The Value Proposition
Unlike the value chain, which is an internal function that focuses on operations, the value proposition is the external messaging that communicates what the product has to offer to the customer. Customers are always interested in the benefits a product or service will provide for them. They will be asking, "what's in it for me?". The answer to this question gives the consumer a reason to buy one product over another. When a company understands what is important to their customer, no matter where they are in the world, it can better formulate messaging that will be meaningful. An effective value proposition will be clear and concise, persuasive, and will differentiate the product from the competition. Consider the value propositions from Target – "Expect More, Pay Less" – and Walmart – "Save Money, Live Better". While they convey similar messages, the differences are evident but no less meaningful and effective. This section will explore the intricacies of the value proposition and how companies can formulate effective messages for their international marketplaces.
What Is a Value Proposition?
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.
It is difficult to create an effective value proposition because it requires the marketer to distill many different elements of value and differentiation into one simple statement that can be easily read and understood. Despite the challenge, it is very important to create an effective value proposition. The value proposition focuses marketing efforts on the unique benefit to customers. This helps focus the offering on the customer and, more specifically, on the unique value to the customer. Also, the value proposition is a message, and the audience is the target customer. You want your value proposition to communicate, very succinctly, the promise of unique value in your offering.
A value proposition needs to very simply answer the question: Why should someone buy what you are offering? If you look closely at this question it contains three components:
- Who? The value proposition does not name the target buyer, but it must show clear value to the target buyer.
- What? The offering needs to be defined in the context of that buyer.
- Why? It must show that the offering is uniquely valuable to the buyer.