If you look up ‘value proposition’ in the Oxford Dictionary of Marketing, it is defined as: “The company’s core promise of benefits to its clients and prospective clients.”
The dictionary goes on to warn darkly that, “Often what the organisation thinks its value proposition is, and what its customers think its value is, are different, therefore this subject needs to be constantly surveyed.”
This is undoubtedly true.
I remember attending a talk some years ago by John Roberts, founder of the e-commerce retailer, AO.com.
Roberts explained that at first, he had assumed that by undercutting his rivals, such as Currys, consumers would choose to flock to his new website.
After all, why buy the same model of dishwasher, fridge, or tumble dryer at a higher price?
But tempting consumers away from familiar retailers they had often shopped at for years was not easy.
And offering a lower price was not enough.
After studying customer feedback Roberts found that what customers really valued was a dependably fast delivery.
Waiting for several days to receive a new washing machine, especially if your old one had packed up, was an obvious source of frustration.
Roberts also realised that his customers’ only real-life interaction with someone, after placing an order online, was with the delivery driver.
But as Roberts was outsourcing his deliveries to courier companies he could not control the customer experience.
And so he solved this by buying a fleet of trucks and hiring a team of drivers.
Now AO.com could offer next-day delivery, even on Sundays, and his team would bring appliances into the customers’ homes (rather than leaving them on the doorstep, as the courier companies would do), even removing their shoes if required, and offering to take away all the packaging.
The value proposition evolved from being purely price based to being centred around service.
Over time this had the added benefit of making customers less price sensitive, as people will pay more for a better experience.
Other brands have followed a similar path of tweaking their value proposition.
Safety remains at the heart of Volvo’s proposition – and the Swedish car brand is responsible for a host of safety innovations – from the three-point seat (1959) belt to pedestrian detection with braking (2010).
But in recent years Volvo’s messaging has evolved to focus on the premium and luxury aspects of its offering, growing its market share in the process.