flevyblog

Flevy Blog is an online business magazine covering Business Strategies, Business Theories, & Business Stories.
MANAGEMENT & LEADERSHIP STRATEGY, MARKETING, SALES OPERATIONS & SUPPLY CHAIN ORGANIZATION & CHANGE IT/MIS Other

How Compelling Is Your Value Proposition?

Editor's Note: Take a look at our featured best practice, Business Model Innovation (30-slide PowerPoint presentation). Innovative business models can reshape industries and drive tremendous growth. However, many organization find business model innovation difficult. The framework outlined in this presentation is based on the HBR article "Reinventing Your Business Model," authored by Clayton Christensen, [read more]

* * * *

First, let’s define Value Proposition.  Here’s what Wikipedia has to say:

A value proposition is a promise of value to be delivered and acknowledged.  Creating a value proposition is a part of business strategy. Kaplan and Norton say “Strategy is based on a differentiated customer value proposition. Satisfying customers is the source of sustainable value creation.”

Why is having a clear and compelling Value Proposition so important?

  • It solves a customer problem or satisfies a customer need.
  • It is the reason why customers turn to our company vs. a competitor–i.e. it is a source of Competitive Advantage.
  • It is the foundation to a company’s business model–other components include Profit Formula and Key Resources & Processes.

Most companies believe they already have a compelling Value Proposition–a product offering that’s the best thing since Pokemon Go.  But, do your customers agree?  Is there a disconnect between the value as defined by you (i.e. Customer Value Proposition) and the value as perceived by the customer (i.e. Customer Value Perception)?  This disconnect is known as the the Value Perception Gap.

To close the Value Perception Gap, we need to have an offering that is truly compelling.  A compelling offering must both

  1. demonstrate high value to the customer (customer says, “I need” or “I want”); and
  2. be highly differentiated (customer says, “the alternatives aren’t as good”).

A useful tool for determining those attributes that fulfill these criteria is the Value-Differentiation 2×2 Matrix, which defines categories of offering attributes:

  • Table Stakes – Features that are important to customer, but are provided by all competitors at a similar level.
  • Game Changers – These are the must-haves that allow you to truly craft a compelling Customer Value Proposition.
  • Neutrals – Features that are irrelevant to consumers.
  • Fool’s Gold – These are distinctive, but do not drive true value. These “nice-to-have” attributes alone will not meet the customer’s basic needs.

value-differentiation

At a minimum, we must have the Table Stake attributes. Without these, we aren’t a viable player in the industry, as we are not even meeting the customer’s basic needs.

To differentiate ourselves in a useful way, we need to develop the Game Changer attributes. Game Changers score high on both Value Proposition and Value Perception, thus minimizing the Value Perception Gap.

Are you a management consultant?  You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.

BoJack-210-Improve-Dude-FlashbackMany companies spend time and effort developing and marketing the Fool’s Gold attributes. While these attributes may also make the offering highly differentiated, the customer don’t need these bells and whistles.  Companies that create offering with these features don’t have an accurate understanding of what their customers truly need.  These offerings (and companies) don’t last.

Another powerful framework for identifying and prioritizing those attributes to create an offering of high Value Differentiation is the Value Curve. (The Value Curve is at the foundation of Blue Ocean Strategy, an innovative growth strategy framework for creating an uncontested market space.) The Value Curve allows us to allocate our resources by answering the questions:

  • Which of the attributes that our industry takes for granted should be eliminated?
  • Which attributes should be reduced well below the industry’s standards?
  • Which attributes should be raised well above the industry’s standards?
  • Which attributes should be created that the industry has never offered?

Since we don’t have unlimited resources, we can only increase value on the Game Changers by reducing or eliminating cost of non-essential attributes.

What do you think makes a compelling Value Proposition?

You can download an editable PowerPoint about the Customer Value Proposition here on the Flevy documents marketplace.

27-slide PowerPoint presentation
As core markets become saturated with new entrants and products, we find it more and more difficult to grow the core. We find traditional approaches that have successfully driven growth historically are also reaching points of diminishing returns. Business Model Innovation (BMI) is a powerful, [read more]

Do You Want to Implement Business Best Practices?

You can download in-depth presentations on Business Model Design and 100s of management topics from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.

For even more best practices available on Flevy, have a look at our top 100 lists:

These best practices are of the same as those leveraged by top-tier management consulting firms, like McKinsey, BCG, Bain, and Accenture. Improve the growth and efficiency of your organization by utilizing these best practice frameworks, templates, and tools. Most were developed by seasoned executives and consultants with over 20+ years of experience.

Readers of This Article Are Interested in These Resources


43-slide PowerPoint presentation
The Business Model Canvas is a versatile tool that can be used to describe, discuss, design, choose, challenge, improve, innovate, pivot or invent a business model. The document provides an overview of the business model canvas and how it links to strategy analysis and development. It offers [read more]


 
23-slide PowerPoint presentation
 
 
29-slide PowerPoint presentation

About David Tang

David Tang is an entrepreneur and management consultant. His current focus is Flevy, the marketplace for business best practices (e.g. frameworks & methodologies, presentation templates, financial models). Prior to Flevy, David worked as a management consultant for 8 years. His consulting experience spans corporate strategy, marketing, operations, change management, and IT; both domestic and international (EMEA + APAC). Industries served include Media & Entertainment, Telecommunications, Consumer Products/Retail, High-Tech, Life Sciences, and Business Services. You can connect with David here on LinkedIn.

