Application: Revenue and Margin Maximization, Repositioning Commodities. NPD/NSD, Innovation Management, Pricing, Sales

The Concept

Surprisingly, the term “value proposition” (which is common parlance among marketers in many different industries) appears in very few marketing texts. A value proposition is an offer to customers which meets their buying criteria at a price that they regard, however illogically or unfairly they form that judgement, as “value for money”. Contrary to popular opinion, price, or more accurately, cheapness is not a buyer’s prime consideration. Sometimes they are willing to pay more for a particular item and sometimes they deliberately choose an “expensive” offer. It depends on the value of the offer to them.

Some new offers fail to make money, not through poor planning or inadequate component design, but because they are misrepresented in the market place: there is not a clear, simple, appealing value proposition. The marketing and sales literature is merely a description of the various components and features. To succeed, it is essential that the raw elements of the offer are turned into a proposition to which buyers can relate. It would be ridiculous, for example, to describe a fast food outlet as follows: “Our service contains people in a carefully designed uniform who prepare a limited range of food very quickly using the latest technology ...

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