Posted By Megacap | September 22, 2020 Photo Credit

Value is simply defined as the excess of benefits for service or product that a client pays for (generally, clients perceive value as the total benefits from the product or service procured less the actual cost of procuring that value – essentially the price and other related costs. This means businesses generally exist to offer value for clients – usually technically translated to providing a solution (goods or services) to existing problem (that can also be loosely translated as demand).

Value proposition can therefore be generalized as a business’ solutions to a client base’s problems based on that business’ understanding of the client base, those very problem and that company’s promise / commitment on how they intend to deliver the said value to clients. Unique value proposition therefore goes further and gives a compelling differentiation – that which makes the business different from competition – and thus seeks to convince clients to choose to buy from it and not from competition.

Contrary to popular opinion, unique value proposition is not only applicable in a highly competitive business environment but is also applicable for businesses in less to no competition in which case the strategic intentions from the company’s perspective will vary depending on strategic priorities for the specific periods. For businesses in competitive environments, unique value propositions would automatically seek positional advantage in the mindsets of potential or existing buyers – ultimately resulting in a bigger or growing market share. Those in less to no competition environments may seek to use the positioning to build image, client loyalty especially in light of substitutes, client satisfaction and confidence in future products and solutions.

In summary therefore, value proposition helps potential clients understand at a glance what a business has to offer, makes the differentiation pitch from competitors, helps generate quality leads that have a higher potential for conversion and forms the initial basis of understanding of what to expect in a potential or existing business relationship (transactions and interactions).

So how does a business determine its unique value proposition?

First, it is important to have clarity on the products and services the business wishes to offer with particular focus on benefits of the said products and services. This forms the basis for compelling positioning complete with demonstrable authority. Secondly, have as deep as possible understanding of the target market – that particular section of the market that you seek to position your products and service for. This will make it possible to devise a targeted value proposition that will speak to this very category of customers. Finally, have a plausible understanding of options available for this target customer base, and their key strong/ weak points. This, together with the other two will be instrumental in devising unique selling points for your business.

An unavoidable consideration here is ensuring alignment between the clients’ expectations and desires and the business’ value proposition, as well as that business’ capacity to deliver it! To achieve this, the value proposition should be precise on what the business does, concise on benefits to customers, demonstrate ability to solve identified problems / needs, differentiate the business from competition, and be as pragmatic as possible – in other words, simple, memorable and focused on value.

Using our hypothetical business – Kanga Groceries that is deals specifically with the sale of watermelons in Juja farm, in Ruiru, Kiambu County to demonstrate (simplistic) unique value proposition will be as below:

Written by: Ouko Festus – The Managing Director of Megacap, a top tier consultancy company that offers customized capacity strengthening solutions for businesses and organizations enabling them to flourish.