What is a Value Proposition?

Value proposition refers to what is meaningful to customers, that is, an in-depth description of the true needs of customers. Listing all the advantages, publicity advantages, and highlighting the resonance points are the three methods that suppliers usually use to formulate a "value proposition". As for the customer value proposition, several key indicators are reflected in the actual operation when the customer selects a product or service. If customers pay attention to quality, after-sales service, price, brand and other aspects when purchasing large-scale equipment, customers will also look at these aspects when choosing supplies.

Value proposition

Customer value proposition is a strategic model for competitors. Both have similarities compared with competitors-similarities, but also have better and better differences than competitors. And customer-oriented personalized product and service strategies-resonance.

To achieve stable and sustainable development, companies should do three things:

The first thing: Make a correct judgment on the development trend of customer value orientation, and make a correct staged prediction of future market competition trends.

Second thing: Make strategic choices based on your own resource structure.

With its capital and scale advantages, Changhong resolutely pursues comprehensive cost leadership. Therefore, in the price war, it has always controlled the dominant power of competition. After 2003, although due to changes in customer value orientation, it has become a follower in the high-end market; but when the price war broke out again, it quickly regained market dominance.

In contrast to Changhong, Hisense is a model for leading strategies for product innovation. In the years when many manufacturers are desperately involved in the price of meat grinders, it has always adhered to the development of digital TV technology and products. When the customer value orientation changed in 2003, it quickly stood out and became the market leader.

The third thing: When the customer value orientation changes that are not conducive to one's own strategy, be an excellent follower.

Although Hisense is the representative company of the leading strategy of product innovation, it did not stay out of the price war, but made itself one of the closest runners to Changhong. Because of this, when customer value orientation changes, we can surpass all competitors in the shortest time and become the new market leader.

There are usually three ways for suppliers to develop a "value proposition":

1. List all the advantages

When it comes to developing a customer value proposition, most managers simply list all the benefits they think the product may bring to their target customers. Using this method requires minimal knowledge of customers and competitors, and therefore minimal workload. However, this relatively simple method has one major drawback: managers claim that their product features have various advantages, but they are actually not good for the target customers.

2. Publicity is bad

Diversity This type of value proposition clearly recognizes that customers have other options and focuses on promoting differences that are beneficial to them. Suppliers must highlight what sets them apart from their competitors, which requires companies to be fully aware of suboptimal alternatives. However, there may be multiple points of difference for a product or service. Without a deep understanding of customer needs and preferences, suppliers may focus their efforts on those points of low value to the target customer.

3. Highlight resonance points

In order to provide such a customer value proposition, the supplier must seize the most important elements of the target customer to demonstrate the advantages of their product, prove to the customer the value of this excellent product performance, and demonstrate in the communication that they understand the customer's business Focus. There are two major differences between this value proposition and publicity. First, it does not advocate the more the better, it only competes on the factors that customers value most. Second, this value proposition may contain a similar point.

The author uses Schneider and Intergraph as examples to illustrate how to formulate a customer value proposition that highlights resonance. However, it is not enough to formulate an effective value proposition. Enterprises must be able to prove and demonstrate their value proposition. Intergraph and Rockwell Automation use the "value text equation" to concretely prove the value proposition, while GE Water and SKF USA use the "value calculator" to show their company products in advance to potential customers The value it has. Finally, the company must also record the savings and increased profits of each customer after purchasing its own product, so that potential customers can be completely convinced. Quaker Chemical does a great job in this area.

A properly constructed and properly delivered customer value proposition can make a significant contribution to a company's strategy and performance. The article gives an interesting case about how a resin supplier can adjust its value proposition so that customers are willing to accept their new high-priced products. Some managers believe that the customer value proposition is a beautiful word designed by the company's marketing department to print advertising and promotional materials. This short-sighted perspective ignores the important role that value proposition plays in creating superior performance for the company. Having a reasonable value proposition helps companies seize the key points and focus on launching truly valuable products to customers. In fact, the customer value proposition can not only provide a guiding light for the company to create outstanding performance, but also lay a solid foundation for creating excellent performance. Therefore, it is not only the task of marketing managers to make customer value propositions play such a role, but company executives and general managers also have the responsibility.