module 3-value proposition

Value Proposition

Understanding and Developing Business Models in the Globalisation Era

• Introduction• Purpose

• Learning Outcomes

• Keywords

• Theoretical background

• Examples and Good practice

• Exercises

• References

Value Proposition 2

Content

Introduction

Content

Introduction

The Value proposition is crucial forentrepreneurs as it describes thebenefits customers can expect fromproducts and services. One or more valuepropositions may apply to a product orservice. The value proposition providesvalue through various elements, e.g.,design, price, functionality, etc.

Purpose

The purpose of the Value PropositionModule is to support entrepreneurs andcompanies to identify value proposition,which are significant for their potentialclients.

Value Proposition 4Content

Introduction

Learning Outcomes

After the completion of this module the learner will be able to:

• define the concept of value proposition;

• indicate the elements of value proposition;

• identify types of values proposition;

• place the value proposition in the business model;

• provide examples of some of the most popular value propositions on the market;

• select the most suitable value proposition to satisfy the clients.


Introduction

Keywords

• SMEs

• business model

• profit

• interest

• relevancy

• differentiation


Theoretical background

Content


A value proposition is a is a statement that answers the question: ‘why’ should someonedo business with you?

A value proposition IS NOT an incentive, a catchphrase or a positioning statement.

In order to think about the value proposition, you must first consider the following aspects:

• Identify all the benefits your product offers.

• Describe what makes these benefits valuable.

• Identify your customer's main problems and needs.

• Connect this value to your buyer's problems and needs.

• Differentiate yourself as the preferred provider of this value.



The role of value proposition

Having an easily communicated and recognisable value proposition is increasinglyimportant in today’s world where people are bombarded with an overload of informationfrom a variety of media sources and where there are numerous competitors for acompany’s business.

Successful firms craft their unique value proposition prior to entering the marketplace andthey design their business operations in accordance with their value proposition.



Key elements of value proposition

• Newness

• Performance

• Customization

• Design

• Brand/ Status

• Price

• Cost Reduction

• Risk Reduction

• Accessibility

• Convenience/ Usability



Key elements of value proposition

Some explanations:

• Performance - better performance has been the hallmark of many product offeringsover the years, with most industries managing to thrive for decades on improvedperformance versions of the same products.

• Customization - today’s consumers believe in self-expression and individualism. Theyexpect the products they use to be an extension of their personality and a mediumthrough which they can communicate their values and priorities to the world.

• Risk Reduction - the less risk associated with purchasing a product or service, themore value a customer derives from it. A reduction of the risk associated with apurchase provides peace of mind to a consumer.



Benefits of value proposition

By offering a good value proposition, companies can:

• Provide their customers with something unique, therefore creating differentiation andincreasing competitive advantage.

• Increase the quality of their products or services.

• Gain market share.

• Improve operational efficiency.



Types of Value Proposition

• Functional value – through the “eyes”

• Monetary value – through the “wallet”

• Social value – through acceptation by others

• Psychological value – through the expressions, feelings

• Citizenship value - through a collective benefit



The value propositionshould take intoconsideration thefollowing aspects relatedto:

• the product (benefits,experiences, features)

• the customer (wants,needs, fears)



Value Proposition 16

https://www.isc.hbs.edu/strategy/creating-a-successful-strategy/pages/unique-value-proposition.aspx

In order to propose valueproposition of high quality, it isnecessary to respond to thefollowing questions (see theFigure):

Content

https://www.isc.hbs.edu/strategy/creating-a-successful-strategy/pages/unique-value-proposition.aspx

Content

Examples and Good practice

Nike's value proposition

• Accessibility

• Innovation

• Brand/status



Netflix's value proposition

• Convenience,

• Range of selection

• Competitive pricing



Uber – The Smartest Way to Get Around

• “One tap and a car comes directly to you”

• “Your driver knows exactly where to go”

• “Payment is completely cashless”

Value Proposition 20

It directly contrasts the typical experience of getting a taxi – no phone calls to disinteresteddispatchers, no painful conversations trying to explain to a stressed-out cabbie about whereyou need to be, and no fumbling for change or worrying you’ve got enough bills in yourwallet. Just a fast, efficient way to get where you’re going. This is reinforced by theaspirational messaging towards the top of the Uber homepage, which states that “Your daybelongs to you.”

Content


Amazon’s value proposition

• “To be Earth's most customer-centric company, wherecustomers can find and discover anything they mightwant to buy online, and endeavours to offer itscustomers the lowest possible prices.”



KFC’s value proposition

• “To provide a unique flavour or 'secret recipe' friedchicken…show more content…”


Content

24

• What value proposition will be produced?

• Who will be the end-user of the value proposition?

• How will the value proposition be delivered to the end-users?

Hint: Explain your value proposition in one simple sentence that everyone

can understand. Do not use jargon, slang or abbreviations. It may be

helpful to start writing and then return to work until you are satisfied with

the result. Otherwise, why not collaborate with some colleagues on this

issue, until there is unanimous agreement that the essence of the value

proposition has been captured.

How to identify the

main Value

Proposition:

There are three key

questions that you

need to ask:

Exercise 1

Value PropositionContent

25

• What do customers dream about?

• What do they want the most, even if it is not realistic at

this moment in time?

• What savings (money, time, effort) would make the

customers most happy?

• What would make the customers’ life easier?

• What makes the customers look good and feel great?

• How would the customers like to feel?

• What would encourage customers to adopt this value

proposition?

DISCOVERY OF THE WISHES OF

THE CUSTOMERS

Create a table with the wishes

of the clients. Then, use a

scale of 1 to 10 to identify the

importance of each of these

wishes.

Exercise 2


26

• The profile of the client

• The functional tasks

• Psychological and emotional aspects

• Contacts with the clients

• Cost of the service

• The time of attendance for the taxi

• Bad drivers

• One-click order

NOW ANSWER THE QUESTION: Are these important in the

process of the creation of value proposition? If so, why?

VALUE PROPOSITION OF UBER

Listen to the Uber value

proposition and pay attention

to the following elements:

https://www.youtube.com/wat

ch?v=kiWkRiynPAo

Exercise 3


https://www.youtube.com/watch?v=kiWkRiynPAo

27

In order to create your own value proposition, you must

answer at least these four questions:

• Who is your customer?

• What problem are you solving for the customer?

• What is your solution?

• How is your solution different from the existing ones?

WHAT IS YOUR VALUE PROPOSITION?

YOUR OWN VALUE

PROPOSITION

Try to create your own value

proposition. You may use this

video for support:

https://www.youtube.com/wat

ch?v=vA6TG4wMcUU

Exercise 4


https://www.youtube.com/watch?v=vA6TG4wMcUU

Content

References and External Links

• Value Proposition Canvas [accessed 21.09.2020]

https://www.peterjthomson.com/2013/11/value-proposition-canvas/

• Value Proposition Canvas [accessed 21.09.2020]

https://www.strategyzer.com/canvas/value-proposition-canvas

• How to Write a Value Proposition [accessed on 20.11.2020]

https://www.helpscout.com/blog/value-proposition-examples/

• How to Build a Web Startup [accessed on 20.11.2020]

https://steveblank.com/2011/09/22/how-to-build-a-web-startup-lean-launchpad-edition/


https://www.peterjthomson.com/2013/11/value-proposition-canvas/

https://www.strategyzer.com/canvas/value-proposition-canvas

https://www.helpscout.com/blog/value-proposition-examples/

https://steveblank.com/2011/09/22/how-to-build-a-web-startup-lean-launchpad-edition/

module 3-value proposition

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