Value Proposition Essentials

Value Proposition

• A concise communication of the unique benefits and value of a product or service to its target audience.
• It highlights the specific problem it solves, the advantages it provides, and why it is superior to competitors.
• Helps differentiate a business and attract customers.

Elements of a Successful Value Proposition

• Specific: Clearly outlines the benefits the target customer will receive.
• Pain-Focused: Addresses how the product/service fixes the customer's problem or improves their life.
• Exclusive: Highlights what makes the product/service desirable and superior to competitors by showcasing the company's competitive advantage.
• Focus on customer benefits, not product features.

Value Proposition Formula

• [Adjective] [Product or Service] / for [Aspiration] - A basic, adaptable formula.

Writing Unique Value Proposition

• Understand Your Customer's Voice: Use their language from interviews and surveys.
• Clarity Before Creativity: Ensure your value proposition answers the following questions:
  • What are you selling?
  • Who should buy it?
  • How will it improve the customer's life?
  • Why should they choose you over competitors?
  • When will the value be delivered?
• Emphasize Benefits, Not Hype: Avoid using hype to compensate for a weak value proposition.
• Use a Template: Utilize templates to organize brainstorm ideas.

Customer Jobs, Pains, & Gains

• Customer Jobs: What task or problem is the product/service solving for the customer?
• Customer Pains: What difficulties or frustrations are customers experiencing that the product/service addresses?
• Customer Gains: What positive outcomes or benefits does the product/service provide?

Competitive Advantage

• Factors that allow a company to outperform its rivals.
• Can emerge from factors like cost structure, branding, product quality, distribution, intellectual property, and customer service.

Types of Intellectual Property

• Patents: Exclusive rights to an invention (design, process, improvement, physical invention).
• Copyrights: Exclusive rights for authors/creators to use, copy, or duplicate their original material.
• Trademarks: Recognizable symbols, phrases, or insignia representing a product that legally distinguishes it from others.
• Franchises: A license purchased by a franchisee to use the franchisor's name, trademarks, knowledge, and processes.
• Trade Secret: A company's confidential process or practice providing an economic advantage.

Examples of Competitive Advantage

• Access to exclusive resources.
• Highly skilled workforce.
• Unique geographic location.
• Proprietary technology.
• Lowest manufacturing costs.
• Strong brand recognition.

Constructing Competitive Advantage

• Benefit: Clearly define the value the product/service provides.
• Target Market: Identify the specific group of customers and how to cater to them.
• Competitors: Understand the competitive landscape and the strengths/weaknesses of competitors.

Types of Competitors

• Direct: Businesses offering the same product/service in the same niche or target market.
• Indirect: Businesses solving the same problem with a different product/service, competing for the same customers.
• Potential: Not currently in your market but have the potential to enter.
• Replacement: Offer alternative products that customers might use instead of yours.

Strategies for Competitive Advantage

• Cost Leadership: Aiming to become the lowest-cost producer.
• Differentiation: Distinguishing your products/services from rivals through high quality, innovation, or other factors.
• Focus: Concentrating on a specific and narrow target market segment.

Competitive Analysis

• Identifies competitors and analyzes their strengths and weaknesses.
• Helps refine your strategy and find ways to outmaneuver competitors.

Why Is a Competitive Analysis Necessary?

• Differentiates your business from competitors.
• Focuses marketing efforts.
• Supports public relations and word-of-mouth marketing.
• Aligns your brand message with overall company sentiments.

Benefits of an Online Value Proposition

• Helps stand out from competitors.
• Focuses marketing efforts and clarifies the purpose of a site.
• Supports PR and word-of-mouth marketing.
• Aligns with the company's broader value propositions.
• Builds trust and credibility with consumers.
• Increases conversion rates.
• Improves customer acquisition cost.

Formulating an Online Value Proposition (OVP)

• Understand the characteristics of online channels and their benefits to customers.

Chaffey’s 6C’s of Customer Motivation

• Connect: Providing relevant content, context, and media for website visits.
• Customization: Personalizing content or products for individuals or groups.
• Community: Offering customer forums for troubleshooting or exchanging tips.
• Convenience: Providing 24/7 availability, quick turnaround times, reliable after-sales service, and guarantees.
• Choice: Offering a wide range of products/services, flexible payment options, delivery methods, and easy returns.
• Cost Reduction: Conveying the perception of lower costs, promoting direct sales with no middlemen, and offering online-exclusive pricing.

Rayport and Jaworski’s 7C’s

• Context: Website design.
• Content: Information on the website.
• Community: Communication between users.
• Customization: The extent to which the site can be personalized.
• Communication: Site to user communication.
• Connection: Relationship between this and other sites.
• Commerce: E-commerce functionality or the ability to conduct transactions and purchases.

Steps to Develop or Refine an OVP

• Review potential OVPs.
• Select your target audience.
• Research your audience.
• Benchmark OVPs.
• Define your OVP.
• Communicate your OVP.