Value Proposition: Level 1 Business Hierarchy of Needs

The value proposition is what a company promises to deliver to customers that attracts them to your products and services. It amazes me how many companies do not understand their value proposition, and for those who discuss it, how many stakeholders do not understand it and use it as a guide in their product development, marketing, and sales activities. Value Proposition is the reason customers buy your products and services.

Every company has a unique value proposition that differentiates it from the competition. It is that differentiation that needs to be defined, and the strategic plan needs to leverage it. All too often, especially with consumer products, price is the component that is cited when discussing value proposition. While that is important, because value and price are related in many ways in the buyer’s eyes, value proposition is much more than that. In value propositions we have developed with our clients, we leverage the following components:

1. Products

2. Services

3. Technology

4. Cost/Price

5. Quality

6. Customer Service

7. Ease of Use and Purchase

8. Availability

9. Social Media

The above items are driven by your value proposition and incorrectly defining it or not making it robust enough will minimize results. Your current value proposition is what got you here. But, what about the future?

We were working on the strategic plan for a lighting company. During a session on value proposition, the conversation took many twists and turns. It started with executives believing that they provided lighting for the movie industry. As we spoke about the future of the industry and its needs, the team very quickly concluded that the simple provision of lighting for movie sets was not their value proposition. Customers bought their products because the company’s owners continued to work in the industry and clearly understood what was required to properly light a movie set; they also understood that technology, ease of use and effectiveness were key elements. Price was never discussed. The company’s owners and senior leaders routinely held group meetings with gaffers who worked on the sets. They knew what these folks wanted and were able to stay in touch with their needs.

They were also able to anticipate the needs of the professional lighting community: the required methods, products, technologies, and systems. That was their value proposition. They built products that met the future needs of the industry in advance of everyone else and are a market leader as a result.

We build a value proposition through market research on the reasons customers buy a company’s products. It is melded with the future requirements of served industries and then compiled. The value proposition is a lever upon which the MIG and strategy are built. A lot of companies struggle in the marketplace because they don’t fully understand their value proposition, how to make it compelling, or leverage it. Simply defining it is not enough. All stakeholders need to understand the company’s value proposition and focus their efforts on leveraging it.

After reading this section, you should be asking yourself the following questions:

1. What is our Value Proposition?

2. Does it truly reflect why customers are attracted to our products?

3. Do all stakeholders understand it?

4. Is it used as the litmus test for every product program, and does it drive marketing and sales strategies?

5. Is it effectively used in marketing and sales programs?

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Learn more about Jim Gitney, the author here.

Call me to discuss getting started on developing your company's unique Business Hierarchy of Needs: (909) 949-9083, or drop me a line at [email protected]