Value proposition

 

A brand’s value proposition is a statement of the functional, emotional and self-expressive benefits delivered by the brand that provide value to the target customer. An effective value proposition should lead to a relationship between the brand and the customer, and drive the customer’s purchasing decisions. It also provides the basis for the brand’s positioning.

Benefits

Functional benefits are based on a product attribute that provides the customer with functional utility. They are directly linked to customer decisions and user experiences. The goal is to select functional benefits that have the greatest impact with customers and support a strong position relative to competitors. However, functional benefits often fail to differentiate, can be easy to copy, reduce strategic flexibility, inhibit brand extensions, and assume a rational decision-maker.

Emotional benefits provide customers with a positive feeling when they purchase or use a particular brand. They add richness and depth to the experience of owning and using the brand. The goal is to research how customers feel when buying or using a brand, and how they feel when achieving the functional benefit, and then combine both functional and emotional benefits.

Self-expressive benefits provide an opportunity for a person to communicate his or her self-image. They heighten the connection between the brand and the customer by focusing on something linked to his or her personality. Self-expressive benefits focus on the act of using the product, as opposed to the emotional benefits associated with the result of using the product.

Price

A brand’s price is related to its benefits. A price that is too high in relation to the product’s benefits will weaken its value proposition. Customers will think that the perceived benefits are not worth the cost. However, a higher price can indicate higher quality or a premium position in the marketplace.

Value proposition statement

The value proposition statement consists of several key components:

• what you offer and how you offer it to customers
• what type of, and how much, value or benefit is associated with what you are offering (e.g., cost savings, time savings, revenue increase, customer/employee satisfaction)
• how the value is generated
• why it is different from anything else on the market

Start-ups and value propositions

To the customer, value is not a function of product attributes alone. It includes the brand’s emotional and self-expressive benefits. It is the sum of all of these benefits that drive buying decisions. Functional benefits play a significant role in business-to-business (B2B) environments. However, it does not eliminate the need to consider emotional and self-expressive benefits as part of the value proposition.

Value must always be considered from the buyer’s perspective. Any functional, emotional or self-expressive value will vary depending on the customer’s specific situation. Understanding the customer’s role (i.e., economic buyer, technical buyer, end user) as well as where the customer belongs on the technology adoption lifecycle (TALC) is critical when developing a value proposition.

For the customer to consider buying your product, your value proposition must be superior to: 1) the competition; and 2) doing nothing. It must set you apart from the competition and focus on your product’s unique benefits. Your value proposition also requires an understanding of what your customers are trying to achieve through their strategy and actions.

 

References

Aaker, D.A. (1996).Building Strong Brands. New York: Free Press.

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