What are Value Propositions? How can knowing mine help me?Developing a Creative Business Model Canvas
Head of Creative Entrepreneurship at the Centre for Creative Practices
What are Value Propositions? How can knowing mine help me?
A robust and impactful value proposition is essential for any business to effectively engage and connect with customers, partners, stakeholders, and critically internal employees, by clearly communicating how it is different, better and worth purchasing from. The value proposition is central to the overall business model and should form the anchor for all decision-making, operations, and customer engagement. It is more than a set of words; more than a set of marketing messages; it is the framework for how the business aligns its activities and output with its target audience’s needs, to deliver a compelling experience that can ultimately be monetized through an exchange of value. In this respect, the value proposition is key to validating the business idea; both as you start up and as you grow. These are the benefits and advantages that should be considered as you go through the process of discovering, articulating and realizing the value proposition:
A value proposition provides direction by defining the ideal target audience right up-front, then identifying and understanding the core needs that can be satisfied by the planned solution. A clear value proposition thereby helps avoid wasting time, money, and effort by offering products or services that aren’t relevant or attractive to the target customers.
A robust value proposition gives team focus by identifying the fundamental initiatives, activities and aspects of the business; this will have an impact on meeting the defined target audience’s needs. Value proposition assists in focusing on the who, why and how the business will be delivering value. It outlines what you must deliver to meet the defined audience’s needs and create an overall remarkable experience.
Having a robust and perfected value proposition gives the team and stakeholders’ clarity so that progress can be made without questioning and second-guessing every move, thus breeding confidence. Confidence comes from knowing that you’re making a difference to the people that you’re serving, that you’re doing so in a way that’s meaningful to them, and that the actions are aligned to delivering an overall remarkable experience.
Improves customer understanding and engagement
Value proposition gives you the basis to engage with customers in a compelling and resonant manner by understanding how they view the products or services. Without this alignment, you may be talking to prospects and customers in ways that breed misunderstanding or even alienation – and people who feel misunderstood don’t buy. The value proposition determines the factors that not only make a difference to the audience, but do so in aspects or ways that are meaningful to them.
Provides clarity of business value
As a start-up without any brand recognition, you’re going to have to paint a very clear picture as to why you’re worth people’s time. Often though, many companies’ marketing messages end up being vague and unfocused, thereby losing their impact and persuasiveness. The value proposition frames not only how you’re creating value for the audience by addressing a core need, but critically why the solution is better than what they are currently doing or using, or versus whatever else is potentially out there that could do so.
Increases effectiveness of marketing
Value proposition directs marketing efforts to concentrate on those activities that will generate the best results. By truly understanding desired customers and their core need that you’re accommodating to, you’re able to focus on the channels that are most relevant, and will effectively communicate the benefits and advantages of the solution.
The value cycle
Osterwalder and Pigneur state that the value proposition must be studied through its entire value life cycle. Value elements can be created in each of the five stages of the value life cycle. These stages are: value creation, value appropriation, value consumption, value renewal and value transfer:
- Value Creation: The traditional view of the value creation process doesn’t allow customers to take part in feeling the value. Marketing and research and development are mainly responsible for adding value at this stage based on historic data and observation. However, in modern times, the customers of several companies are included in this stage.
- Value appropriation: value can be created in this stage by developing, improving and facilitating customers buying experience. This can be done in two steps, firstly improving how transactions are made, and secondly, considering the fulfillment of customers.
- Value Consumption: This is core to the value proposition. At this stage customers see and feel the value through the actual use of the product or the service. At this stage value can be created through a bundle of benefits that are linked to the product or service. It can be improved through observation and resulting feedback.
- Value renewal: This stage is when value expires. The value can be created from this through adding more benefits and features to the product or service when it is renewed.
- Value Transfer: The final stage of the value life cycle is the stage when customers can no longer gain value. Value abundance can occur at this stage, when customers need to pay for disposing certain used goods, e.g. TVs/computers.
