Unit 5: Product Propositions

Lesson 2: Value Proposition

Contents
Engage 1
Introduction 1
Objectives 1

Explore 2

Explain and Elaborate 3

Value Proposition 3
Value Proposition Builder Model 3
The Value Life Cycle 5
Value Proposition Advantages 7

Extend 8
Activity 8

Evaluate 9

Wrap Up 12

Photo Credit 13

Bibliography 13
Unit 5.2: Value Proposition

Engage

Introduction

Fig. 1. Laundry Shop

Value describes the importance or usefulness of something to consumers. Value is the core
of any business organization, and it directs all future decisions, innovations, and target
customers. Engage yourself in the lesson and learn how to make a value proposition for
your business.

Objectives
In this lesson, you should be able to do the following:
● Recognize and understand the market.
● Describe the value proposition that differentiates one’s product or service from
existing products or services.

DepEd Competency
Describe the value proposition that differentiates one’s product/service from existing
products/services. (CS_EP11/12ENTREP-0d-7)

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Unit 5.2: Value Proposition

Explore

15 minutes
Guide Questions
Form a group consisting of three students and answer the following questions.

1. What were the offerings or benefits of your school presented to you when you enrolled?

2. What benefits do you get from school now?

3. Why is your school better than any alternatives? Write your justifications.

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Unit 5.2: Value Proposition

Explain and Elaborate

Value Proposition
Value proposition is a business or marketing statement indicating the worth that the
business offers to customers. The business makes promises to a customer or consumer
segment, which is easy to understand why they should purchase a product or service. It can
be applied to the whole organization, customer accounts, products, or services.

Example

Below are the well-known value propositions of some businesses.

Business Product Value Proposition

Walmart Products offered virtually Save money, Live better

Spotify Online music streaming Soundtrack your life

Vimeo Online video streaming Makes life worth watching

Remember
A value proposition is a statement that clearly identifies the benefits and the reason why a customer s

Value Proposition Builder Model

The value proposition builder model is a six-step interactive process in building value or
worth to the customer experience. The steps in value proposition builder model are the
following:

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Unit 5.2: Value Proposition
Table 1. The Value proposition builder model

Steps Description

This includes analyzing and identifying the market or specific

1. Market
clients or target groups of the business.

Analyzes the value experience that the customer may get

from the business and its activities. The entrepreneurs must
2. Value experience know how to define good, bad, and neutral undertakings
because the effectiveness of the value proposition depends
on customer feedback.

Identify the product or service mix the business is selling and

3. Offerings its capabilities of leveraging the value experience of the
customers.

Assess the benefits of the offerings and how these offerings

4. Benefits
deliver clear customer value.

5. Alternative and Identify the alternative option for the business’ product and
differentiation how it is different and better than alternatives.

Provide and ensure with relevant credibility and

6. Proof believability of your product in order for the customer to
see if the product is really satisfying.

Is value proposition required in all products and services? Why do y

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Unit 5.2: Value Proposition

Tip
In writing the value proposition, think about two main things:
● Experience of the customers, and
● Capabilities of the products or services.

The Value Life Cycle

The value proposition must be studied throughout the entire life cycle of value perceived
by customers. An entrepreneur must create an attribute that captures the five stages of
the value life cycle. Value elements can be created in each stage of the cycle. The following
are the stages in the value cycle:

Table 2. Stages of value life cycle

Stages Description

Value creation is a set of interdependent activities that

generates value for customers to help sell their products and
services. It includes three main components, such as key
1. Value Creation
partners, key activities, and key resources. Marketing and
research and development team are the department in the
business which is responsible for adding value at this stage.

The value can be created by enhancing, innovating, and facilitating

2. Value customer buying experience. This can be done in two steps.
Appropriation The first is to improve how transactions are made. The second
is to consider the satisfaction of the customers.

3. Value At this stage, customers see and feel the value of the product by
using it. The value is maximized if the value proposition offered by
Consumption
the business matches the customer’s needs.