, , , , , ,



Complimentary Business Training Guides


Many companies develop robust strategies, but struggle with operationalizing their strategies into implementable steps. This presentation from flevy introduces 12 powerful business frameworks spanning both Strategy Development and Strategy Execution. [Learn more]

  This 48-page whitepaper, authored by consultancy Envisioning, provides the frameworks, tools, and insights needed to manage serious Change—under the backdrop of the business lifecycle. These lifecycle stages are each marked by distinct attributes, challenges, and behaviors. [Learn more]

We've developed a very comprehensive collection of Strategy & Transformation PowerPoint templates for you to use in your own business presentations, spanning topics from Growth Strategy to Brand Development to Innovation to Customer Experience to Strategic Management. [Learn more]

  We have compiled a collection of 10 Lean Six Sigma templates (Excel) and Operational Excellence guides (PowerPoint) by a multitude of LSS experts. These tools cover topics including 8 Disciplines (8D), 5 Why's, 7 Wastes, Value Stream Mapping (VSM), and DMAIC. [Learn more]
Recent Articles by Corporate Function

  

  

  

  

  

The Flevy Business Blog (https://flevy.com/blog) is a leading source of information on business strategies, business theories, and business stories. Most of our articles are authored by management consultants and industry executives with over 20 years of experience.

Flevy (https://flevy.com) is the marketplace for business best practices, such as management frameworks, presentation templates, and financial models. Our best practice documents are of the same caliber as those produced by top-tier consulting firms (like McKinsey, Bain, Accenture, BCG, and Deloitte) and used by Fortune 100 organizations. Learn more about Flevy here.
  


OUR CORE OFFERINGS
Flevy Marketplace: Top 100
· Strategy & Transformation
· Digital Transformation
· Operational Excellence
· Organization & Change
· Financial Models
· Consulting Frameworks
· PowerPoint Templates
FlevyPro (Subscription Service)
KPI Library
Streams (Functional Bundles)
Flevy Executive Learning (FEL)
PowerPoint Services

FREE Resources

About Flevy
Management Topics
Marcus (AI-Powered Consultant)
Partner Program
LinkedIn Influencer Marketing
FAQ / Terms / Privacy / Blog
Contact Us: support@flevy.com



CONNECT WITH US!
       
TOP 100 TRENDING TOPICS
Acquisition Strategy
Agile
Analytics
Artificial Intelligence
Balanced Scorecard
Best Practices
Big Data
Breakout Strategy
Business Continuity Planning
Business Plan Financial Model
Business Transformation
CMMI
COBIT
Change Management
Cloud
Communications Strategy
Company Financial Model
Competitive Advantage
Competitive Analysis
Consulting Frameworks
Continuous Improvement
Core Competencies
Corporate Culture
Cost Reduction Assessment
Customer Experience

BROWSE BY FUNCTION
Strategy, Transformation, & Innovation
Digital Transformation
Operational Excellence and LSS
Organization, Change, & HR
Management Consulting

Customer Journey
Customer Service
Cyber Security
Data Privacy
Decision Making
Digital Marketing Strategy
Digital Transformation
Digital Transformation Strategy
Due Diligence
ESG
Employee Engagement
Employee Training
Enterprise Architecture
Growth Strategy
HR Strategy
Hiring
Hoshin Kanri
ISO 27001
ITIL
Information Technology
Innovation Management
Integrated Financial Model
Kaizen
Kanban
Key Performance Indicators

ADDITIONAL RESOURCES
Business Strategy Frameworks
Case Studies
Consulting Training Guides
COVID-19 Trend Data
Digital Transformation
Financial Advising Services (FAS)

Knowledge Management
Leadership
Lean
Lean Manufacturing
Logistics
M&A (Mergers & Acquisitions)
Manufacturing
Market Research
Marketing Plan Development
Maturity Model
McKinsey PowerPoint
McKinsey Templates
Operational Excellence
Organizational Change
Organizational Design
Performance Management
Post-merger Integration
Pricing Strategy
Process Improvement
Process Maps
Procurement Strategy
Product Launch Strategy
Product Strategy
Project Management
Quality Management


Free Resources
KPI Library
Lean Management
Lean Six Sigma Training Guides
Marcus Insights
Operational Excellence

Real Estate
Remote Work
Restructuring
Risk Management
Robotic Process Automation
SWOT
SaaS
Sales
Scrum
Service Design
Six Sigma Project
Social Media Strategy
Strategic Planning
Strategic Thinking
Strategy Development
Supply Chain Analysis
Sustainability
Target Operating Model
Team Management
Total Productive Maintenance
Value Chain Analysis
Value Creation
Value Stream Mapping
Visual Workplace
Workplace Safety


Product Strategy
Small Business Owner
Startup Resources
Strategic Planning
Strategic Planning Process
Value Innovation Strategy


© 2012-2024 Copyright. Flevy LLC. All Rights Reserved.