Two Things You Need to Know about Creating Value
March 13, 2012 in Critical Success Factors, Customer Behavior, Demand Generation, Differentiation
By one estimate, three out of ten products fail because of poor value proposition. In other words, 30 percent of products don’t provide consumers with enough value.
Three out of ten might not sound like much, but for the product developers behind those products, it is a crushing defeat. Understanding what “value” means to their target consumers might have saved their products.
Customers measure value based largely on two things: price and benefit.
PRICE is the amount a consumer is asked to spend on a company’s product. A product must live up to its price. To claim value at any price point, a company must make a customer find enough worth in its product.
BENEFIT is the “worth” that the consumer must associate with your product. Your customer must be able to justify paying a product’s asking price, and this justification is determined by the product’s perceived usefulness and benefit.
To create VALUE for your target customers, you must strike a balance between the price of your products and the benefits they will provide. Find this balance and avoid a product failure!
