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What Is a Value Proposition: An Essential Guide

What is a Value Proposition: An Essential Guide

Does your product or service make people’s lives easier? Can it solve their problems? Can your company do a better job than your competitors? If yes, let your potential customers know. Use a compelling value proposition to improve sales.

A value proposition represents a promise to improve the quality of life for your customers, and is central to all types of business.

Given its importance, you need to understand what is a value proposition and how to write a compelling one.

We’ll teach you this, and show you some of the best value proposition examples from well-known businesses to get you started.

What is a value proposition?

A value proposition is a marketing statement that describes your business values, and how your product or service will benefit customers post-purchase.

  • Having a proposition of value is vital as it highlights your competitive advantages.
  • If your proposition resonates with your target market, they’re likely to choose your company over other options.
  • A good value proposition should directly improve your sales performance and conversion rates.

Unlike brand slogans, a company can have more than one value proposition.

Many companies apply different value propositions to their brand, products, and services. When doing so, however, they must not contradict each other.

Starbucks, for instance, features “the rarest, most extraordinary coffees Starbucks has to offer” as its Reserve brand value proposition.

Meanwhile, the company uses “celebrate those everyday little moments” as their drinks’ promise of value.

Despite having different propositions, both the company and its product still share the same value: to provide customers with high-quality coffee-based drinks.

How to create a compelling value proposition

Crafting a compelling value proposition isn’t just about delivering ambitious promises; it should honestly reflect your brand’s value.

When approaching your own business proposition, follow these steps:

Step 1: Identify your customers’ pain points

This step is essential for creating a compelling and on-point proposition on how your product can resolve their problem.

One of the best ways to identify pain points is to create a customer persona, which is a representation of your target audience based on data.

You can form your customer persona by first asking yourself these questions:

  • What do your customers value in a brand?
  • How do they make purchase decisions?
  • What drives them to use a particular product?

To get useful data, you can conduct pop-up surveys or customer interviews.

Besides being cost-effective, these methods can target participants globally, allowing you to collect market-specific information.

Another approach is to use the STP (Segmentation, Targeting, and Positioning) method.

This involves segmenting your customers based on variables, such as their geographic or demographic information, hobbies, and interests. Once you mapped out your data, define a target audience that you think fits best for your company, and craft your value proposition based on that.

By narrowing your focus, it’s easier to identify opportunities for your customers’ demands.

For example, the ASUS Zephyrus product line is a result of the company’s success in recognizing a demand from its specific target group: users who enjoy playing games but travel frequently.

Step 2: Create the solution

Your next step is to provide a solution to the problem that you can deliver.

You must think of a value proposition that represents your end product. Most importantly, the statement should describe what the product can do to solve the customers’ problems.

Using the example from before, ASUS’s solution is a gaming laptop product line, that includes products that are as powerful as standard gaming laptops but lightweight and portable for travel.

When creating a value proposition, make sure that it fits your business and contains only words that your customers will be familiar with and respond positively to.

For instance, tech brands like ASUS may use simple yet catchy words like “innovative,” “powerful,” and “boundary-breaking” to design their value proposition.

Step 3: Make sure it’s profitable

Once you know what you are selling, you must identify the cost structure and revenue stream.

Calculate the ideal price for the product by taking into account all the production expenses, such as but not limited to, employee salaries, promotion expenses, and other operating costs.

In doing this, you ensure the key proposition is not only valuable to the customers but also profitable for your company.

Avoid creating unrealistic value propositions as they can harm your business.

For example, if selling a product at a lower price isn’t sustainable for your business growth, then don’t promote it as being the cheapest.

Types of value propositions

There are several types of value propositions, so it’s down to you to identify which style will suit your business best.

Type 1. Performance

Performance refers to the product’s ability to execute a certain task.

  • We commonly evaluate a product’s performance based on how effectively and efficiently it can carry out a task, or fulfill a purpose.
  • Companies use this type of value proposition to showcase the quality of the product they’re selling.
  • Its main goal is simple: convince customers that your product is currently better than anything else on the market.

Apple’s iPhone 11 Pro is not the only tech product that uses a performance-based value proposition for their marketing strategies.

iPhone 11 Pro's value proposition on Apple's website

iPhone 11 Pro includes the word “Pro” in its value proposition to represent both the product name and its superiority.

