What is a value proposition?
Although it has become a buzzword in the business world, a value proposition is simply a clear analysis of the tangible benefits of a new product or service. A strong value proposition is a starting point for persuading potential customers that your offering is best for them.
Companies will often create weak value propositions about the features and capabilities their products provide. If you create a better mousetrap, you might say, “Our mousetrap is more effective than competing ones on the market.” But this isn’t really a value proposition because it doesn’t tell potential customers about the value that the product offers.
Steps to creating a value proposition
Using the example of the new mousetrap, let’s look at the elements that should be considered when developing a value proposition as a marketing tool.
The first step is to analyse the market and what customers are looking for. Is the mousetrap for commercial or residential use? Is it something that people want and are willing to pay for? Is it differentiated enough to be a viable contender against competitors in the market? Does it have features that stand out from other products in the market?
You will also want to consider the best market segment for your products. Different types of buyers will have different needs, so you will want to consider this when developing your value proposition. Do they want a mousetrap that’s reliable and easy to use? Do they want a humane mousetrap to catch and release, or are they more concerned with hygiene?
In order to gauge preferences, you’ll want to conduct research to find out what’s important to potential customers. You can do this by conducting surveys or focus groups, or using existing third-party research. When you know what your target audience is looking for, you can use this information when formulating your value proposition.
The next step is to look at the benefits of your product or service. You can say “it’s the best” all day long, but it means nothing unless you can back your claims. You can start with the physical characteristics. Maybe your mousetrap is built with heavy-duty materials not found in other mousetraps, which means it will last longer and not get damaged if accidentally stepped on. It also might be designed in a way that makes it easier to set up and bait.
Then you can cover the operational benefits. You can test your mousetrap against similar ones to uncover the tangible benefits. If yours catches 20 per cent more mice than the competing models, under the same conditions, stress this point.
Third-party experts or organisations will give you more credibility when communicating the benefits of your value proposition. For example, having your mousetrap tested by an independent laboratory or trade organisation will have more impact than claims based on your own research.
After you have thoroughly analysed the needs of potential customers with respect to the product and its benefits, you can start creating your value proposition. Start by asking how the features and benefits of your new product or service meet the needs of your potential buyers. Your value proposition should stem from the points where the needs of customers coincide with the product’s benefits. If your product can’t fulfil the requirements of your prospects, you might need to look more closely at your product and target market.
Create the foundation for a successful value proposition
Although it has been said that the world will beat a path to your door if you create a better mousetrap, the fact is that you need to clearly communicate the value of a new product or service in order to sell it. Developing your value proposition is a basic step in the process. Remember that understanding your market and the tangible benefits that your product will bring to customers are the foundations of a compelling value proposition.
For assistance creating your value proposition, go to Seven Proven Templates for Writing Value Propositions That Work.
