Marketing experts have long been using the concept of creating a value proposition for their services or products. If you do not know what your value proposition is or even what a value proposition are then you need to spend some time developing one. A value proposition has many names. Some refer to a value proposition as a unique selling point or an inferred positioning statement. No matter what name you give it, a value proposition is critical for a business to successfully sell their product or service.
A value proposition has three primary elements that you should focus on. The first of these elements is the target market segment. Who are you trying to sell your product to? Who do you believe that your customer base is? These are easy questions to answer for some while difficult for others. If you are selling men's hair coloring to remove gray hair then it is easy to identify your target market. You are looking for men over 40 years old primarily. If you are selling make-up then you are focusing on women only. However some products make it more difficult to define the target market segment. If for example, you are selling automobiles then you want to appeal to a vast array of people, men, women, various age groups, etc. You need to spend time thinking about which target market segment that you want to buy your product or service and whom you think will actually purchase it. If you are selling high dollar furniture, you do not want to market to a lower socioeconomic customer base. If you are selling low priced automobiles, you will want to focus on that market segment instead of the more affluent market.
The second element to a successful value proposition is the reasons why a customer would buy your product or service. This is a point of differentiation amongst your competitors. Put simply, why would a potential customer choose your product or service over a competitor? Depending on your marketing strategy there are a variety of reasons that a customer may choose you over a competitor. Some of these reasons may include, price differentiation, quality, brand name, customer service, etc. As a business owner you need to decide which of these factors you want to focus on the most. Do you want to set your product apart from others because of the price? Do you want to draw a customer base that is focused on quality? Of course in a perfect world we would offer the customer the best of all these categories, but that is very hard to achieve. Appealing to both the cost conscience and the person looking for name brands is quite challenging and may very well be impractical.
The third element of a successful value proposition is comparison with other products. This is similar to defining why customers would choose your product or service over others. This is a frame of reference for you and for potential customers. If you sell Kia automobiles your frame of reference will likely be on the value of the vehicle. Conversely, if you sell Mercedes automobiles your frame of reference will be on the prestige associated with it and the quality of the vehicle. Volvo is often associated with being the leader in safety in the automobile industry so their frame of reference is different from both Kia and Mercedes. Understand that all of these automakers are extremely successful in their individual target markets. You too must choose what approach you want to take with your product or service line. Do you want to position your product as a value, a prestige product, a higher quality, etc.? Once you have decided what your frame of reference is you can begin your marketing campaign.
It is critical that you choose a marketing position that you can defend. Much like Kia is able to defend their claim to be inexpensive, Volvo has numbers to back up their safety claims. Positioning involves making a clear choice of the target segment to be served, the points of difference compared to the competitors and the frame of reference for the customers. A successful business offers more than one single benefit and appeals to more than one segment of the market while staying focused on the key benefit of that product or service while identifying to whom it has the greatest appeal. Positioning allows the business to choose with whom it competes.
Now look at your product or service and start thinking carefully about what you want your value proposition to be. It is quite difficult to change that value proposition once it has been implemented. For example, consider if Kia tried to compete with the customer base that Mercedes has. It would be quite difficult to implement, although not impossible. So get started today in developing that value proposition before throwing away money on misdirected advertisements.