The statement is crafted to attract mobile users who prioritize performance and innovation.

Type 2. Design

Though design is subjective, and therefore hard to measure, this type of value proposition remains effective in making your service distinctive.

  • When working with this proposition type, you emphasize your product’s design choices and characteristics.
  • Additional elements that can be mentioned include the use of high-quality materials and functional features for better user experience.

Tesla’s Cybertruck has one of the best design-centered value propositions currently on the market.

Considering the truck has one of the most revolutionary designs in the industry, highlighting its design and utility value is a no-brainer.

Tesla Cybertruck's exoskeleton design as its value proposition

If you want to use this type of value proposition, your website must look equally as beautiful as your product.

Your website is the best place online to showcase your dedication to your value proposition.

If you don’t have a business website yet, check out Zyro’s website builder capabilities.

Not only do our web templates accommodate all business types, but they’re fully responsive and SEO-friendly – increasing your chance of climbing search rankings.

After you’ve chosen your desired website template, you can customize it using the drag-and-drop html editor.

When you’re satisfied with your results, you can simply publish the website. It’s as easy as that.

All Zyro plans include the essential features and resources you need to create a stunning site, including reliable web hosting and an SSL certificate.

High-quality stock photos, provided by Unsplash, are also available to spice up your website for free.

Type 3. Price

Having an attractive price is a key deciding factor influencing purchasing decisions.

  • Having a price-based value proposition tells potential customers you offer value for money.
  • Offering the same or better service quality at a lower cost than your competitors is one of the ways to do this.
  • If customers believe they’re getting a good deal, it’s easier to sway them into choosing your services.

One of the more famous clothing companies that use price-based value propositions is H&M.

This clothing company proudly claims that they offer both fashion and quality at the best price, and in a sustainable way.

H&M uses price as their value proposition

What H&M does is the complete opposite of its competitors – since many clothing lines put forward quality over affordability, H&M corners the market by targeting an audience that prioritizes the latter.

Type 4. Brand

People often trust a specific brand because of the value that it has earned, such as luxury and prestige.

  • To build that perception of quality, you must consistently develop your brand image and deliver high-quality products and services.
  • Only if you’re truly delivering on the promises of the brand can you build a loyal customer base.

Patek Phillippe, a renowned watchmaking company, uses this value proposition type to market its products.

Known for producing high-class timepieces since the mid-19th century, the company instills an image of luxury and prestige in their products.

Today, most people buy Patek Phillippe’s watches to carry those values with them, more so than actually using them as a timepiece.

Patek Phillipe's value proposition talks about their brand

Recommended reading: Money Talks: Word Of Mouth Marketing Examples

Type 5. Novelty

Creating a new and original solution to customer’s needs will really help your brand stand out.

  • In a saturated market full of similar products, offering a unique solution to a common problem opens new opportunities for your product to shine.
  • Think outside the box, and deliver value which your customers might not expect, but will love nevertheless.
  • While this type of value proposition helps you make a splash in the industry, doing so with an original product is risky. Make sure what you sell is unique, desirable, and profitable.

Shooz, a crowdsourced business, entered the footwear industry by selling the idea of detachable shoes.

Since certain occasions call for a specific type of shoe, Shooz solves that problem by letting people customize their footwear, giving them the perfect shoe for all events.

Image of Shooz' product and its novelty value proposition

One of the safest ways to sell your product is to use a pre-order strategy, as shown by Shooz.

Besides reducing revenue loss by producing only made-to-order goods, this system guarantees sales and revenue during the production period.

Value proposition recap

You’ve learned what a value proposition is and its importance for your business.

  • Being one of the best ways to market a product or service to your customers and influence their buying decisions, having a value proposition is vital for your company.
  • We have shown you several excellent value proposition examples and provided you with some hints on how to craft a compelling one yourself.
  • When coming up with one, keep in mind that your value proposition must convey a solution for customers’ problems and needs.
  • When it’s time to write a proper value proposition for your business, ensure it communicates the essence of your brand.

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Martina is an expert in writing about website building and eCommerce, but her real passion is helping others grow their small business online. From solid branding to punchy marketing strategies, you can count on her for the best growth tricks. In her spare time, Martina loves nothing more than a good scoop of ice-cream and a sweaty match of tennis.

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