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A product’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. It consists of several key components:
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 (that is, economic buyer, technical buyer, end-user) is critical when developing a value proposition.
For the customer to consider buying your product, your value proposition must
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. While functional benefits play a significant role in business-to-business (B2B) environments, they do not eliminate the need to consider emotional and self-expressive benefits as part of the value proposition.
The sum of the various benefits is what represents value for the customer―and this value is subjective, as the value a product can provide often differs for each customer and market segment.
An effective value proposition should lead to a relationship between the brand and the customer and drive the customer’s purchasing decisions. It should also provide the basis for the brand’s positioning.
Creating a clear and succinct value proposition that is meaningful to all of a startup’s stakeholders including its staff, customers and investors is one of the first challenges any entrepreneur faces.
The reason for this difficulty is simple. The value proposition reflects critical choices and decisions about target customer, the customer’s problem and the product itself. In the early days of a startup, these are hard decisions to make because at that stage entrepreneurs often lack detailed information about their technology and the marketplace they plan to enter.
A way to gain the information about the market and the potential impact of their business idea is to engage in the customer discovery process as described by Steven G. Blank in his book, The Four Steps to the Epiphany. The customer discovery process essentially offers a step-by-step approach to identify potential customers and the problems you could solve for them.