A value proposition is a strategic tool in business that expresses the value a customer receives when purchasing a company’s product or service. In essence, the company uses its value proposition to communicate the benefit the customer will gain. This benefit could be, for example, a solution to a specific problem, increased ease or speed brought by the product or service, or even enhanced safety.
What creates the value of a product or service for an individual? Although value and how it is formed are subjective—shaped by each person's own perceptions, experiences, and interpretations—there is still a great deal we humans share in this regard. All it takes is a look in the mirror and a moment of reflection on our own behavior to begin to understand where the value of a product or service comes from for us personally.
Maslow’s hierarchy of needs defines our basic needs—those essential for survival. These include warmth, food, and water—things we can’t go without for long. In addition to these fundamental needs, we also have other needs that must be met in order for us to feel truly satisfied. Safety is one of them, even if it’s not absolutely critical for survival. As social creatures, we are only truly content when we have others around us—when we feel cared for and loved. Receiving attention and even respect from others also gives a welcome boost to our self-esteem—it’s something we all appreciate.
We are also, by nature, inclined toward laziness and comfort. This doesn’t mean we’re not willing to work hard or put in effort for things we find meaningful—but we generally don’t want to spend time or energy on tasks that could be done more easily, efficiently, or simply. We like things that are easy, smooth, and fast—processes that don’t require unnecessary effort.
When discussing how the value of a product or service is formed for an individual, we must consider not only our basic needs and nature, but also emotions. Purchasing decisions are rarely made purely based on logic—emotions are almost always involved in one way or another. Have you ever heard of someone buying a car based solely on rational reasons? I haven’t.
When emotions come into play, things can get even more complex.
When emotions come into play, things can get even more complex. Our purchasing decisions are then influenced by factors such as past experiences, personal beliefs, and recommendations we've received or read. Brand recognition and reputation also directly shape our attitude toward a product or service. Marketing plays a significant role in shaping our decisions, as do the messages conveyed by packaging. And the truth is, we aren’t even fully aware of all the factors influencing our buying decisions—many of them operate below the surface.
With these basic principles in mind, we can begin to build a value proposition for the company, product, or service. To do this, we need to identify not only our target audience, but also the specific benefits our products or services can offer them. A key question at this stage is: How can we make our customers’ lives easier? At its best, the solution helps the customer meet their needs, makes things simple, and resonates emotionally—so that the customer feels they made the right choice and gains satisfaction from their purchase decision.
Easier said than done—but concreteness helps here too. The more clearly and concisely we can express the benefit the customer gains from our product or service, the easier it is for them to understand the value it brings. And if that benefit is especially meaningful to the customer and clearly stands out from competitors, all the better.
So what makes a good value proposition from a sustainability perspective? At its best, a value proposition is part of the company’s strategy and serves as a guiding principle for the entire staff. Since the value proposition is also part of the company’s communication, the same basic rules apply as in sustainability communication: it must be based on concrete actions and be open, understandable, and honest. Not that dishonesty gets anyone very far in business anyway.
A good and responsible value proposition is based on the company’s genuine and honest intent, which is reflected throughout the entire operation and is deeply embedded in its leadership and employees' daily practices. Anything superficial or imposed from the top will not work here either. When we talk about values and the added value the company provides to its customers through its operations, services, and products, we are also talking about trust. In the long run, the system only works when the company and its staff can be proud of and grateful for the trust customers show through their purchasing decisions.
A value proposition can provide a great customer experience, but a responsible value proposition offers an even better one. When the company’s business model, product offerings, and value proposition align and follow the same responsible path, it creates a holistic approach that, in the long run, becomes one of the pillars of the company’s success.
Value creation and value proposition. Key points summarized on one slide.
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