Remembering Your Unique Value Proposition (UVP)
by Geoff Hineman
Whether you are crafting press releases, issuing brand statements, or trying to figure out which products to optimize next, it would do you good to keep your organization's unique value proposition front and center. In short, your unique value proposition (UVP) highlights the type of value you bring to a product or service that makes you different from others. While it's easy to think of "value" as "affordable," price is just one possible UVP.
In this post, we are going to look at how UVPs work and three questions to ask when developing (or rediscovering) your organization's UVP.
How Unique Value Propositions Work
Often, your value proposition is the reason you launched a product or service in the first place. That is, you found an opening in demand and filled that opening with a product or service that is different from anything previously offered. You can find this demand in two ways:
- Segmenting the Market. When you segment the market to get your UVP, you are essentially finding a product or service that already exists but doesn't serve the needs of the entire market. In doing this, you isolate a market segment and introduce a new product or service that meets the needs of that segment in a way nothing else does. For instance, if you are a vehicle manufacturer, you might realize that there are no mid-size pickups offering a certain combination of torque and towing from a hybrid engine. Creating one addresses a certain segment of the pickup truck market.
- Expanding the Market. When you expand the market, you introduce a new product or service that people didn't know they needed until it existed. For instance, many of us never knew we needed smart speakers, like Amazon Echo or Google Home Max, until we tried them. Products like these expanded the device market by introducing new conveniences not found in other devices.
Discovering your Unique Value Proposition
Now that we know the goal of a unique value proposition, we need to do the legwork of finding out the three elements of discovering your unique value proposition: your customers, their needs, a price point. Within each of three elements, there are core questions you need to ask.
Who Are the Customers?
In every industry, there are different customer segments. From hobbyists to professionals, from planners to builders, from creators to consumers, and beyond. If you are developing (or have already developed) a product or service, identifying the right end user for that product or service is essential to success.
After you have identified your ideal customer segment(s), you need to find the best channels to reach them for both promotion and delivery. For instance, does your customer segment read trade publications, listen to the radio often, or rely primarily on the Internet for information or entertainment? Knowing this kind of information puts you in the right place for discovery.
After that, you need to discern where your customer segment shops: online, in big box stores, local shops, or some combination? Is there a location where they won't shop? These factors play a role in distribution and should be sorted out as early in the UVP discovery process as possible to avoid acquisition issues that could undermine your overall success.
What Do the Customers Need?
In some cases, the need for a product or situation is so obvious that honing the consumer segment doesn't have to be the first step. For instance, the need for faster computing power in laptops is a need that is clearly present. If your product can deliver that better than current offerings, then that is where the seeds of your UVP lie. Figuring out how to reach specific customer segments can be a secondary concern when the customer need is great enough across a variety of segments.
Often, when a UVP is based upon a need, you'll find that the customer segments can overlap, be connected in only the loosest ways, or have some combination of both depending upon the industry. When your product or service delivers the right balance of features and benefits, though, the customer segment will always be around the common needs of sometimes otherwise-disparate segments.
What is the Appropriate Pricing?
We mentioned at the top that many people equate the term "value" with "affordable" or "cheap." For many businesses, that is certainly the case. Wal-Mart's slogan is actually, "Save Money. Live Better." Their UVP is pricing and they put that message right in their slogan.
Value, however, is not just about pricing. It's about what you get for the pricing. There is a difference. Whereas competing on price alone often creates a race to the bottom that is marked by progressively lower standards of quality, competing on the value aspect of pricing can encompass luxury brands as well as economy brands. The three options you can take with value are:
- Premium. Will your customers be willing to pay premium pricing for bells and whistles they want, but can't find anywhere else?
- Parity. Will your pricing be consistent with the market, leaving you to compete on finding the right combination of features for the right market?
- Discount. Will you offer a product or service that meets enough of a customer's needs to still be profitable when trying to sell for less than the competition.
When it comes to determining price as a unique value proposition, there are two types of customers to keep in mind: those who are overserved and those who are underserved.
A customer who is overserved (and usually overpriced) is looking at a sea of products that usually offer more bells and whistles than necessary. By paring those down to get to the crux of what the overserved customer needs, you can also decrease the price, as well. When trying to reach an overserved customer, pricing is usually the most important element of the three we are covering.
A customer who is underserved (and usually underpriced) is looking for more bells and whistles than what is currently offered in the market. They are willing to pay for those bells and whistles if they can find them. By targeting underserved customer in your market, you have more liberty with your pricing, because fulfilling needs becomes the dominant element of the three listed here. If you really meet the needs of the underserved customer in way that the competition doesn't, you can really set that price to maximize profit even after you have made a more robust product.
From market research, to product development, to advertising, to distribution, and all the peripheral processes that come with those steps, it is wise to keep your pre-defined unique value proposition front and center. When products (and even brands) veer too far from their UVA, it can create confusion and lead to lost sales opportunities.
Just remember to ask yourself who your audience is, what they really need, and how much are they willing to pay for it. When you have those answers, you have a clear, coherent direction for all the actions that follow.