Value Proposition: What is it and Why Does My Company Need it?
In an ideal world, all a company would have to do is create some amazing products and/or services, get the word out with a bit of advertising and customers would simply fall in line. In reality, there are a great many truly outstanding products and services available and companies almost always find themselves with some serious competition. In some cases, it is the competition itself that does a company in, not the lack of having something truly valuable to offer customers. In this post, we will review what the concept of a value proposition is, its relationship to competition and why every company needs to develop their own proposition in order to ensure the continued success of their own organisation.
Value Proposition Defined
The concept of value proposition sounds simple enough — it basically answers the question, “Why should a customer buy from you instead of one of your competitors?” You might think the obvious answer is because your product is the best, but there is really much more to it than that. Consider a company like Domino’s Pizza. They did not become successful because they had the best-tasting pizza around. They became successful because they filled a need for college students, notorious for having big appetites and very little money or time. Their value proposition consisted of meeting the needs of their target audience by ensuring their product centred around college campuses. They provided fast delivery with their “30 minutes or it’s free” campaign, and they offered large amounts of food at a low price.
Domino’s filled the 3 basic requirements of a value proposition strategy, which is solving a need, relieving fears about the purchase and offering their customers a compelling reason to act. They did this by satisfying a student’s hunger without breaking their bank, plus providing them with a 30-minute guarantee, so students knew they couldn’t lose. If their time was wasted, they got a free pizza out of the transaction.
Creating a Value Proposition For Your Company
To create a value proposition means asking yourself why should customers choose you instead of your competitors. This requires some analysis of your target audience. In the case of Domino’s, college students did not need gourmet pizza — they needed cheap food that was filling and delivered quickly. An effective value proposition for your organization tells your target audience the following: how you can solve their need, it alleviate any fears they have about selecting you over a competitor, and gives them a compelling reason to take action.
If you do not yet have a clear-cut value proposition for your organization, contact us. We can outline a complete strategy that will help put you in front of your competitors!