Recap – Value Proposition
Firms exist to create value for customers and, in doing so, compete in the market to earn a profit and achieve the goals of the firm. A value proposition describes the ability of the firm’s offering to provide greater value to itstarget customers than the offerings of its competitors can.
Those last two words are highlighted for a reason. The same offering can represent different values to different customer segments, depending on the specific needs of each target group. In fact, what is valuable to one target market may have no relevance whatsoever to another target market.
Like beauty, value lies in the eye of the beholder. Sales people – especially those who sell complex products to B2B customers – readily recognize this. A good sales person is skilled at eliciting a buyer’s needs and motives, and then adapting the sales presentation to focus on the attributes of the offering that best fit the buyer’s needs. Other attributes, no matter how appealing they may be to other buyers, are kept in the background.
The Problem with Soundbites
There’s a reason mission statements are crisp: so that they clear and memorable.
It’s hard, though, to find a simple statement that aptly and fully describes a firm’s strategy. For example, one can say that a firm’s strategy is “to be the low price leader in its industry.” It’s a convenient shorthand device, but it says nothing about the tactics that shape the strategy. How are costs kept low? Is quality traded off to achieve low price? Are assortment and variety constrained as occurred with the Model T – any color you want as long as it’s black? Or perhaps the offering is only distributed in urban areas, and not outside.
The shorthand form can only be correctly interpreted when it is accompanied by a detailed description of the tactics used to achieve the strategy of low price leadership. It is much the same with articulating value propositions.
Marketers are expected to come up with a memorable and effective soundbite that captures the essence of the offering’s core value. Just like Apple did with the iPod: twenty thousand songs in your pocket. But, too often, it is left like that – a catchy soundbite with very little back-up substance.
A value proposition soundbite left standing on its own, no matter how catchy, is just like a strategic soundbite: leaves a lot open to interpretation. And it won’t earn any marks with the sales force.
From Soundbites to Value Maps
You can be sure that Apple did not print up cards printed with 20,000 songs in your pocket, hand them out to all their retail sales people, and then tell them to sell a boatload of iPods. And if they have such a card as part of the iPod product intro, you can be certain that it did not stand on its own: there would have been plenty of back-up material.
Value maps are like strategic maps. Value maps show the linkage of every relevant attribute of an offering to the needs of each target market. If there are 5 target markets, then 5 value maps are needed.
A value map relates relevant and strong attributes of an offering (compared to competitive offerings) to the needs of each segment. In the case of B2B customers, and increasingly consumer targets, detailed profiles are given that describe key purchase drivers along with effective ways to link the offering’s attributes to each of the drivers.
Constructing effective value maps takes good research and effort. But the results are worth the effort. Your sales personnel will be the first to thank you for them.
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