Investopedia: What is a 'Value Proposition'?

Investopedia
Value Proposition

What is a 'Value Proposition'

A value proposition is a business or marketing statement that a company uses to summarize why a consumer should buy a product or use a service. This statement convinces a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings. Companies use this statement to target customers who will benefit most from using the company's products, and this helps maintain an economic moat.
VIDEO
Unmute
BREAKING DOWN 'Value Proposition'

A value proposition is a promise by a company to a customer or consumer segment. It is an easy-to-understand reason why a customer should purchase a product or service from that specific business. A value proposition should be a clear statement that explains how a product solves a pain point, communicates the specifics of its added benefit, and states the reason why it's better than similar products on the market. The ideal value proposition is concise, and it appeals to a customer's strongest decision-making drivers.
Creating a Successful Value Proposition

A company's value proposition communicates the number one reason why a product or service is best suited for a customer segment. Therefore, it should always be displayed prominently on a company's website and in other consumer touch points. It also must be intuitive, so that a customer can read or hear the value proposition and understand the delivered value without further explanation.

A successful value proposition has a bold headline that communicates the delivered benefit to the consumer. The headline should be a single memorable sentence, phrase or even a tagline. A sub-headline is often displayed below the main headline, expanding on the explanation of delivered value and providing a specific example of why the product or service is valuable. The sub-heading can be a short paragraph between two and three sentences, with bullet points below the sub-heading to list the key features or benefits of the product. This allows consumers to scan the value proposition quickly and pick up on the product features. Added visuals increase the ease of communication between business and consumer.

Value propositions can follow different formats, as long as they are unique to the company and to the consumers it is servicing. However, all effective value propositions are easy to understand and demonstrate specific results from a customer using a product or service. They differentiate a product or service from any competition; avoid overused marketing buzzwords; and communicate value within five seconds of reading it.
Next Up Marketing Strategy

    Value Proposition
    Marketing Strategy
    Customer Service
    Customer
    Perceived Value
    Adjusted Net Worth
    Relative Value
    Economic Value
    Mass Customization
    Marketing Plan

Marketing Strategy
Share

A marketing strategy is a business' overall game plan for reaching people and turning them into customers of the product or service that the business provides. The marketing strategy of a company contains the company’s value proposition, key marketing messages, information on the target customer, and other high level elements. The marketing strategy informs the marketing plan, which is a document that lays out the types and timing of marketing activities. A company’s marketing strategy should have a longer lifespan than any individual marketing plan as the strategy is where the value proposition and the key elements of a company’s brand reside. These things ideally do not shift very much over time.
BREAKING DOWN 'Marketing Strategy'

People frequently confuse marketing strategies and marketing plans. It is not unusual to find the marketing strategy and the marketing plan baked together into a single document as they feed off one another. Although the transition between the two is blurry, a marketing strategy covers the big picture of what the business offers - the value proposition and related brand messaging. The marketing plan is how the business will get across those key message - the platforms, the creative, the timing, and so on. The marketing strategy may also be absorbed upwards into the corporate value statements and other strategy documents.
Read More +

    Work With Investopedia
    About Us Advertise With Us Contact Us Careers

© 2017, Investopedia, LLC. Feedback All Rights Reserved Terms Of Use Privacy Policy