What Is a Value Proposition?

Written by Coursera Staff • Updated on

A value proposition is how a business uniquely serves its customers and how it differentiates itself from competitors in the market. Learn more about how value propositions help companies and the key elements of effective value propositions.

[Featured image] A UX designer is reading a value proposition on their phone.

Key takeaways

A value proposition describes what the company, product, or service does.

  • Value propositions highlight what makes a company’s offering superior to its competitors.

  • Identification of the target audience, differentiation, and relevance to customers make up the key elements of a value proposition.

  • You can utilize UX design principles to create impactful value propositions. 

Discover what a value proposition is, its main components, and how UX design aids in creating effective value propositions. Afterward, if you’re ready to build essential UX skills, enroll in the Google UX Design Professional Certificate to learn how to apply foundational UX principles, including user-centered design, accessibility, and equity-focused design. 

What is a value proposition?

A value proposition serves as both a mission statement and a marketing tool; it describes what the company, product, or service does. Before starting your business, it’s important to create an effective value proposition to differentiate yourself from others. It also illustrates what makes the company’s offering superior to its competitors. 

What is the purpose of a value proposition?

Having a unique value proposition creates company value for its customers. For example, until wireless headphones came along, customers didn’t realize they wanted headphones. It helps a company of any size attract investors, new customers, or clients. It can also help keep customers and boost brand loyalty. 

What is a customer value proposition framework?

A customer value framework is a structured process that can help you pinpoint your value proposition by considering the relevant factors and elements that influence how valuable your customers see your product. While you can find many different suggestions for which framework to follow, three key elements of a value proposition are understanding who your customer is, how you’re different from your competitors, and how relevant and important your product is to customers. A customer value proposition framework gives you a methodological approach to determining your value proposition and offers solutions for integrated frameworks, such as Agile, that can help you manage feedback and continuous improvement. 

What are the 3 elements of a value proposition? 

Compelling value propositions often share key elements. A company starts by identifying and addressing its target audience. Then, it communicates how the brand, product, or service differs from competitors and how it relates to the target audience. 

1. Identification of target audience

To make sure its message is getting to the right customer, a company needs to identify its target audience. To pinpoint the target audience, it helps to analyze the following demographics:

  • Age

  • Gender

  • Race

  • Geographical location

  • Education level

  • Income

  • Marital status

  • Family size 

2. Differentiation

Communicating how a brand, product, or service differs from competitors helps customers and investors understand value. Ways that companies can differentiate themselves include:

  • Offering unique products or services 

  • Providing a superior customer experience

  • Saving customers time

  • Using quality materials in product construction

  • Providing product guarantees or exceptional warranties

  • Presenting an appealing visual identity (website, logo, etc.)

3. Relevance to customers 

Customers want to know how a brand, product, or service relates specifically to them. Companies can reassure customers by creating a website that excites—or inspires loyalty from—a particular audience. It’s also important to share how a product or service addresses a customer’s problems or pain points. 

How UX design helps in creating value propositions

When design focuses on user experience (UX), it helps meet the needs and address customers’ pain points. Key processes involved in UX design include:

  • Design thinking: A process that involves identifying a customer problem, having empathy for the customer, coming up with a solution, developing and testing prototypes, and creating a final product

  • Data analysis: A process in which companies analyze customer behaviors and other data to make better decisions

  • Design iteration: The testing and improvement process that leads to a final product or service 

Read more: How to Use Design Thinking

Related terms

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