What is value?
Value is the one criteria buyers use to make purchase decisions. Most people think of the price tag when they hear value. But, value is not a number so much as it a ratio. It can be helpful to think of it as a mental scale used by consumers where “What I get” – “What I give” = Value.
Look at the scale below. The brand that tilts the scale the most to the right wins. That can be done by lightening up the “give” side and/or weighing down the “get” side. But, in any case, the price tag is just one of several factors that can be used to increased perceived value.
In this equation, “What I get” is evaluated in relation to the specific need the prospect has and its priority. For instance, if an individual’s real motivation for buying a new watch is status, then they likely to weigh the brand name more than specific features. “What I give” is evaluated in terms of the prospect’s resources or tolerances. For example, a well-paid but time starved executive may weigh the time required to purchase the product much more than the price tag.
What is a value proposition?
When communicating with your export market, there is a lot you can say about your brand. However, you can only say one thing first. That one thing should be your value proposition.
Your value proposition should be something that differentiates your brand and earns it a spot on the prospect’s short list. It defines your brand’s priority in serving the market. If you can convince the public that you deliver on this promise, it has a halo effect on all other claims. Value propositions can promise a functional benefit (what it does for your prospect), an emotional benefit (how it makes them feel), or a self-expression benefit (what it makes others feel about them). In fact, there are as many types of value propositions as there are consumer needs.
Most likely, your product has several benefits. But they will not all be equally important, differentiating or believable to your target market. To select one benefit as your value proposition it should be the one that is most important, differentiating and believable to your target. To help you decide, consider your target’s value requirements.
Your target has wants and needs. But they also have conditions that the solution to those wants and needs has to satisfy. We call them value requirements. Typically there are several. For instance, lets say someone is thirsty and wants a lemonade. They may have value requirements like it should be in a half-litre bottle, it should contain no artificial colour or sweeteners, it shouldn’t be too bitter, it should be from a brand they recognize, etc. In order to compete, you must excel in at least one of the value requirements that the target seeks.
The value requirement(s) where you do (or could) outperform your competitors is where to start looking for your value proposition. It doesn’t necessarily need to be unique, it probably not a priority for everyone, and may not always be rational, even in B-to-B purchases. But, your organization will have to be able to get behind it and work at developing your superiority in that area. Ideally, you’ll choose an aspect of value that would be difficult or unlikely for competitors to copy too readily.
Tipping the scales
The value proposition highlights what has been done to tip the value scales in your favour by either lightening up the “give” side of the equation or weighing down the “get” side. It is based on perceptions, not absolute truth. How your prospects value the various get-and-give aspects of you offer will, most definitely, be very different from the way you and you team value them. So you will need 3rd party perspective to accurately define and assess them.
Keep the value proposition specific and non-subjective. Any time you see words like “best” or “superior” or “effective” or “smart” in a value proposition, you should recognize it as shoddy strategy work. The whole purpose of the value proposition is to define exactly how your offer is best, superior, effective, or smart. Be specific. Stand for something. It doesn’t mean that’s all you offer, but it gets you seen and gives your prospect something that matters to remember you by.