This stage happens when value expires. Value renewal also

4. Value Renewal includes updating and adding benefits and features to the product
or service.

This is the final stage of the value life cycle. This happens when
5. Value Transfer
customers can no longer gain value from the product or service.

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Unit 5.2: Value Proposition

Example

Situationer:
An individual who sells pizza in a school canteen may go through stages in the value life
cycle. Below are the following examples.

Stages Answers

The business owner will create a product that his customers will
surely like. The key partners are the business owner, including
all his sales staff. Key activities include the creation of the
1. Value Creation actual product, such as cooking. The key resources will be the
materials and ingredients needed to create the finished product.
The entrepreneur also chooses a value proposition that will fit
the business.

The business owner notices that most of the students in the school
2. Value do not like the flavor of pizza he offers. He decided to innovate
his product. Instead of selling only one flavor, he adds a variety
Appropriation
of flavors to choose from. Most of the flavors he chose to add
are unique and tasty.

3. Value The customer starts to patronize the product. They now see and
Consumption feel the value and benefit they get in the product.

The customer now doesn’t like the product because of their

changing preferences. The entrepreneur will improve the product
4. Value Renewal
by adding features like additional toppings for the pizza. Through
this, customer value also increases.

Customer transfers to another store or product because the

received value did not match with the value proposition. When
5. Value Transfer
value did not meet the expectation, there is a possibility that
customers may transfer.

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Unit 5.2: Value Proposition

How will value proposition help your business to be successful?

Value Proposition Advantages

The following are the advantages of identifying the value proposition of a business or
product/service.

1. Gives direction. It provides a clear direction by identifying the target market and
understanding the needs of the customers that can be satisfied by a planned
solution.
2. Creates focus. The value proposition focuses on how and why the business will
deliver value. It also outlines what the business must deliver to meet the
customer’s needs and create an overall marketable experience.
3. Breeds confidence. It gives the entrepreneur confidence that comes from knowing
that the business is making a difference to the people they serve in a way meaningful
to them.
4. Customer understanding and engagement. It serves as a basis to engage the
customers by understanding how the customer views the business and its products
or services.
5. Focus on clarity of value. It focuses on brand awareness. The business is going to
identify a very clear picture of the business’s brand.

Review
A unique selling proposition is basically a part of the value
proposition. When entrepreneurs want to provide value to customers,
they need to have a unique selling proposition.

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Unit 5.2: Value Proposition
Wrap Up
___________________________________________________________________________________________

● A value proposition is a business or marketing statement indicating the worth

that the business offers to customers.
● The value proposition gives direction, creates focus, breeds confidence, improves
customer understanding and engagement, and focuses on clarity of business
value.
● The value proposition builder model consists of six steps, namely: market, value
experience, offerings, benefits, alternatives and differentiation, and proof.

___________________________________________________________________________________________

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Unit 5.2: Value Proposition

Photo Credit
Laundry shop by Bryan Papazov is licensed under Unsplash License via Unsplash.

Bibliography

Barnes, Cindy, Helen Blake, and David Pinder. Creating and Delivering Your Value Proposition:
Managing Customer Experience for Profit. Kogan Page Publisher, 2009.

Bhasin, Hitesh. “The relation between USP and value proposition.” Marketing91. Accessed
March 31, 2020.
https://www.marketing91.com/usp-value-proposition/.

Fernandez, Mary. “32 of the best value propositions (plus how to write your own)”.
Optinmonster. Accessed March 27, 2020.
https://optinmonster.com/32-value-propositions-that-are-impossible-to-resist/.

Miranda, Gregorio. Basic Marketing Revised Edition. L & G Business House, 1997.

Osterwalder, Alexander and Yves Pigneur. Modeling value propositions in e-business.

University of Laussane, 2003.

Sukhraj, Ramona. “The 31 best value propositions examples you wish you
had.” Impact. Accessed March 27, 2020.
https://www.impactbnd.com/blog/value-proposition-examples.