How to identify a value proposition


Ways to identify a suitable value proposition

Providing a value proposition is a central part of a firm’s offering in the marketplace. A value proposition helps differentiate firms and brands by having something unique about their “offering”.

In marketing terms, an “offering” is the collection of benefits that is available to potential customers from transacting with the firm’s products and services. Each firm would have a unique product mix, with their products probably having different features and designs, which leads to the ability to provide different consumer benefits.

By aligning their product mix and product features, along with supporting services, such as customer service and warranties, as well as brand equity benefits (which may provide social status and purchase comfort) – the firm is able to provide an overall value proposition.

But how does a firm initially identify a suitable value proposition? A value proposition needs to add value to the customer, as well as being differentiated in the marketplace from competitors – and, therefore, it is very important strategic decision.

Here is a list of techniques and tools that can be utilized by any organization in order to identify a suitable value proposition:


  • Internal engineering assessment
  • Focus group value assessment
  • Importance ratings
  • Direct survey questions
  • Benchmarking
  • Conjoint analysis

Each of these tools and techniques and briefly discuss below, in terms of how they can help identify a suitable value proposition for a firm.

Internal engineering assessment

In this approach, the firm utilizes product experts inside the company to compare and assess its range of products, against its key competitors. Essentially, it is a technical assessment of the products only.

For example, a manufacturer of tools (such as, hammers and screwdrivers) would test its products, versus competitive products, on key benefits such as strength, reliability, durability, efficiency when used, and so on. The goal is to identify how the firm’s product range is superior to competitive offerings – and then this becomes the basis of the firm’s value proposition.

One disadvantage with this method is that it is an internal assessment only and does not connect their product superiority and potential benefits to the actual needs in the marketplace.

Focus group value assessment

Focus groups are very common market research technique and have a variety of uses. In this case, identifying a potential value proposition, the discussion with consumers would center on the firm’s products, its range of products, and their features – all relative to competitive offerings.

The goal of this research will be to identify where consumers in the focus groups see extra value, or extra benefits, in the firm’s offering, again relative to competitive products. This approach is effective because it focuses on the existing perceptions and understanding of the firm’s products within its target market/s.

Importance ratings

Importance ratings would be generated from a large survey, involving a relatively detailed questionnaire. Each survey respondent would be asked to identify the importance of each major product attribute to them. For example, for airline travel they would be asked how important (on a scale) would various attributes be: food, seating, entertainment, service, waiting facilities, and so.

The respondent is then asked to rank the quality of firm’s offering for each of these product attributes. Likewise, each of the major competitors is also assessed using the same survey instrument.

The end result is a clear analysis of the different components of the offerings, which ones are more important, and how the firm compares across all these product attributes. Hopefully, the firm outperforms competition on one or two of the more important attributes and that can become the basis of their value proposition.

Direct survey questions

Another market research technique, which like the importance ratings utilizes a quantitative survey, is to ask direct questions of consumers. Unlike the importance ratings above, the survey does not break the product up into multiple attributes and ask the respondents to rate each.

Instead, more generalized questions are asked in response – what do you look for in this type of product, or on what basis would you choose between these brands, or would you be willing to pay more for a product that had this feature?

Again the intention is to identify areas where the firm may have an existing advantage and try to convert that into a clearly communicated value proposition.


Benchmarking, in this case, is another market research technique where consumers are surveyed. The starting point is for a “standard” product to be described to the respondent. The key product features and benefits of the product would be also communicated to the respondent.

Then, as part of the survey, different product variations in comparison to this “standard” (that is, the benchmark) products and then explained to the respondents. The respondents then need to assess this new offering and they are invited to indicate how much they will pay for this product version in comparison, or how much lower the price should be if some attributes were removed.

Conjoint analysis

Conjoint analysis is sometimes also referred to as trade-off analysis, which is a better term for understanding what the technique is trying to do. In this piece of research, respondents are offered choices between two similar products that vary on one or two product attributes.

By repeating this process numerous times, a model can be constructed of which particular product attributes, or sets of product attributes, appear to be preferred by the respondents. An alternative approach to conjoint analysis is to get respondents o rank their preferences for each of the product alternatives provided.

The end result of this technique is a ranking of preferred product designs and product feature combinations, potentially by different target markets (that is, by segmenting the respondents) – which can be quite helpful in determining how/where the firm’s product offerings have some competitive advantage.

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