Product Value Propositions

Business environment is dynamic and fast changing at all times.

Marketing is a big challenge as well as a creative process that keeps marketing managers and business managers on their toes all the time.

There is no single recipe for success that will work every time in building brand leadership. Business Managers are always faced with the twin task of increasing sales revenue as well as ensuring that the brand is growing in terms of value.

With reference to branding and marketing, the organizations have two different aspects or dimensions that they need to look into at a strategic level with long term business perspective.

First and foremost is the value proposition that they provide to the customer and secondly the value exploitation that the organization engages in terms of marketing and selling the value of the brand and realizing its objectives.

Both the above points refer to the value of the product that is provided by the organization and the customer’s perception of the value of the product.

More importantly the value proposition provided by the organization as well as the customer’s perception is measured directly in proportion to the price paid by the customer. This forms the basis of a successful sale transaction and in long term the reputation of the brand as well as the loyalty of the customers too hinges on the value perception.

When the organization is looking at providing the value to the customer via product features, sales and service process, performance guarantee and a great customer experience, we call it the ‘Value Proposition’.

When the customer evaluates the value of the product in terms of the value that the company is promising to deliver and the price that he associates with the perceived value is called ‘Value Perception’.

Using the above two concepts, the organizations work their strategies to grow as well as exploit the value of the product.

The business world is full of scientists and engineers who are creative individuals with a passion for designing and inventing new products. However when it comes to commercializing the new products, they do not have the right business skills to market and sell the product on their own.

On the other hand, there are several Organizations that bring out so called ‘New’, ‘Improved’ and ‘Ultra’ etc. brands as extensions of the existing brands.

Most often these new products are nothing but new formulations or repackaged and redesigned products and not really new inventions. Such products will not be able to gain acceptance from the consumers who can see through and fade away in a while.

Such product variations can be seen in retail brands as well as automobiles and branded confectionaries etc. Many times, companies adapt such techniques to give impetus to an old dying brand to infuse some life into it. Customers are intelligent and well informed. In a short while when they realize that they are not getting any incremental value for the price they paid, they shift their loyalty to a competitor’s brand.

When Companies look at growing their brand leadership, they need to be innovative in bringing out new products and innovations that will make the customers loyal and increase their expectations. No product improvement gimmicks will do this job.

Customers need to obtain tangible benefits and increased performance or experience as compared to the price they pay and thus the value perception needs to be higher, for the brand to be accepted.

Organisations like Microsoft, Intel, Sony etc keep working on new product or technology innovations that provide exponential benefits and superior performance with each product revision or up gradation, besides introducing new products in the market.

Thus they continually work on improving the existing product’s value proposition as well as grow new market with newly introduced products as well.

Understanding the difference between exploring value proposition and creating new product value proposition is essential for management and marketing students for it gives them an insight into working of product strategies in tandem with marketing strategies of an organization.

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