What are Value Propositions
A value proposition is a statement which clearly identifies clear, measurable and demonstrable benefits consumers get when buying a particular product or service. It should convince consumers that this product or service is better than others on the market. This proposition can lead to a competitive advantage when consumers pick that particular product or service over other competitors because they receive greater value.
The phrase “value proposition” (VP) is credited to Michael Lanning and Edward Michaels, who first used the term in a 1988 staff paper for the consulting firm McKinsey and co. In the paper, which was entitled “a business is a value delivery system”, the authors define value proposition as “a clear, simple statement of the benefits, both tangible and intangible, that the company will provide, along with the approximate price it will charge each customer segment for those benefits”. In a modern, clear cut definition, Labeaux defines a value proposition as a statement that clearly identifies what benefits a customer will receive by purchasing a particular product or service from a vendor. According to Hassan, however, there is no specific definition for Value Proposition.
Creating and delivering value proposition is a significant issue that marketing planners need to consider in planning strategies. Value propositions vary across industries and across different market segments within an industry. Capon and Hulbert linked the success of firms in the marketplace to the value provided to customers. They introduced a principle of customer value, with customer insights driving the company’s marketing activities. Customer value should also drive investment and production decisions, because customers perceive value on the benefits of the product or service they receive. Consequently, as the environment changes, and the customer experience and their desires change, the value they seek changes. As a result, companies are pressured to invest more resources in marketing research in order to gain deep customer insights, improve value proposition.
Consumers are always looking around for the best possible deal at the best quality and how these products or services will contribute to their success. The value proposition is the promise that the business will give the consumer to assure best possible value. The value proposition is a creative statement that depicts the unique selling point. Without this statement you lose an opportunity to tell consumers why they should pick you over competitors. An important goal in a business is to convince customers that they are getting many more benefits. Coming from a customer’s perspective, buyers are not only asking how this product is different to one they may already be using, but what value this product or service may have. Customers are looking for answers that may improve or replace products or services. Customers will never buy a product or service if they don’t feel like they are receiving the best possible deal. Therefore, the value proposition is important to businesses and their success.
The value proposition is to differentiate the brand from competitors. To understand and get an idea about the value proposition it is important to analyse the business through the marketing mix: identifying what the product or service is, the price of the product or service, where this will be sold, and how this product or service will be promoted. Identifying these key questions helps clarify and make the value proposition more obvious. Another strategy that has been used to help process learning and growth of a business is the balanced scorecard. This concept was developed by Robert Kaplan and David Norton in 1990, to help communicate value proposition in a way that businesses can understand. The maps create a visual representation of the businesses objectives and goals so it becomes more approachable. Through these theories the proposition becomes more obvious and displays to consumers why this product or service is so special to the market. Once businesses determine what makes this item or service so exceptional compared to competitors, it can begin to guide a business more clearly. This can lead to marketing concepts and ideas. The value proposition helps the business understand what their primary focus and goals are within the business and help to understand the consumer’s needs.
When creating a value proposition it’s important to think about these key questions: What is the product or service? Who is the target market? What value does the product or service provide? How is this different from competitors? Many businesses that can answer these will have a relatively strong value proposition as they know how their product or service differentiates from competitors. But it’s more than just understanding and recognising what makes them different; it’s about creating a statement that engages customers to purchase goods or service. There are many benefits that the value proposition can have on a business. These benefits include a strong differentiation between the company and its competitors, increase in quantity, better operations efficiency and increase in revenue. By also creating a more personal and honest relationship with consumers through the value proposition also gives them another reason to choose you. These benefits will help the business grow and succeed in the market.
Later on we will look at how using your value propositions in the creative sector can help you define your business strategy. Till then let us know what you think.
Creative Business Model Canvas
Find out more about the canvases and how to use them in your creative business
Developing a Creative Business Model Canvas
The core issue at stake is to identify and design adequate tools enabling students and graduates of creative disciplines to successfully develop their business ideas.
One of the critical tools missing at present in creative education is a business planning model that reflects the specifics of the creative sector.
