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value proposition

Page history last edited by PBworks 12 years, 4 months ago


Value proposition


see also:  Marketing , branding 




value = Benefits / Price
or alternatively:
value = Quality received / Expectations


Leaving something on the table = key to creating perception of value


When you are marketing a product / service...you should always focus on creating a "value proposition" for your client.... a sense of value (more benefits in relation to costs as compared to your competitors).


For example: 

If it costs Motorola $5 to make a handset

Your Finance guys recommend selling for $10

But, your marketing guys discover that a customer would be willing to pay $75


The "value proposition" is to sell that phone for $50, and leave some "money on the table", so that the customer walks away with the feeling that they got a really good value for the excellent product. 


By not sucking every last penny available, you increase the chance of building customer loyalty, good reputation...and you close the door to potential competitors (who would take advantage of the bad feelings you would generate with your customers if you charged the maximim possible for your product).


Think "nike" here:  If their marketing research tells them that they could charge $300 for the newest basketball shoe, but instead charge "just" $125... they dont piss off potential clients, and they maintain brand loyalty.  Even though it might only cost them $20 for that shoe at retail, they maintain good will of the customer by giving him a sense of VALUE.  (even at the premium brand this is important).














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