We will start with developing the value proposition.
The Value Proposition is about identifying the problem that your business will resolve, or the need that it attempts to meet. It could be a social, environmental or economic problem and your business will help people and communities to resolve this issue.
For any business to be successful, it needs address problem or need that people have. How otherwise can they be convinced to buy our products or services?
When we solve a problem with an affordable solution to consumers, we are likely to succeed with our business idea. However, we need to be very clear about the problem or need that we are tackling.
So, Value Proposition is just a fancy word for the problem you are solving with your product or service.
As the founder of your business, YOU have to understand the problem or need of your customers. The best ways to find out is by talking to your customers and ask what they need.
For example, if you have a hair salon, you need to understand what really make the customer choose your store over another one. It could be that they prefer getting a quick and cheap haircut. However, it is highly likely that they also care about the cleanliness and interior design of your store, and how they are greeted and treated. Customer service play a critical role in their choice of hair salon and your approach could be the deciding factor for choosing your salon over another. A quick approach to good customer service is to offer them a beverage while they wait and while you cut their hair. But it might not be enough for them to become returning customers.
It is important that you find out what would really help them and what would make them buy your product/service. Speak with your customers and will you find out. You will realize that your customers are the treasure of the success of your business.
You should also try to find out the value proposition of your potential competitors. What needs do they address? On the basis of this piece of information, what unique value proposition could you develop for your business? How can you stand out? You have to find creative ways to produce the product/service either better or cheaper.
Take away: What is the problem you are solving? Write it down in the value proposition piece.
Before you go ahead and finalize your Value Proposition, I would like to share with you my value proposition.
Esther's value proposition
Initially, I was selling whole pumpkins to wholesalers for 100 shillings. In turn, they sold them to retailers for 230 shillings and consumers for 250 shillings. This meant that they made great profits, on my behalf. I was the one who had spent all those hours growing the pumpkins and taken all the risks in terms of whether conditions and consumer demand. I thought to myself that this was not fair. Why couldn’t I make the 230 or 250 shillings directly and get the profit myself?
So, to figure out how this could work, I went to Selfridges and Fairmat supermarkets and the local market in Kiambu as well as to grocery stores in Nairobi. I talked with many people who buy and consume different pumpkin products. I asked them for what purposes they use pumpkins, how often they buy them and how much they are willing to pay for them based on different levels of quality.
I was very surprised. I realized that there was a large untapped market just in front of me. I found out that people preferred processed pumpkin rather than whole pumpkins. They also told me that they would be willing to pay a lot more for processed products since it saved them a lot of time and work. They told me that pumpkin is too messy, too much work, and the whole pumpkin is too heavy to carry.
Right then, I realized that the problem I could would solve for my customers was to make their lives easier. My business would do the cutting, cleaning and processing of the pumpkins.
But talking with customers also enabled me to create new products, such as pumpkin juice, pumpkin wine, pumpkin flour and much more. And, only because I talked with the consumers, and made them my customers.
Today, I am happy to say that my company’s Value Proposition is to: “Provide fresh, processes and diverse pumpkin products for consumers in my community”. This is the problem my company has addressed.
Now, what is your Value Proposition? Get back to your piece of paper where you wrote down your initial idea. Is it still the same? What has changed? Do you need to get back out and consult further?