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Does Your Value Proposition Make Sense?

There are four basic value propositions that sales teams use to generate sales. Each value proposition requires a different market strategy, according to Michael Treacy, co-author of the bestseller "The Discipline of Market Leaders."

To find out if your firm has the right strategy, click on the appropriate link in the list below:

  • VALUE PROPOSITION #1: Our prices are the lowest in the industry. Example: Dell Computer underpricing PCs in order to grow market share in the 90s. CLICK HERE.
  • VALUE PROPOSITION #2: We build a uniquely better product. Example: Volvo sell to safety-conscious parents because they're seen as safer than other cars. CLICK HERE.
  • VALUE PROPOSITION #3: We make things easier for the customer. Example: Fedex charges extra because it "absolutely, positively" promises on-time delivery. CLICK HERE.
  • VALUE PROPOSITION #4: We take ownership of customer results. Example: Accenture promising to "own" their customer's successful management of their computer resources. CLICK HERE.
VALUE PROPOSITION: LOWEST PRICE
  • NAME OF THE GAME: Getting out a competitive product that you can afford to sell at a lower price.
  • THE RIGHT STRATEGY: You need a manufacturing and distribution methodology that squeezes every drop of extra operational cost. If you haven't got that, this strategy will eventually put your firm out of business.
  • EXAMPLE: If your competitor is outsourcing its manufacturing to China, you'll need to outsource your manufacturing to Vietnam, where labor costs are even lower.
  • WARNING: You could easily end up with price war, so you've got to ensure that you'll be the last firm standing. Make sure that your firm has deep pockets just in case you end up slogging through a price war.
CLICK HERE TO EXAMINE ANOTHER VALUE PROPOSITION.
VALUE PROPOSITION: PRODUCT EXCELLENCE
  • NAME OF THE GAME: Making sure that your products are always better than the competition.
  • THE RIGHT STRATEGY: You need to determine, through interviews and market research, which features will cause customers to consider your product superior to the competition. Then you need get engineering to build it for you, faster than anyone else.
  • EXAMPLE: If you're launching a line of "designer" desk chairs, find out what fabrics and leather provide a look and feels that potential buyers view as "upscale."
  • WARNING: The "superiority" of your product may be the result of irrational human preference and your "image". (Think designer handbag.) That makes your value proposition very vulnerable to bad publicity (like using child labor in your supply chain.)
CLICK HERE TO EXAMINE ANOTHER VALUE PROPOSITION.
VALUE PROPOSITION: EASE OF PURCHASE AND USE
  • NAME OF THE GAME: Creating a hassle-free customer experience.
  • THE RIGHT STRATEGY: You need to figure out why it's difficult to buy and/or use your competitor's product, and then make yours far easier to buy and use.
  • EXAMPLE: If your competitors are selling software the requires a complicate installation process and a corporate data center, offer the sames capability as an online service.
  • WARNING: Your will quickly imitate whatever you're doing.
CLICK HERE TO EXAMINE ANOTHER VALUE PROPOSITION.
VALUE PROPOSITION: OWN CUSTOMER RESULTS
  • NAME OF THE CAME: Performing a strategic function inside the customer's business better than they could possible perform it themslves.
  • YOUR STRATEGY: Becoming an expert who deeply understand your customer's business. Ideally you should be an ex-employee of the companies to which you're selling.
  • EXAMPLE: Rather than selling office supplies, you become the de-facto facilities manager, ensuring that everything is always available when its needed... without the customer ever having to worry about it.
  • WARNING: The business relationship will be highly dependent upon the relationship that you have with individuals within the customer firm. If they leave, you could find yourself thrown out of the account.
CLICK HERE TO EXAMINE ANOTHER VALUE PROPOSITION.
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