The unending permeation of the term “Value’ continues to ingrain itself throughout our business purposes, campaigns, and slogans.  The contemporary perspective for this traditional cost vs. benefit protagonist is called the Value Proposition.  Evolving beyond the preceding concepts of “getting a good deal” through the expectation of greater features for less cost, today’s Value Proposition has become an intricate industry fixated on the differentiating summation of a vendor’s promise to offer customers the inevitable clear choice favoring their product.

Conventionally, the Value Model brought an advantageous financial benefit to the customer.  As features increased and costs decreased the “value” of a product automatically improved.  The simplicity of the equation was guaranteed to attract customers to the logical conclusion of purchasing your product above all others.   Value equaled providing more and charging less.

Traditional Value Model

Value Propositions strive to extend beyond feature/benefit approaches and incorporate the customer’s experience, emotions, and psyche into the value equation.  These Value Propositions develop an ethereal benefit which adds a “soft” factor into the customary value equation and often results in a value decision based on the perception of a better product for a higher price.

Today's Value Proposition Model

Regardless of the “Value” level of a product, it is important for Leaders to understand that Value is a constantly declining position.  Once established, Value becomes reactive to the forces of competition, improvements, innovations, and passions.  Whether a traditional “cost vs. benefit” model has been established or a “soft benefit” component has been added to the strategy, value is diminishing with time.


The Value of a product or service can be perceived by a customer in one of four strata:

Prospective Value – Here a company is proposing the promise and aspirations of products and services of the future.  Customers are engrossed to this value package because they hunger to be “first”, on the leading edge.  Companies successful with this value offering typically have a demonstrated track-record of delivering on their predictive visions.  They are offering the “next best thing” and the prospect for their customers to “be there” when it happens.  The Prospective Level produces Partnerships between companies and customers with long reaching potential.  These customers are obtaining the “Promise of Tomorrow”.

Enhanced Value – Products and services which are provided with additional features beyond the customer’s expectations deliver Enhanced Value.  Products and services at this level exceed what has come to be customary in the traditional product offering.  Instead they offer an “extraordinary” result.  We have become familiar with the term Value Added for this value category.  Here customers are “Wow’d by Extras” they did not expect.

Anticipated Value – In this level, products and services presented have become “expected” by the customer.  The customer knows what they are buying and presumes the minimum requirements to be met.  A company delivering a product at this level must focus on Quality as its differentiation.  Customers purchasing Anticipated Value are looking for “Reliability and Consistency” of a known product.

Accustomed Value – In this bracket, a customer sees no difference of value in the product or service they need.  It is considered a commodity offering.  Attempting to imply value at an additional cost in this scenario turns your value equation upside-down resulting in a “no sale”.  Customers who are accustomed to this generic product are concerned only with the “Low Cost Provider”.

It makes no difference where your product value is targeted as long as you are focused on the appropriate customer drivers for attraction and purchasing.  Companies can be very successful at any Value Level as long as they offer the matching deliverable.

Prospective Value – Partnership

Enhanced Value – Valued Added

Anticipated Value – Quality

Accustomed Value – Low Cost


It is vital that you understand Value is constantly slipping in the eyes of customers.  Prospective Value is becoming Enhanced which in turn is falling to Anticipated.  Unique offerings are quickly followed by competitors focusing on Quality and Lower Cost Structures in an attempt to “knock off” the innovative successes of others.

The Diminishing Value Effect

As a child, I recollect the seductions of the “Car of the Future”.  Auto Companies flooded our sensations with the new features we would experience driving their automobiles (a tactic still in use today).  They built partnerships around my father’s generation with the GM and Ford.  As seat belts, power windows, and eight track stereos made their entrance on the scene, we were truly “Wow’d” and could not wait to be capable of affording these advanced options.  Soon we anticipated them focusing on which contraption was superior.  Then they became something we demanded the dealer “throw in”.  Remarkable how no one today would ever expect to see the price of power windows called out as a benefit.  Power windows went from a dream to a commodity. Sirius radio, MP3 compatibility, fuel efficiency and the like are on the same path, spiraling down the value chain.  You may not be able to see it, but it is happening right in front of your eyes.

As a Leader, you must understand the level at which your Value is being delivered. From there you must determine whether your goals should focus on innovation, adding value, improving quality, or driving out costs.  Producing any of these deliverables with a “best in class” result will establish you as a serious competitor in your field.

In an effort to lift the value of a product we have witnessed “bundling strategies”.  Here a company offers a product with diminished value attached to another one for a reduced price.  The resulting “two for one bundle” constitutes a renewed value which often extends the life of a product’s value.  Bundling is a “loss leader” strategy which can usually only be successfully implemented through excellent market research and a commanding industry position.  It is not a favorable solution for most.

The key to dominating your competitors is in ones ability to provide multiple levels of value for a product or service at the same time.  If you can innovate with quality or provide a high quality product at the lowest cost, you will gain leaps and bounds on your competition.  Leaders capable of mounting a multi-front attack on diminishing value will be the victors!


You are facing a highly competitive environment where the most innovative advances are quickly followed by others.  In my article, The People Age, I point out:

“Over the last two decades, more people than ever have gained access to the once differentiating resources of Knowledge and Technology. … Everyone has it! This decrease in differentiation has flattened the competitive arena between businesses, markets, and global influences. Every company has access to Knowledge and Technology at ever increasing speeds. And with Knowledge and Technology outpacing development, the result becomes a temporary market advantage at best. Today, a “competitive void” exists for most businesses.”

To counteract the “flattening” effect many companies are adding Core Values to their Value Proposition.  They are infusing the “economic value” of their products and services with the “ethical Core Values” of who they are and why they do what they do.  Ethical Values and Beliefs have been around business for decades as part of Strategic Plans (and usually posted in the corner of the CEO’s office).  But now companies are taking their Core Values off the wall and offering them to their customers as a value-add component.  Core Values which successfully connect to customers result in the building of a “Brand”.  Unlike a diminishing value, a Brand built on Core Values can stand the test of time.

For example, ask yourself the following question.  “Do you value relationships, or are Relationships a Value?”  The difference between the twist on words is significant.  The first phrase implies something more transitional which could be replaced tomorrow, by let’s say profits.  But the later, constitutes a foundation of permanency, which a customer will invest in for the long haul.  Examine your company’s Core Values and determine to build your Brand around them.  A strong identifiable Brand built on values allows a company to constantly re-invent itself in a world of diminishing value.  Core Values are the new Secret Weapon in building a Value Proposition.

The New Value Proposition Model

In today’s battle to attract and keep customers through the delivery of incomparable value, you must realize you are affecting a constantly changing field.  Your product’s perceived value is continually slipping in the minds of your customers, and if you are not adding to it, improving the quality of it, or driving the cost out of it, your customers will soon be procuring from someone else.  Understand that a great Value Proposition is built on strong features/benefits and buying experiences.  But if you want to be a Street Smart Leader, incorporate “who you are” into your Value Proposition and build a customer base that will stay with your Brand throughout the cycles of diminishing value.

And one additional quick thought for Street Smart’s sake. The Value you bring to the table is influenced in the same way.  Does your boss see your personal value as a partnership necessary to stay on the cutting edge or as a low cost commodity based provider?  If you want to succeed, you need to stay innovative and add value beyond his expectations!