A business’s value proposition is what it offers to the market, how it’s delivered and how it’s priced.
First, the cliche of working on the business and not just in it is strongly applicable to regularly and objectively reviewing the value proposition.
Second, the reviews should be conducted by a group of people and not just the most senior people, not just the regulars, not a particular team and not just internal people.
Third, the reviews should involve a core group each time, for continuity, but should include a mixture of some others as well.
Fourth, when a new or adjusted value proposition is designed, it has to be also determined how it can best be marketed and sold.
There are several key questions to address when reviewing a value proposition:
- What is the business currently offering to the marketplace? – For example, dental services, tax and accounting services, technological solutions, engineering advice, etc. Establish total clarity of what is on offer.
- What is currently being taken up by the marketplace? – This has to be asked to determine whether what is being offered by the business is actually being taken up by the market (significantly) and, if not, why not?
- How is the business providing its products once the offer has been taken up by the market? – Outline the provisioning process that’s in place as well as how effective and efficient it is.
- Where does the price (range) sit in comparison to the rest of the market? – Above market? Below market? At market? Different for different parts of the offer? A business should know where its pricing sits; whether it’s deliberate and whether it’s effective.
- How different are the answers to the previous questions to competitors? – Therefore, is your value proposition different to your competitors or similar? And if it’s different, is it attractively different? These answers have to be completely objective. Businesses suffer when they think their value proposition is attractively different to competitors when it’s either similar or unattractively different.
- How often is the value proposition being reviewed? – The business world is changing rapidly, including competitors, so the review should be regular (at least yearly).
- What information is being used to frame the value proposition? – Is marketplace information being sourced on consumer buying patterns, demographics relevant to the business, consumer attitudes, competitors? How is this information being used in framing up the proposition? A value proposition is more likely to be effective if it’s designed with such information in mind.
- How is technology being used with respect to the value proposition? – For example, (frequent gathering) of data, feedback, etc.
- As above, once a new or adjusted offer to the market is determined, it then has to be decided how it will be best be marketed and sold. – The marketing might include online, social media, advertising, word of mouth, telemarketing, etc. and the sales might be through a sales force, online, agents or some other distribution system. The design of the offer may determine the best marketing and sales approaches so they must be reviewed as well, to ensure they are deliberate and not just what’s been in place in the past.
The purpose of this article should be obvious, especially when businesses and industries that have failed to adequately review their value propositions have either gone out of business through losing their markets or are suffering at the hands of competitors. Relevance to a market and success in a market can only be achieved by frequently reviewing and adjusting (even re-creating) what is provided, how it’s provided and how it’s priced. Apple is outstanding at doing this but there are many other businesses to look at for inspiration and examples as well.
Reviewing the value proposition is not just the domain of larger businesses; it’s just as important for smaller businesses. Whilst smaller businesses may have fewer resources to conduct the reviews, they have the advantage of being able to act more swiftly, not having larger infrastructures, systems or complex decision-making processes, all of which can slow down change.
Last, some of the points in this article are as relevant to an individual in business as they are to the business itself or its owners. It gives individuals the opportunity to really make a difference to the future success of the business by being involved in value proposition reviews.
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