There are usually three ways for suppliers to develop "value propositions" :
1. List all the advantages
When it comes to developing a customer value proposition, most managers simply list all the benefits they think a product might bring to the target customer, as many as possible. This approach requires minimal knowledge of customers and competitors, and therefore minimal effort. However, this relatively simple approach has a major flaw: managers claim that their product features have various advantages, but in fact they do nothing to benefit their target customers.
2. Advertise spreads
This type of value proposition explicitly recognizes that the customer has other options and focuses on the differences that benefit them. Suppliers must highlight how they differ from their competitors, which requires the firm to be well aware of second-best alternatives. However, there may be multiple points of difference in a certain product or service, and without a deep understanding of customer needs and preferences, suppliers may focus their efforts on those points of difference that are less valuable to the target customers.
3. Highlight the resonance
To deliver such a customer value proposition, suppliers must demonstrate the advantages of their products by focusing on the few elements that are most important to the target customer, demonstrate the value of this superior product performance to the customer, and communicate that they understand the customer's business priorities. This value proposition differs from the promotion of advantages and differences in two major ways. First, it does not advocate that more is better, but only competes on the factors that customers value most. Second, a similarity may be included in this value proposition.
The authors illustrate how to develop customer value propositions that highlight resonance points using examples from Snagg and Intergraph. However, it is not enough to formulate an effective value proposition, firms must be able to prove and demonstrate their value proposition. Intergraph and Rockwell Automation use "value equations" to concretely demonstrate value propositions, while GE Water and SKF USA use "value calculators" to advance the value of their products to potential customers. Finally, the company must also record the cost savings and increased profits of each customer's purchase of the company's products, so that potential customers can be completely convinced. Quaker Chemical has done a better job of this.
Properly constructed and properly delivered customer value propositions can make a significant contribution to company strategy and performance. The article presents an interesting case study of how a resin supplier managed to get a customer to accept its new, higher-priced product by subtly adapting its value proposition. Some managers think of the customer value proposition as a flattering statement designed by the company's Marketing Department to print promotional advertising material. This myopic view ignores the important role that value propositions play in generating superior performance for a company. Developing a sound value proposition helps companies stay focused and focus on delivering truly valuable products to their customers. In fact, the customer value proposition can not only provide a guiding light for the company to create excellent performance, but also lay a solid foundation for creating excellent performance. Therefore, making the customer value proposition work is not only the task of marketing managers, but also of company executives and general management.