The ‘value proposition’ forms one piece of the ‘business model canvas’ puzzle. The canvas itself is a simple way of mapping out your business idea by detailing the operations of your company. It is a much more simple and visual way of laying out your business, something which is traditionally done in a business plan.
The business model canvas covers every area of your business and is a terrific way of identifying missing pieces in your business idea. If I were to go through every section of the model (of which there are 9), my post would be far longer than those I have done in the past. So I have decided to group and break down sections.
Although all aspect of the canvas are key in order to fully form your idea, the value proposition is a major part, and describes why people would buy your product. Simply speaking, it helps you answer the questions:
- What value does your product deliver to the customer?
- What is the problem which you are solving for the customer?
- Which product are you offering to which group of customers?
- Which customer needs are you satisfying?
The value proposition is based on three categories: need, feature and benefit. The need is what the market needs, the feature identifies which features of your product matches this need, and the benefit section shows the benefits which result from these features.
A great way to find your value proposition is to draw a table with these headings, then simply write how your product fits in. A very important thing to bear in mind during all of this is that benefits sell, features don’t, and so identifying and being able to annunciate these benefits is key.
An example of a value proposition when referring to a buying a new hatchback car would be as follows. The feature of this car is the extra space at the back of the car; the benefits are that this makes it easier to load shopping and to travel with your dog whilst keeping your backseats seats clean.
Unsurprisingly, the best benefits your product can bring save the customer time and money. Once you’ve identified the value proposition, you are one step closer to justifying your added value in pricing terms, something which will be covered in another post.
This is an essential part of any sort of idea development, as it makes it easier to describe why people should buy your product and ultimately how it will sell, so do not forget to think this through.