.
- For making a value proposition a big success, it should be shared with customers via direct channels such as the official site of the company, advertising, marketing, etc.
- There is no specific format created for value proposition. However, they should fall within the brand’s significance, and should be unique and identifiable in nature.
References for “Value Proposition”
Academic research for “Value Proposition”
The blended value proposition: Integrating social and financial returns, Emerson, J. (2003). The blended value proposition: Integrating social and financial returns. California management review, 45(4), 35-51.
From the vendor’s perspective: exploring the value proposition in information technology outsourcing, Levina, N., & Ross, J. W. (2003). From the vendor’s perspective: exploring the value proposition in information technology outsourcing. MIS quarterly, 331-364.
A stakeholder perspective of the value proposition concept, Frow, P., & Payne, A. (2011). A stakeholder perspective of the value proposition concept. European journal of marketing, 45(1/2), 223-240.
Value proposition on interoperability of BIM and collaborative working environments, Grilo, A., & Jardim-Goncalves, R. (2010). Value proposition on interoperability of BIM and collaborative working environments. Automation in construction, 19(5), 522-530.
Knowledge transfer: discover your value proposition, O’Dell, C., & Jackson Grayson Jr, C. (1999). Knowledge transfer: discover your value proposition. Strategy & Leadership, 27(2), 10-15.
The value proposition for fractionated space architectures, Brown, O., & Eremenko, P. (2006). The value proposition for fractionated space architectures. In Space 2006 (p. 7506).
Does fair trade deliver on its core value proposition? Effects on income, educational attainment, and health in three countries, Arnould, E. J., Plastina, A., & Ball, D. (2009). Does fair trade deliver on its core value proposition? Effects on income, educational attainment, and health in three countries. Journal of Public Policy & Marketing, 28(2), 186-201.
Channel collaboration and firm value proposition, Tuominen, M. (2004). Channel collaboration and firm value proposition. International Journal of Retail & Distribution Management, 32(4), 178-189.
Value proposition as a catalyst for a customer focused innovation, Lindič, J., & Marques da Silva, C. (2011). Value proposition as a catalyst for a customer focused innovation. Management Decision, 49(10), 1694-1708.
The co-creative practice of forming a value proposition, Kowalkowski, C., Persson Ridell, O., Röndell, J. G., & Sörhammar, D. (2012). The co-creative practice of forming a value proposition. Journal of marketing management, 28(13-14), 1553-1570.