Value Proposition

A value proposition means a clear statement of benefits provided for consumers, when purchasing a product or service. The VP usually constitutes a part of the enterprise marketing strategy. As a rule, the value proposition presents a manifest with key intentions that acquaints customers with the firm’s brand. So, it contains the information about the enterprise as a whole, its operating principles, as well as the reasons why the company deserves to be highlighted among rivals. 

Actually, the value proposition may be introduced as a business-related or marketing statement targeted at selling points of a particular item or service. In case it is quite convincing, a consumer would accept the firm’s offer, as the enterprise sells a line through standing out among analogues. 

Essence of Value Proposition

A value proposition forms a promise of the enterprise to the customer or a market subset. In other words, the term signifies a reason that explains the benefits of buying goods and services from the particular business. It clarifies the way a product satisfies the needs, reflects its advantages, and indicates its selling points. The perfect value proposition should be precise by encouraging the customer to adopt a decision. 

It is deemed that the expression was first featured in the McKinsey Global Institute research document in 1988. The term “value proposition” is defined as an exact and understandable statement of advantages (tangible and intangible) that the enterprise is able to present, as well as the rough price it withdraws for the mentioned perks. 

Firms apply the value proposition to target the core audience, who could gain the most profit from having the enterprise goods and services. The strategy assists in the economic moat promotion, known as a competitive advantage. Therefore, the wider the moat is, the larger and the more stable the enterprise would be. 

Constituencies of Value Proposition

By advancing a proposition, the firm lays emphasis to the prime reason why the goods and services suit perfectly for a particular customer class. Thus, the statement has to be displayed on the foreground of the corporate page, or other interaction points. An overriding requirement is a self-explanatory form, in order to realize the value proposition at once without a subsequent interpretation. 

The structure of the effective value proposition is quite easy, and includes the following:

1. A remarkable and digestible headline is needed for meeting the prospective clients’ eye. It usually consists of one memorable sentence, or catchphrase. And this headline is incorporated into a successful advertising campaign. 
2. An illustrative cross heading expands the proposition value. It often contains a case in point for better understanding.  In other words, the statement includes a particular case why the service or product has an obvious advantage over analogues. The cross heading is a short section and is made of two or three sentences. 

The aforesaid structure helps the potential clients to look through the value proposition and distinguish the goods’ characteristics. Visual effects complement the statement simplifying the parties’ cooperation. To create a great value proposition, enterprises undertake market research. 

Essential requirement

The value propositions are unique in regards to a specific firm or client. That’s why these statements have various formats. The most effective ones are intuitive, and project the actual results achieved. Notably, buzzwords are reduced to minimum. At the same time, the value proposition should take a short time period. 

To transform a prospective customer into a financially reliable one, there are several ways. A firm should determine who these clients are, their points of concern, as well as reasons for overcoming these issues by using the product and service. 

Value Proposition in real life

In fact, the value proposition is applied in many spheres. For instance, a collaborative service InVision offers to “design better, faster and together”. It's easy to notice from the value proposition that, firstly, InVision is a design tool, and secondly, it facilitates collaboration and speeds up the process. 

Then pay attention to the underline: “The digital product design platform powering the world’s best user experiences”. These words seem to hint that Netflix, HBO, Amazon and other well-known companies operate with InVision quite successfully. And on the button there is a call to action, which is also very tempting: “Get started - Free forever". 

The above-mentioned example can be called an excellent value proposition, as it points to all the firm’s benefits and stands InVision out of the rivals by highlighting its competitive edge on the market.