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Value Propositions

Consumers do not buy products, they buy the expectation of benefits. These benefits may be emotional, rather than strictly functional.

Before businesses can communicate value propositions and brand positioning to their target customers, they need understand who it is they are targeting, and how to best reach and serve them.

Differences between market segments also need to be understood.

Customer insight, segmentation, positioning, and value propositions are all inter-related. In particular, segmentation and positioning strategies are two sides of the same coin.

A business will establish its most rewarding value propositions once it:

• has good customer insight,
• understands in some depth the nature of the customer segments it is targeting, and
• has developed a positioning strategy for the business in these segments.

Tests for a “Good” Value Proposition

There are some common factors which determine how productive a value proposition will be for a business. The business objectives which value propositions assist in achieving include attracting customers, building customer usage, maintaining customer loyalty, price maintenance, and of course revenue generation and the growth of gross margins.

The value propositions which a business should include in its go-to-market strategy should:

• Establish a unique position.
• Be relevant to target market segment (gain interest, address a real problem, fulfil an emotional need or want, and/or deliver a looked-for experience).
• Be credible / believable.
• Have clarity (to all relevant people and targeted customers).
• Communicate advantages (versus alternatives and competitors) which are meaningful, not irrelevant differences.
• Differentiate the brand from alternatives (again, in meaningful way)
• Not be “me too” positioning or generic.
• Communicate benefits, rather than features or functions.

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