Value Proposition

Digital Marketing - Study Notes:

Business value proposition

A business value proposition is a statement that explains what benefit you provide, for whom you provide it, and how you do it uniquely well. It basically communicates why buyers should choose your products or services over your competitors. A value proposition should always represent your offering honestly and accurately. A well-crafted statement can help you win customers and gain a competitive advantage.

The terms ‘value proposition’ and ‘customer value proposition’ can be used interchangeably. A value proposition can apply to an entire organization, or to parts of it. It could also apply to a customer account, or a particular product or service.

A customer value proposition isn’t the same as a positioning statement. A positioning statement, which articulates your brand’s position in the market, is an internal guideline, whereas a value proposition is customer-facing. 

An effective value proposition succinctly captures the way your brand or product fixes a pain point or improves the lives of the target audience. It communicates the benefits and value you deliver to customers. It’s specific, pain-focused, and exclusive.

Example: Studio Neat 

Consider the example of Studio Neat. This organization’s company value proposition is:

Simple products that solve problems.

This value proposition appears on the company’s home page:
 
The company has a similar value proposition for the range of walnut docks it creates for Apple iPhones, watches, and AirPods. The statement “Wood docks for MagSafe” is carried through each product in the range and serves to highlight the versatility and compatibility of the products, as well as the benefit of having a designated charging point for various devices. 

It reinforces the idea that these are simple products that solve problems:
 
The company has a similar value proposition for its Apple TV remote stand product, which essentially tells the consumer: “You know you’re going to lose your remote – with this product you won’t.” This is still in keeping with the company value statement:
 
Example: Lidl

Similarly, Lidl’s company value proposition is “Big on Quality, Lidl on Price”. This value proposition appears on the company’s home page:
 
The company’s ‘Middle of Lidl’ category has a slightly different value proposition. It offers customers weekly deals from its famous middle aisle while retaining the commitment to low prices found in the company value proposition:
 
The company value proposition also caries through to individual product ranges. For example, its range of Halloween Must-haves essentially tells parents that kids can dress up in great costumes for one night because the price of those costumes is so affordable:  
 
A value proposition shouldn’t only apply to current customers. It should also apply to prospective customers, and other constituent groups within and outside the organization.

An effective business value proposition should highlight the organization’s advantage over competitors. 

Example: John Lewis

Consider this example from John Lewis. It provides a clear business proposition, offering quality products and outstanding service to consumers. And it highlights the brand’s main point of difference – their employees or ‘partners’.

Digital value proposition

Sometimes, a company’s digital or online value proposition can differ from its offline value proposition. That’s because you might offer additional or different benefits or services to online customers. For example, Greggs’ online value proposition is: “Greggs anywhere, anytime, delivered direct to your door.” This statement doesn’t apply to its offline offering.

An effective digital value proposition has the following characteristics:

•      It’s specific.
•      It avoids business jargon.
•      It’s clear.
•      It’s unique.
•      It fulfils a customer need.
•      It’s easy to understand.

Components of an effective digital value proposition

In general terms, an effective digital value proposition contains the following components: 

•      A headline
•      A sub-headline
•      Three bullet points
•      A visual

Let’s look at some examples.

Example: Trello 

This digital value proposition from Trello is effective. It clearly states in bold what the company offers and to whom. 

It lists key features and benefits in the sub-headline and provides a relevant image:
 
Example: Weebly 

This digital value proposition from Weebly is also effective. It contains a clear statement about what it offers: a free website builder. It targets people who are running a business. And there’s a relevant image:
 
Example: Ecotricity 

This example from Ecotricity is also effective. Again, it clearly states what the company does and for whom. The target audience isn’t just existing customers but people who want to join the movement to end the use of fossil fuels. There’s a headline and sub-headline, a relevant image, and some additional points are included:
 
A company’s value proposition, along with its mission and vision statements, are crucial documents. Taken together, they outline the purpose, future direction, and culture of the organization in an accessible format that’s easy for all stakeholders to understand. 

Successful businesses are characterized by a clear business model and a clearly differentiated value proposition – for the business as a whole and for each of its products or services. 

Brand positioning    

You can position your brand in different ways. 
 
The Kotler and Armstrong matrix shows the possible value propositions that a company could use to position its products. The green cells represent winning value propositions that give your company a competitive advantage. The red cells represent losing value propositions, while the middle yellow cell offers a negligible benefit.

The matrix can help you position your product in the market effectively. It can also help ensure that your overall value proposition is precise and accurate.

The five winning value propositions are:  

•      More for less: This is probably the ideal value proposition. However, it can be difficult to sustain this positioning in the long term and you may lose out to more focused competitors.
•      Less for much less: Many consumers are willing to accept lower performance or quality for a much lower price. Few customers can afford to always buy the best of everything.
•      The same for less: This is a powerful value proposition because it offers a good deal to customers. You could offer the exact same product at a lower price or develop a similar product to sell more cheaply.
•      More for the same: Positioning your brand as offering more for the same price is a great way of attacking a competitor’s value proposition. You could offer a better service, a better atmosphere, or better facilities.
•      More for more: By selecting this proposition, you offer customers more benefits for a higher price. This can give you a competitive advantage, but it’s essential that you can justify the premium price.