We recently asked a project team to describe the value proposition for their new product.
From the broad range of responses we received, it was obvious that team members differed substantially in their definition of what constitutes a value proposition.
This seemed to reflect variations in the term’s common usage, which at one end of the scale might involve a detailed statement of a product’s various benefits to the customer, versus the other, where the value proposition simply refers to some distinctive or ‘standout’ product feature or functionality.
Well, I’m not usually such a stickler with definitions, but I believe the concept of a value proposition is of such fundamental importance in product development that its use deserves greater care and specificity than it typically receives.
The value proposition describes the values or benefits the customer will accrue from your product, including the point of differentiation from your competitors. The customer should perceive the importance of those benefits, and enable your product to stand out in their mind—to the extent that they will be willing to pay for those benefits.
The value proposition is not the same as a competitive strategy. The value proposition is a perception of the customer. Competitive strategy, on the other hand, is perceived from the company’s point of view—it is what the company does differently that ultimately results in the value proposition.
The value proposition may vary by customer segment. The company should therefore focus on one segment at a time and determine the segment-specific activities and resources needed to deliver the value proposition to the customer.
The value proposition is one of the most important product development terms because it expresses the value from the customer’s point of view. It is not about what you do differently, it’s about how that difference provides valuable new benefits to customers. From our old friend, Jack Welsh…if you can’t differentiate, don’t compete.
The next article in this series will provide a simple framework for developing a value proposition. Sign up for our monthly (yes monthly, not daily or even weekly) newsletter to avoid missing out on great product development content.
Questions: Mary Drotar, [email protected] 312.212.3144.
Strategy 2 Market helps companies increase growth and decrease product development complexity. www.strategy2market.com
For more information or to speak with one of our consultants, please contact Mary Drotar at 312-212-3144 or [email protected]