Your value proposition is the most important thing you can say about your brand, product or service, it’s a critical cornerstone of what your brand does.
t is the unique combination of benefits and value that a company offers its customers in return for their choice and loyalty. Value propositions give your customers tangible benefits, reasons to believe and buy. Without them, you’re shooting in the dark.
The value proposition is influenced by many factors, including market conditions and customer behavior, which, in case you haven’t noticed, is moving now.
The inevitable effect of inflation is that the prices of goods and services will rise, and companies tend to raise their prices to maintain profitability. Add to that continued global freight costs and rising fuel prices, and price hikes are inevitable.
How many brands haven’t considered this yet? Changing your pricing due to inflation can invalidate your value proposition, inadvertently changing your position in the minds of your audience.
Suddenly, you’re asking customers to pay more for what is essentially the same product or service. Customers can easily perceive high prices as unjustified or unaffordable and switch to other brands or products.
The impact of this shift in perception is everywhere. Customers are rethinking how far their dollar can go when goods and services that were once “necessities” have been downgraded to “nice-to-haves.” Streaming services, food boxes, luxury shoes, cleaning services… the list is endless.
So we have mobility because customers are buying cheaper compared to higher priced products. Suddenly, value propositions that might have worked a year ago may suddenly be outdated or outdated because they no longer target a valid audience.
It’s even more difficult locally because we have a unique set of challenges to navigate in Australia. We’re a small market, which means we have even less room for error. In most of our industries, we have wide gaps between category leaders and market innovators.
The COVID-19 pandemic was an interesting testing ground for what could happen, because it not only introduced innovation, but also showed the brutality of failure when customers disappeared.
There are countless cases of brands that launched with the perfect proposition at the perfect time (Milkrun and Voly are great examples) but then failed to find relevance as the world opened up, only to have large operators such as Woolworths. copy their idea with the likes of Metro60.
How do you develop your proposition if your customer’s interpretation of value has changed? When is it “worth it”? the first question they ask? You need to rethink your customer and the world in which they operate.
When things cost more, people make different choices. In fact, is your client still there? What can you do to stay relevant in these circumstances?
It’s all well and good to focus on profitability, but it means nothing if you just price shock your customers into leaving. To make premium pricing work, brands need to think about their audience and tailor their value proposition to fit their product and pricing strategies. Everything is balanced, and one does not work without the other.
If your analysis reveals that certain customer segments are suddenly no longer in the market, see what steps you can take with your products and services to find those who are or win them back.
Reevaluate your product, distribution and range strategies. In this new market context, how you market your products has become extremely important. Big companies, think Unilever or health insurance, have perfected the art of using multiple brands to fit different products into different buying behaviors.
It’s also time to get back to marketing basics, focusing on ensuring you’re balancing the four Ps: product, price, place and promotion. Explain what your brand stands for and why people should buy it, making sure your value proposition justifies your pricing.
Macroeconomics and fluctuating pricing remain, and your value proposition—and in turn, your entire marketing strategy—must adjust to match.
The key is to adapt your offering to changing customer behavior. It is not enough to change the prices only in terms of profit. your value proposition must change along with it.
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