Wikipedia defines a value proposition as “the promise that the business will give customers to assure best possible value. The value proposition is a creative statement that depicts the unique selling point. Without this statement marketers lose an opportunity to tell customers why they should pick you over the competition.” In other words, the value proposition is the fundamental reason a customer buys what your company offers.
One of the most important roles of the company’s Chief Marketing Officer is to determine the unique value proposition of any solution, product or service that their company provides. McKinsey & Company came up with the concept of a value proposition in the 1980s, and defined it as an essential part of a sustainable business strategy. According to McKinsey, “Strategy is based on a differentiated customer value proposition. Satisfying customers is the source of sustainable value creation.”
In this blog-post, I am going to provide two examples of value-proposition development I was involved with in my career. One in the Healthcare arena, and the other in Technology. While these industry-verticals are miles apart, the marketing discipline in determining the necessary value proposition was the same. To respect privacy, I have anonymized the companies and the products I have outlined, but these are real-life examples, and both had a fundamental impact on the growth trajectory of the product.
The electric toothbrush market in the early 2000’s was highly commoditized, with many entrants being introduced by globally recognized healthcare companies with large marketing budgets, given the large market size and growth opportunity. Every competitor was focused on being the ‘fastest’ toothbrush out in the market, with 10,000 strokes per minute, 20,000 strokes per minute, and even 30,000+ strokes per minute becoming ubiquitous. It was a never ending rat-race to create products that were faster and faster.
Our team had a fundamentally different insight. Based on research with the target consumer, the team realized that consumers trusted their dental care professional, to guide their purchasing behavior for dental-health related products. We built a value proposition around being the top Dental Professional recommended toothbrush in the country. To support this claim, the organization invested a significant amount of money on clinical proof showing improvement in dental health of a consumer using the product, and using this data, signed partnerships with the American Dental Association, and other well known dental associations, who helped validate the claim. The entire go-to-market campaign was built on this dental professional recommended claim, on-TV, in the dental office, and even in sales presentations to retail customers. The company grew market share and surpassed the sales targets during this multi-year time period.
Apple had revolutionized the smartphone industry with the launch of the iPhone in 2007. Every major smartphone provider was clamoring to replicate this success, all offering the internet on a mobile device. Tens of millions of dollars of marketing dollars were being expended. But, no competitor could break Apple’s stronghold on the market, because their management understood that focusing on the technical features of iPhone was not enough to distinguish the device in such a crowded market. By emphasizing the overall experience of device, including its aesthetic simplicity and beauty, Apple’s value proposition was compelling and appeared untouchable.
My team and I were charged with launching a brand new smartphone, built around an open operating system that developers all over the world could build upon. We focused the value proposition on the uniqueness of this open operating system, and the innovation in mobile apps that it enabled. On the product side, the company invested in developers who created new innovations not known previously. Our smartphone came equipped with the first mobile app that could scan items and recommend the cheapest place to buy the product. Another innovative mobile app on the smartphone was a photo taking app, that with a few clicks could be inserted into an electronic photo album, or on Facebook for everyone to see. The entire marketing campaign was built around these ground breaking new apps, and the whole new world that was now available for consumers at their fingertips. Over time, smartphones built on this operating system became one of the top platforms worldwide.
Both of these value propositions were unique, and compelling to the consumer. The product development and marketing organizations focused their efforts on making this value proposition come to life.
So, why do so many companies get their value propositions wrong? According to MarketingSherpa, exclusivity is often missing from many value propositions, especially in industries where it is difficult to differentiate products or service. A value proposition must focus on features and benefits that make the product unique, and are sustainable over time. A powerful value proposition lets customers truly understand the value of your company's products and services. It helps your target customers to see how what you offer benefit them, and is their only available option.
In my next blog-post, I will walk through the process of creating a unique value proposition.
Topics: Value PropositionThu, Apr 28, 2022