Value proposition definition
Value propositions are the benefits you confer with the products and services that you sell. If communicated correctly, your prospects will perceive the benefits they will receive if they buy your product or service and become customers. A simple example would be a SaaS (software as a service) subscription that gives you instant access to a powerful sales tool. However, if there are 99 other companies offering a similar service, how do you differentiate? This is where you need to start with your why for a good value proposition.
Value proposition in marketing
‘Start with why’ is a book published in 2009 by Simon Sinek. In this book, he describes what actions a leader can take to communicate their purpose and applies this to the world of business. The premise centres around communicating not what you do but why you do it. For example, we all know that Apple makes mobile phones but people loyal to the brand believe they have the best user experience and the latest technology in the palm of their hand. This is a powerful differentiator.
In a crowded marketplace with high cost focus and low differentiation leading to commoditisation, such as in the world of IT and Telecoms marketing, it is difficult to stand apart from competitors. Continued price pressures, convergence of ICT and Telecommunications, extended product life cycles and highly informed buyers mean differentiation is your most important weapon in a competitive marketing strategy.
Value proposition example
A simple value proposition would be to say that an IT solution replaces multiple video-conferencing technologies. The clear message is that it reduces cost and simplifies your solution.
There are three challenges with establishing a value proposition:
- Conferred value – Firstly, is the value genuine, different and do the benefits solve customer pains?
- Communicated value – Secondly, is the value clear, do prospects know and do they believe you?
- Confirmed value – Thirdly, is the value agreed by customers and do they share the experience?
As part of your business strategy, a differentiation focus is a source of competitive advantage and satisfying customers a source of sustainable profitability.
Professional value proposition example
As part of your marketing strategy, identifying your value proposition is a key stage before you craft a marketing plan. Ultimately, your value proposition helps to identify the benefits of what you do which you can then add further differentiation by saying why you do it. Once you have both, you can start to work on the markets and personas which you will target with your marketing activities.
Returning to the SaaS marketing example, a provider of e-Invoicing gives many benefits versus a paper-based solution and even versus other proprietary technologies. However, it may not have such clear-cut benefits versus established competitors and so you start with why you do it.
Start with why to differentiate
Think Beyond is a marketing consultancy agency that provides marketing consultancy and marketing agency services. We run professional marketing training courses such as ‘Start with why’ to help you stand out from the crowd. Let us help construct or refine the benefits of your propositions and decide how to target customers as part of your marketing strategy.
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