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Developing More Meaningful Value Propositions

September 18, 2018 By Bill Kline

A cornerstone concept for IOI Partners is value – creating, delivering, and capturing value. The Discovering Your Value Proposition (DYVP) Workshop uses proven canvas tools to help early stage companies identify value from multiple perspectives. As an engineering educator, value is a critical concept that is integrated into every aspect of teaching as our graduates must understand what it means to create value in any setting.

Developing More Meaningful Value Propositions

One of the most commonly considered but poorly defined concepts that entrepreneurs often tackle is the value proposition for a new concept or product. Value proposition statements are easy to create but are often not meaningful. A well-crafted value proposition will serve as a true north for your team, enabling them to make decisions around delivering the product or service that will find market success.

A definition for a value proposition is: a promise by a company to a customer or market segment. It is an easy-to-understand reason why a customer should purchase a product or service from that specific business. (1)

A template is often a good place to start. While many have been developed, one of the more popular ones is Moore’s on value positioning:

For _____(target customer) who ______ (statement of the need or opportunity) our ________ (product/service name) is _______ (product category) that (statement of benefit) _________. (2)

Common issues encountered include that the value proposition is often written without considering competing offerings, or market research and inconsistent terminology is used. The result is that value proposition statements often read like a marketing promotional statement and represent a hope rather than a clear and meaningful characterization of the impact the product or service will provide to the customer.

Sharpening Your Value Propositions with Jobs-to-be-Done

Borrowing concepts from Ulwick (3) and Outcome Driven Innovation (ODI), we can sharpen up our value propositions. Using the Moore template, the job to be done (JTBD) is used as the statement of need or opportunity and the job executor will be the customer. The job is the statement of what the product does without considering how. There are many timeless jobs such as ‘listen to music’ or ‘provide transportation’.

Let’s consider the Keurig coffee maker as an example. First introduced in 1998, the job it performs is to ‘make hot drinks’ and we could add a context of ‘in an office or residence’. The job executor could be defined as ‘busy adults’. The product category could be a ‘brewing system’ and we will consider ‘outcomes’ to comprise the statements of benefit. Outcomes are the desirable product characteristics that customers use to compare competing products and ultimately make choices. A short list of outcomes for a product to make hot drinks could include taste, temperature, serving size, variety, time to make, time to clean up, and affordability. We can define quantifiable metrics for each outcome.

Combining all of these thoughts into the template, a value proposition for the Keurig coffee machine could be:

For busy adults who make coffee or other hot beverages in an office or residence, the Keurig brewing system prepares a variety of customized single serving drinks that are fresh and flavorful in less time and require less clean-up than traditional brewing.

There are several aspects here to creating real, meaningful statements of benefit. The template helps us to collect the right items of information, but we might need to rewrite it to suit particular needs. Next, the product characteristics or outcomes called out in the value proposition must really be better than competing offerings and they must truly be important to the customer, yet the customer is not well served by current offerings. Verifying importance and satisfaction must be done and can be accomplished through customer interviews or surveys. (3)

For comparison, let’s look at what Keurig says about the coffee machines. Paraphrasing website material: ‘gourmet coffee…delicious beverages…in less than a minute…without having to grind beans…or clean anything up’. (4) While not written in template form, all of the same information is included and this is very similar to the template statement above.

The Keurig coffee products have had a long run of success. At the time they were introduced, the main competing offerings were instant coffee or drip-style makers. The Keurig did provide outcomes that were better than these competing offerings that were both underserved and important to customers.

Remembering to Consider the Relative Position of Your Proposed Offering

Now let’s consider the example of the Keurig Kold. Introduced in 2015 as a single serving cold drink maker, it arrived with great fanfare but found little success and was discontinued less than a year later. Through partnerships with soft drink makers, a variety of popular drink flavors were offered.

Looking back at the product release information for the Keurig Kold, it cited value proposition elements of taste, variety, and delivery as main themes.

The disruptive countertop-size innovation in KOLD is like nothing consumers have ever experienced – from the rapid chilling that turns room temperature water to a perfectly chilled drink at the push of a button; to the dispensing technology that produces consistently great tasting beverages; to the pod technology which enables fully carbonated beverages. KOLD delivers game changing, on-demand variety.  (5)

The outcomes for a cold drink maker could be similar to the coffee maker above, including taste, temperature, serving size, variety, time to make, time to clean up, and affordability.

Considering competing offerings of a SodaStream drink maker and a can of soda stored in the refrigerator, the Keurig Kold possibly offered advantages in choice and delivery over SodaStream, but more importantly, it did not have many advantages over the can of soda stored in a refrigerator. In fact, the can of soda in the refrigerator had many advantages over the KOLD, leaving one to wonder how well Keurig really did understand value to the customer in this market segment.

Recent work has presented new tables and views that are helpful in identifying the relevant product stakeholders and outcomes and comparing multiple products using these features identified. (6) This work provides a more in-depth and substantial basis for the consideration of customer value and value propositions. In our classes, these views serve as a framework to guide students in the collection of the right information in a new product development setting leading to outcomes that create value more consistently for customers and other stakeholders.

While they are easy to write, value propositions that are written as marketing slogans are useless to the product development and commercialization teams. Meaningful value propositions guide the delivery of successful products and services by clearly stating the real relative position of your proposed offering compared to alternatives and ensuring that the identified benefits to the customer are both important and underserved. Furthermore, this value proposition should guide decision-making at every step of the development and commercialization process and should be constantly evaluated and challenged to ensure it is still relevant and meaningful to customers.

[1] Value proposition. (2018). Investopedia.com. Retrieved from https://www.investopedia.com/terms/v/valueproposition.asp.
[2] Gronsund, T. 7 Proven Templates for Writing Value Propositions that Work [Web log post]. Retrieved Sept. 9, 2018 from http://torgronsund.com/2011/11/29/7-proven-templates-for-creating-value-propositions-that-work/.
[3] Ulwick, Anthony, ‘Outcome Driven Innovation (ODI): Jobs-to-be-Done Theory in Practice’, Strategyn, LLC Whitepaper, January 1, 2017.
[4] Brewing Excellence, One Cup at a Time. (2015). Retrieved from http://keurig.uk.stage.tech.ny.havasww.com/our-story.
[5] Watson, E. Keurig KOLD hits stores in six cities, but will consumers buy into its promise of ‘game-changing, on-demand variety’? [Web log post]. Retrieved Sept. 9, 2018 from https://www.foodnavigator-usa.com/Article/2015/09/29/Keurig-KOLD-cold-carbonation-system-hits-stores-in-six-cities.
[6] Kline, W., W.D. Schindel, ‘Engineering Design, A Shift from a Process to Model-Based View,’ 2017 IEEE Frontiers in Education (FIE) Conference, October 18–21, 2017 Indianapolis, Indiana.

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Filed Under: Innovation, Product Design & Development, Strategy & Business Development Tagged With: Clarity, Delivering Innovation, Success, Value Creation

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About Bill Kline

Bill Kline is the Associate Dean of Innovation and Professor of Engineering Management at Rose-Hulman.

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