Month: May 2015

Finding Value in the Value Proposition

Value Proposition. It’s a term we hear a lot in marketing and branding. But it is just marketing-speak? Or is there really value in a value proposition?

In this post, we’ll look a what a value proposition is, and how creating one for your company or brand can go a long way in making a difference between success and failure.

We’ll define value proposition, look at its key components, and provide a simple exercise to help craft a value proposition for your brand.

For a definition, we’ll go straight to one of the modern day gurus of brand marketing, David Aaker.

Aaker is an American organizational theorist, consultant and Professor Emeritus at the University of California, Berkeley’s Haas School of Business. He is the author of more than 100 articles and 14 books on the subject of branding.

Here’s Aaker’s definition of Value Proposition:

“A brand’s value proposition is a statement of the functional, emotional, and self-expressive benefits delivered by the brand that provide value to the customer. An effective value proposition should lead to a brand-customer relationship and drive purchase decisions.”

We’ll get to the statement developing exercise in a minute. First, we will take a look at the three key benefit components of the value proposition definition.

Functional Benefit

The functional benefit is generally the most visible and common component of a value proposition. Simply put, it is the product attribute that provides functionality to the the user. The functional benefit is generally related directly to the function(s) performed by the product or service.

For example, a computer printer’s functional benefits might be speed, color, resolution, quality, etc. Generally, if a brand can dominate a key functional benefit, that brand will dominate the category. The challenge with brands who have only defined a functional benefit (no emotional or self-expressive benefit) is that they are very susceptible to competitive threats. This is because a competitor can simply copy or claim the same functional benefit, diminishing — or completely eliminating — the competitive edge a brand might hold.

Emotional Benefit

When the purchase or use of a particular brand gives the customer a positive feeling, that brand is providing an happy customeremotional benefit. Evoking these positive feelings in a brand or marketing strategy can go a long way in separating your brand or product from competitors because emotional benefits are much more difficult to copy or claim.

Examples of brands with strong emotional benefit associations include Volvo (safety); Nordstrom (valued); Nike (athletic); Tesla (successful). A great way to learn more about your brand’s emotional benefits is to survey your customers and ask about feelings related to their association with the brand. If you start seeing recurring themes or keywords in this research, you know you are centering in on what could be a key emotional benefit.

Self-Expressive Benefit

Brands and products can become symbols of an individual’s self-concept. This fact demonstrates how a self-expressive benefit component of the value proposition can help you separate yourself via a focused marketing strategy.

Nike’s “Just Do It” slogan is a great example of successful execution of a self-expressive benefit. Consider this: consumers (who may not even be athletes) pay Nike to promote the brand through the purchase of shoes, t-shirts and other wearables. The result for Nike is a (very profitable) brand asset the company can charge a premium for that can be leveraged across multiple market channels and segments. And, once a consumer identifies with a brand through a self-expressive benefit, it is very difficult to get that consumer to switch brands, and relatively easy to get them to promote it.

Putting it Together

So with these three basic benefits identified, how can you go about developing a value proposition for your brand? The following basic exercise is a good starting point. Simply fill in the bracketed areas for your company or brand. One key criteria: it’s important to be as specific, but brief, as possible in the entry areas.

To [TARGET AUDIENCE], [BRAND or PRODUCT] is the [WHAT] that [DOES WHAT] so that [BENEFIT/RESULT].

Here’s an example of how this might look for TechServ, a fictional company that offers computer repair and upgrade tech services for small businesses.

To [IT professionals and small business owners], [TechServ] is the [customer service-oriented tech repair and computer upgrade firm] that [delivers peace of mind and quick, responsive service with regards to PC and Mac repairs and upgrades] so that [business owners and IT professionals can rest assured knowing they can focus on business operations and profitability without worrying about computer problems or downtime].

Notice how this company’s value proposition extends beyond the functional benefit of computer repair. TechServ is in the peace of mind business, not the computer repair business. This is an important point, because functionally, a computer repair service had better be able to fix computers in a timely manner. Marketing your product or company needs to be built on something beyond a functional benefit that is a baseline standard across the industry.

The value proposition exercise helps you hone in on those qualities that may not be as apparent, but that offer a unique positioning advantage in the marketplace.

The focus away from promoting a functional benefit to a strong emotional benefit — that of a business owner or IT person being able to relax knowing that tech needs will be taken care of without impacting the company’s daily operations or profits — helps define the brand personality of the company, setting it apart from the other “repair shop” companies who are no longer positioned as threats or competitors.

Hopefully this post inspires you to think more about your company’s value proposition, while digging deeper to find those unique qualities that set you apart from your competitors.

 

Bill Threlkeld

Bill Threlkeld is the president of Threlkeld Communications, a marketing communications and public relations firm that helps businesses develop the right marketing strategies to grow their businesses and meet financial goals. He can be reached at bill@threlkeldcomm.com

 

 

 

 

Endurance Marketing: A Race With No Finish

Marketing isn’t a race to the finish. It’s a race without a finish. Think of marketing your product or service as a marathon that doesn’t really end.

If that makes you tired just thinking about it, let’s put this concept in perspective.

