Every business must have a strong value proposition. A strong value proposition provides the focus for a business' marketing and sales activities, it enables them to charge higher prices than their competitors and have stronger margins as a result.
The relationship between value and prices is explained in the quote from Warren Buffet:
Price is what you pay. Value is what you get.
The value propostion consists of the sum total of the benefits that a business promises that their customer will receive in return for their money. The value proposition is what the customer get for their money.
The value proposition should be termed in the customers point of view. The value should be the value to them that your product of service will provide to them that will provide a solution to their problem or satisfy their need.
Establishing the value proposition for your business is not easy and it often takes time to find the right proposition for your clients.
One of the first steps, to developing an effective value proposition is knowing your customers, beacuse until you really know them you cannot understand their problems and needs.
So the first step is to write down - "Who is my Target Customer for X Product/Service" and list down as many things as you can think about them such as:
In respect of the last two questions - What is important to them? and What do they value? - it is unlikely that you will know the answer to that. You have to ask them and find out.
It is the process of asking them and listening to your customers that will reveal the real answers to your value proposition. The result will probably surprise you. It may be something that you thought of but dismissed or something that is totally new.
Once you have a strong value proposition that resonates with your customers, your marketing and sales efforts will become significantly more effective.