For far too long education in creative disciplines has focused solely on artistic and academic excellence, and has not offered tools, knowledge and recourses helping their students to build careers as creative entrepreneurs.
At the same time business planning has focused on the writing of formal business plans and not on developing models that allowed for easy testing and developing of business ideas.
This all changed with the development of the business model canvas and the lean model canvas. These models allow businesses to quickly test and develop ideas in a lean manner before taking them to market.
We have identified a huge potential in applying the lean methodology and the business model canvas to support business planning by creative entrepreneurs.
However, the focus of creative businesses is not only on the business side but also on their cultural, aesthetical or social impact, areas that we felt should also be suitably addressed in the business model planning.
Yet, the currently available canvases do not include these aspects and thus we are working to adapt the existing models to the specific needs of creative sector.
Our adapted Creative Entrepreneurs Business Model Canvas is based on the business model canvas developed by Alex Osterwalder and the Lean Business Canvas developed by Ash Maurya.
Your Business Model Canvas
- Osterwalder, Alexander, and Yves Pigneur. Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons, 2010.
- Maurya, Ash. Running lean: iterate from plan A to a plan that works. " O'Reilly Media, Inc.", 2012.
Creative Business Model Canvas
Some very different but very practical applications of the Business Model Canvas and how they apply to your business.
What are the main differences between Alex Osterwalder’s Business Model Canvas and the Lean Canvas by Ash Maurya. Let’s have a look and then later in the series we will look at how you can apply both to your creative business.
What are the origins of the Business Model Canvas? The Business Model Canvas is a strategic management and lean startup template for developing new or documenting existing business models.
Creative Entrepreneurs Training
Creative Entrepreneurs Intensive Training Programme
3 - 5 February 2017
Ashford, Co. Wicklow, Ireland
Early Bird Price €250 till 31 December 2016 then €300
You know that feeling? You want to develop your creative or artistic practice and give it some structure. But there is never enough time or resources to focus on the business side of your practice. On the other hand it drives you mad that it doesn’t work as it could and should. You are not making enough sales, not getting enough contracts or you simply do not know how to start to build a sustainable creative career.
We have been there ourselves and know exactly how frustrating it can be. All we can recommend to you is to STOP, take 2.5 days out and join us for our intensive Creative Entrepreneurs Training Programme.
You will spend this time working on the business side of your creative practice. Together with you we will (re)define where you are right now with your creative business and where you want to be. You will formulate goals and steps to take with the primary focus on your specific creative niche.
CFCP Online Courses For Creative Entrepreneurs
Building a Strategy For Your Creative Business
The courses focuses on starting, growing and sustaining your creative business – planning the strategy for development, growth and the necessary steps you can take to build a sustainable career. This all takes place in an inspiring, creative and relaxed online environment!
We will spend really exciting time together online between the 1 and 28 February 2017 working on our Creative Business Model Canvas – the visual alternative to the boring business plan which we have developed and based on the business model canvas developed by Alex Osterwalder and the Lean Business Canvas developed by Ash Maurya.
We will answer the 4 questions that every creative business needs to answer: Why – What – How – Who; We will look at your vision for the future and the value propositions that you are basing your creative business around but critically we will ask, who are you? why you do what you do, your motivation and much more…
The delivery will be online but what's different is that we will be there to work in partnership with all of the participants. We will create outcomes together that we are both responsible for and we will be on-hand to help you via group and one-to-one online meetings, email support, webinars and mentoring. We will run the course over the 4 weeks with a group workshop once per week for 2 hours, a 1 hour group Hangout once per week for any group questions / feedback you might have and a 1 hour one-to-one online session with us each week. So all in all you will get a minimum of 4 hours working with us per week plus a lot of videos, workbooks and assignments to complete each week that will really move your creative business forward.
The course works just was well for individuals as well as companies, however, because of the nature of the course we can only take 5 people at a time on the journey with us at this stage. The price of the course will be €250 per person so if more than one person from your organisation would like to take part then you can.
We will also close the registration of interest on Friday, 20 January 2017 at 11.59pm GMT.