Value Proposition

Value Proposition

Developing your Value Proposition should always be the second step in designing a Business Model. This block comes after the Customer Segment, exactly because it depends on the definition of one or more customer groups to make sense. This is because the Value Proposition is about the products and services that create value for your customer.

This “value” can be quantitative, like the price of a product or the agility of a service, as well as qualitative, such as an innovative design or a remarkable experience, for example. Value Proposition will be the preponderant factor for the customer to choose one company or brand over another. So let’s get to know a little more about it, to make sure your consumer elects you.

What is a Value Proposition?

What is a Value Proposition

Value Proposition is, in simple terms, a unique combination of products and services that offer value to the customer. In other words, it is a satisfactory solution to a consumer problem. This problem may be an immediate or recurring identifiable customer need that needs healing, but it could also be a new need that the customer did not even know he had. The value proposition, therefore, becomes the motive that drives a person to acquire a particular product or service, choosing a name among all the competition.

The same product or service may have one or more value propositions. Each of them encompasses a set of benefits developed for previously identified customer segments. Some value propositions involve an innovative offer, different from what already exists in the market. Others are similar to existing offers, but with new and/or added attributes. What characteristics, then, should be observed in order to develop a unique value proposition that is capable of attracting your customer?

Elements for value creation

Elements for Value Creation
  • Newness: some value propositions are based on the innovation or novelty factor. It is a fairly common element in the area of ​​electronics and technology, mainly. They are, in general, propositions that satisfy a need that the customers did not even know they had since there were no similar products or with the same attributes in the market.
  • Performance: it is the element used in the upgrades of products or services. This is a way to create new value for an already traditional product, improving its characteristics and/or overall performance. This is what happens with smartphones that are faster and have more predicates.
  • Personalization: every day more, the concepts of customization, self-expression, and individualization have gained space in marketing. That’s because customers are seeking to express their own personality through their acquisitions. It would be a way of communicating their values ​​and interests. In this way, the adequacy of service products to particular and specific needs of each customer segment has generated value to the consumer. Although this means products at a higher price, many consumers accept to pay more to have their “personal brand” in their purchase.
  • Status: many customers demonstrate loyalty to a particular brand. This may be due to the design or superior quality of the product, but it is also the case of the option for the status that the brand lends to the owner. It is a way for the customer to feel superior, in control, highlighted from the crowd of “ordinary” brands. It is an element widely used by the electronics and fashion industry.
  • Price: one of the most used elements for value proposition is the price. Enough applied by new entrants in the market represents the offer of a product or service cheaper than the existing ones. It is a way that usually satisfies the segment of customers who are interested in such a factor. However, it is important to adapt your entire business model according to this proposition, so as not to make it unfeasible.
  • Cost reduction: another way of generating value that touches the “pocket” of the customer. It is based on offering improved customer experience by reducing your costs. It is also a strong argument from the technology industry, especially apps and software that offer simplified versions or that can be sold in modules, for example. Thus, the customer does not need to invest in more expensive systems, with attributes that will never be used.
  • Risk Reduction: This element is associated with the customer segment that seeks peace of mind with its purchase. The lower the risk involved, the higher the value generated. The goal here is to make consumers feel secure with the solution they have purchased. It is the element chosen, for example, by the customer who decides to purchase a product with an extended warranty. In the mind of the buyer, the risk is reduced because the guarantee reduces the chance of disturbance and expenses with defects and repairs.
  • Accessibility: the focus here is to make products and services accessible to new customer segments. It arises from the business models, the development of new technologies or the sum of both.
  • Convenience / Usability: In this case, the value proposition involves highlighting the ease of use, that is, making products more convenient and/or intuitive. It is the motto of products like Netflix and Spotify, for example, that have transformed the entertainment industry.

Designing a Value Proposition

Designing a Value Proposition

When designing a value proposition, we need to consider the evolution of technology, business, and even the problems and interests of our consuming public. In summary, we need to consider whether the product or service we want to offer is relevant in the market, especially for our previously identified customer segments. The value proposition should be designed, therefore, by analyzing the customer segments, with their pains and needs, as well as their interests and preferences. An effective proposition matches the customer profile to the value-added elements.

Finally, it is about understanding and responding to the needs and desires of your target audience. A solid value proposition is a safe and promising way to move your business model toward the next seven blocks. Do you want to design a winning Value Proposition? Go ahead and check our Super Guide about the Value Proposition Canvas.

Learn more about the next block on the Business Model Canvas.
TAKE ME TO THE NEXT BLOCK -> DISTRIBUTION CHANNELS

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