What is a Value Proposition? - Definition & Examples

Instructor: Danielle Reed

Danielle works in digital marketing and advertising. She holds a bachelor's degree in English and an MBA.

In this lesson, learn the definition of a value proposition and how it ties in to branding. Then, discover a few examples from successful companies that stick to their value propositions.

Value Propositions in Everyday Life

Without realizing it, you encounter value propositions each and every day. Think of your favorite companies. What do they stand for? What do you think they stand for? Even if you are not familiar with the exact phrasing of a company's value proposition, you likely are aware of what the brand is trying to achieve.

Definition of Value Proposition

A value proposition is a business or marketing statement that summarizes why a consumer should buy a company's product or use its service. This statement is often used to convince a customer to purchase a particular product or service in order to add a form of value to their lives. And considering all of the product offerings available, a company needs to stand out.

A value proposition is an important part of a company's branding. Branding is the process by which you create a unique image of a product or service in the mind of the consumer. It is about establishing a significant, different presence in the marketplace. Successful branding can create loyal customers.

Format and Basics of a Value Proposition

The basics of a value proposition typically include: how your product or service improves problems, its benefits to customers, and why buy from you over competitors. In the world of online sales and interaction, you can have as little as two seconds to make an impression on a potential customer. A succinct, consistent proposition keeps your brand from being disjointed.

Here is an example of a simple formula for the creation of a value proposition:

''For (customer type) that is dissatisfied with (alternative service or product). Our product/service is a (explain your product) that provides (what problem is solved).''

At the very least, this simple formula is able to help you better identify the value propositions of companies you frequent or hold in high esteem. Let's use the above formula and apply it to several examples of effective value propositions.

Examples of Effective Value Propositions

Let's go back to thinking of some of the biggest companies or organizations with strong reputations. Although it seems like your perspective of the company is original, they have likely worked hard to achieve this reputation in your mind. Think about what you thought of Netflix 10 years ago and what you think about them now. That's marketing and value propositions at its finest.

Netflix's Value Proposition

Netflix sticks to their three tenants of service: ''affordable price, accessibility, and original content.'' Not so long ago, accessibility meant mailing you copies of movies you couldn't get at Blockbuster. Sticking with this same value proposition, Netflix managed to pivot and wiggle its way into the hearts of millions. They wanted to be accessible, so Netflix added online streaming, and the definition of accessibility changed. Original content wasn't easy to get contracts for, so they turned to production in 2013. Finally, they have retained a fair pricing structure worldwide.

Amazon's Value Proposition

Amazon also sticks to three values. These are, ''convenience, speed, and choice.'' When you hear these, do you feel Amazon is sticking to their value proposition? It seems as though they are! They provide an extensive selection of products with millions of items available for two-day shipping. They are known for patenting the 'one-click checkout' button. According to CNBC, Amazon accounts for 43% of U.S. online retail sales. It seems like convenience, speed, and choice is working for them.

MailChimp

The last two examples make use of three word strings. MailChimp's value proposition tells you everything you need to know about their brand with their phrase: ''Send Better Email.'' This simple statement is direct and bold. MailChimp is about sending better email, and it is working for them. Datanyze estimates MailChimp's market share to be over 47%. Market share is the portion of a market controlled by a particular company or product.

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