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Home | THERE IS NO VALUE PROPOSITION - WITHOUT THE VALUE

 

Monday, March 2, 2015

 

THERE’S NO “VALUE PROPOSITION” WITHOUT THE “VALUE”

 

               proposition: n. something offered for consideration or acceptance

 

                  value:  n.  a fair return or equivalent in goods, services, or money;

                                  relative worth, utility or importance

 

It’s so common these days to hear marketers and their managements state, “We need to figure out the brand’s Value Proposition.”  So common the statement, but not-so-common the meaning.  A good many marketers confuse Value Proposition with Brand Positioning:  VP = BP = VP.  But, as we know, a technically sound brand positioning includes not only the “something offered” (typically the benefits—rational and emotional) but also the target definition, competitive framework, reasons why, and brand character or personality.  So, at best, the brand’s value proposition would only be a component of the brand’s positioning—a vital component, to be sure!

 

Other marketers (often including their communication agency colleagues) limit the meaning of the brand’s VP to the central proposition of the communication campaign.  So, for instance, a cholesterol-reducing drug might have as its central proposition simply, “Brand X effectively reduces cholesterol.”  Or more competitively expressed, “Brand X reduces cholesterol lower than Brand Y.”  Each of these clearly presents a proposition to some target audience; but neither makes clear the valuerelative or added—of this proposition.   It’s true that the second example makes a claim of relative performance…but at what cost to the target?  Is gaining a lower cholesterol number with Brand X a “fair return”?  Or even a better return?  The value piece is missing.

 

Given these loose/incomplete ways of articulating a brand’s VP, we more and more believe that brand-builders must do a lot more thinking and calculating to (a) precisely identify their relative or added value; and (b) to then engineer that value into everything the brand does (not merely into what it says in its communications). Actually, there are a few different ways of thinking about a brand’s relative or added value—each of which has its merits, depending upon the context within which the brand competes.  And by “context” we principally mean:  the positioning target (how customers or consumers perceive value in the category) and the competitive landscape (how major competitors have defined value in the category and/or other ways of defining value that might provide an advantage).  There’s not much point in thinking about a brand’s value proposition without also thinking about the context.

 

Three Value Proposition “Formulae”

 

1.  Cost/Benefit:  Most likely, this is the original way of conceiving a brand’s value proposition.  Driven by marketers of premium and super-premium-priced brands, it quite simply aims to justify the added benefits one derives from a more expensive product:  “Yes, it costs more…but it does soooooo much more.”  No doubt one of the most successful companies at implementing a cost/benefit VP has been Amway.  Virtually all of their “staple” household products, especially their “best-sellers” like LOC Multi-Purpose Cleaner (now re-named Legacy of Clean) and SA-8 Laundry Detergent (also re-named under the Legacy of Clean umbrella) were always super-premium-priced versus the Mr. Clean’s and Tide’s of the retail marketplace.  But due to their concentrated formulas, each could demonstrate comparable (if not better) cleaning but with significantly more uses per pack—for a very attractive and advantageous lower cost per use.  For Amway distributors the value in the proposition is palpable.

 

    Nowadays, the cost/benefit VP has any number of effective permutations.  One that appeals to us (and that we often recommend to our clients as they build or evolve their positioning strategies) is what we call the add-vantage of the “Whole Product” or “Whole Brand.”  Rather than being based upon more uses per pack, the Whole Product offers a customer more than just the product itself—sometimes for the same price.  So, while customers may pay considerably more for one’s brand, they also get value-added service (installation demos, free repairs, in-company training, 24-hour call servicing and so on) along with the product.  Of course, once again, the ultimate value of things like added service links to the context:  not every potential customer will perceive the value of these additives equally…just as not every car buyer perceives the value of, say, an extended warranty equally.

 

    One thing seems fairly certain these days.  Pharmaceutical and Medical Device brands that compete within the context of a “tender” purchasing-contract marketplace are constantly under pressure to demonstrate the cost/benefit of their offering—with BIG emphasis on the actual dollars and cents costs.


2.  Risk/Reward:  The thinking behind this approach to VP is usually more qualitative than quantitative.  Appealing especially to customers like hospital purchasers and private practice physicians, a brand’s relative value may be articulated in one of two ways:  (a) a higher level of risk for, perhaps, side effects that are nevertheless offset by a meaningfully better outcome (all supported by clinical data, naturally); or, better yet, (b) a data-demonstrated lower risk coupled with meaningfully better outcomes than other competitive offerings.  Now that’s an appealing value—strong evidence of high returns (favorable patient outcomes) with low risk of downsides or losses.  But again, the ultimate value of either of these is relative to the mindset and experiences of the target:  it would be a waste of company resources to push either of these risk/reward VP’s to all hospitals or doctors in the market simply because not everyone in the market shares the same perceptions of value. 

 

3.  Functional Parity/Emotional Superiority:  Clearly, this approach to value propositioning is the least tangible of the three…likely requiring the most creativity and persistence.  Its premise is that you get all the functional performance of any other brand but the added value of more or better peace-of-mind with this one brand.  Another way to think about it is that the target is receiving an additional “higher-order” offering, for the same relative investment.  Perhaps an example of something like this at work is in the tire category.  Bridgestone and Michelin are both premium-priced radial tires, probably perceived to be of equal performance quality.  But Michelin carries a longstanding cachet regarding value-added safety that Bridgestone lacks:  both are great performing tires, but only with Michelin can you feel truly assured of your family’s safety on the road.  Ahhhh.  There’s the added value.

 

Every brand needs a meaningful proposition or offering for its chosen target.  Preferably, that proposition is also meaningfully differentiated versus its competition.  But at a time when so many products in so many categories and classes are seen as relatively the same, what really can make the difference between winning and merely participating is a well-expressed value proposition…one in which the value is crystal clear and “in context.” 

 

Richard Czerniawski & Mike Maloney


 

Richard Czerniawski


430 Abbotsford Road

Kenilworth, Illinois 60043

tel 847.256.8820 fax 847.256.8847


reply to Richard:

rdczerniawski@cs.com or

richardcz@bdn-intl.com

 

 

Mike Maloney


1506 West 13th

Austin, Texas 78703

tel 512.761.4038 cell 512.657.2307


reply to Mike:

mikewmaloney@gmail.com or

mwm@bdn-intl.com

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