The Value Proposition

When you know your target group, you can proceed with focusing on the value proposition. The reason for existence (mission) of every organization is after all the fact that it delivers value to a certain segment of society. The products and services offered are a way to make this mission a reality. If it is not clear to the customers (WHO) WHAT this value is, they will have no interest and there is no sales market (and no income).

What value (WHAT) is being delivered to which target group (WHO) ?

Your value proposition is about answering the following questions:

  • What customer problems do you solve and what needs do you meet?
  • What are the products and services we put in place to accomplish this?
  • What is the perceived customer value?
  • What value or benefit do you create for customers? How do you communicate it?

Below we present some exercises which will aid you to gain more insight into:

  • Who is involved in your products and services (ecosystem analysis)
  • How to attune your offer to the wishes and needs of your customer (value proposition canvas analysis by Osterwalder et al.)
  • what the market in which you operate looks like (market analysis)
children, playing, exercise-310223.jpg
source: pixabay.com

1. Ecosystem Analysis

Let’s start with a real life example…
A social enterprise offers trainings to become an assistant cook for people with a distance to the the labor market. For years they employed aqualified cook who developed this training and provides it to ever new groups. Through its existing network, interested people from the target are reached, so that the program can be provided with the necessary influx (trainees). The value for the target group is that through the training their access to employment is greatly enhanced. In the past, funding was provided by subscribing to government calls. The latter gives these subsidies because the social enterprise, as a subcontractor, performs one of its tasks, namely the labor market integration of all citizens. The relationships between the parties involved, and the mutual value creation, are represented in the grey color on the drawing below.

In order to diversify financially, the social enterprise is investigating whether other income in addition to government subsidies could be generated. There is no shortage of ideas and two feasible options are selected (in orange on the drawing alongside).

1. Soup and sandwiches can be offered to the companies on the industrial area where the company is located. This is a simple model: the supply of a product at market price.

2. The organization can mediate the employment of trained trainees with employers, for which she may charge a fee.

To do this exercise for your own organization, take a large sheet of paper and some markers, and follow the instructions below.

STEP 1: Define which parties are involved in your business idea:

  1. Customers
  2. Target groups
  3. Core suppliers

STEP 2: Determine what value the new business idea delivers to all of these parties:

  1. Express this by an arrow
  2. Write the nature (and possibly the magnitude) of the value next to the arrow

STEP 3: Determine what value the new business idea receives from all of these parties:

  1. Express this by an arrow
  2. Write the nature (and possibly the magnitude) of the value next to the arrow

STEP 4: Check whether mutual value is being delivered (sustainable relationships require an equal mutual exchange of value)

2. Value Proposition Canvas

The Value Proposition Canvas lets you think about what exactly the user of your product or service needs, and how you can respond to it.

To do this exercise for your own organization, take a large sheet of paper and some markers, and follow the instructions below.

If you want to do the exercise for your own offer, you can click on the figure below. LINK MISSING