Like competing in any race, success is about Preparation, Perspective, and Persistence. Put together, these three elements together form endurance — the ability to compete at a very high level, consistently.

Today, very few companies can break out in a new market category the way a Microsoft, Google, or Amazon did. These now iconic companies didn’t just enter a current race, they started a new race in a field/category with no competition.

And, as I’ve discussed in a previous post on positioning, once a company sets a leadership pace (which is relatively easy to do in a race with no early competitors), it is very difficult for any other company who enters the category to take a leadership position.

Here’s a look at the three P’s of endurance marketing.

Preparation

I recently spoke to the head developer of a company who is launching  a unique new product into a relatively cluttered market category. The company has spent months and months in development; the product works flawlessly; the spreadsheets showed promising sales projections; the logo was beautiful, and the website state-of-the-art and appealing.

After five minutes speaking with this owner, I knew they were going to have problems. Why? After hearing how unique and groundbreaking the product was, I asked about plans for marketing the product. “We’ve hired XYZ to distribute the product, and they’re going to handle the marketing,” was the reply. This is too bad, because rarely does a distributor have the same passion and desire to see your product succeed as you do. Many distributors apply a “one size fits all” marketing template to the products they distribute (if they create a marketing plan at all), and for a groundbreaking new product, this approach will surely diminish the impact of the product launch.

The first step in successful marketing is preparation — putting together a marketing plan that outlines goals, strategies and tactics. It should identify the target audience(s). The value proposition. Objectives (what measurable goals are you trying to achieve?). Strategies (what resources do you need to achieve those goals?). Tactics (tools, services, etc. will you use to support your strategies).

Way too many companies get far into the race — post development and pre-launch — and don’t prepare for the inevitable hills, potholes and other challenges that are coming. In many ways, preparing your written marketing plan — one that will keep you in the race for a long time — is really just the beginning of the race.

Perspective

A successful competitor, in any type of race, always knows where he/she is in the field. Some athletes use an racetrackenergy preservation strategy, also known as pacing, to win. Others start out of the gate fast and hope that their early lead will create enough space for them to keep ahead. (Note that in a crowded market, this particular strategy is a recipe for burn-out. The leader is already in the field, so your marketing strategy should recognize and address this).

A good marketing plan will include a SWOT analysis. A SWOT analysis is a deep look at your company’s Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis will lend perspective to the realities and challenges ahead. Strengths: What benefit or feature do we have that competitors don’t? Weaknesses: What part of our design or approach leaves us vulnerable to competitors? Opportunities: Where can we focus our strategy in a way that we are pursuing a Brand Relevance strategy over a Brand Preference strategy? Threats: What marketing or competitive conditions exist, or could crop up, that will challenge our current plan?

With this holistic perspective on the market, and what — and who — you are dealing with, you’re in a much better position to stay in the race longer.

persistencePersistance

Even the most detailed SWOT analysis or market perspective plans have once common flaw: we cannot predict the future. Market conditions will change, and sometimes dramatically and drastically.

Imagine how detailed and rosy marketing plans for a bookstore chain like Barnes and Noble must have been while Amazon was quietly planning its launch.

Persistence in marketing is a matter of not staying the course necessarily, but adapting as the market shifts. Generally, this means re-evaluating your marketing plan’s strategies and tactics.

If you find yourself shifting objectives in the middle of a market shift or disruption, you probably didn’t set realistic objectives.

One mistake companies make at this stage in their marketing is to equate effort with success. Steven Covey, creator of the groundbreaking Seven Habits of Successful People franchise, relates the “Sharpening the Saw” analogy as an example of this effort-based approach. A man passes another man in the woods furiously sawing away at a large tree. It’s clear the man is not making much progress because the cut is thin and his saw is dull. The passerby suggests, “why don’t you stop and sharpen your blade?” The reply: “Are you kidding? I don’t have time to stop and sharpen the blade!”

The point: working hard in the wrong direction will simply lead to burn out. Just writing a marketing plan is not enough — you must also refer to it often, follow it, and adapt when needed. Many times, after putting lots of effort into a plan that is not working, companies will continue sawing away by abandoning objectives and strategies and focusing only on tactics because it conveys the sense that they are doing something.

This is like the old saying, “If you don’t know where you’re going, all roads will lead you there.” Failure is not far behind when it gets to this stage.

Staying the course by learning from what doesn’t work and adapting (and repeating this as necessary) is at the heart of persistence and success in marketing.

Get Started

No one gets into a race believing they’re going to lose. New product developers don’t spend hundreds of hours and thousands of dollars expecting that their product will not go anywhere.

But, in today’s competitive marketplace, a great product, savvy developers and a rock-solid financial plan are not enough to compete in the long run. You will need a solid but adaptable marketing plan, one that reflects the realities of the current market and competitive environment. One that can be tweaked as market dynamics require. One that inspires persistence in the face of adversity.

That’s how you stay in the race.

 

Bill Threlkeld

Bill Threlkeld is the president of Threlkeld Communications, a marketing communications and public relations firm that helps businesses develop the right marketing strategies to grow their businesses and meet financial goals. He can be reached at bill@threlkeldcomm.com