Business Value of a Product
Question: "What are some tools or models that product marketers can use to express the business value of a product?"
The primary responsibility of product marketing is to provide potential buyers in the market with the information that they need to make a buying decision. There are three approaches to doing so:
- Price Emphasis – providing information meant to focus the buyer's attention on the (often low) price of the product while de-emphasizing the product's feature set. The goal of the price emphasis method is to create a situation where the customers primarily consider the product's price as the main buying decision factor.
- Feature Emphasis – providing information meant to focus the buyer's attention on the (often expansive) feature set and functionality of the product while de-emphasizing the product's price. The goal of the feature emphasis method is to create a situation where the customers primarily consider the product's feature set as the main buying decision factor.
- Value Emphasis – providing information meant to help the buyer understand the relationship and ratio between the product's price and feature set. The goal of the value emphasis method is to create a situation where the customers primarily consider the product's value as the main buying decision factor.
Value-emphasis is the only way to create "Superior Perceived Value", a state where customers perceive the product (bought from a particular company) gives a net value more positive than its alternatives. This basically means that relative to a specific product, customers realize that they get more benefits from that particular product for every dollar that they relinquish for purchasing that product. In American colloquial terms this is known as "More Bang for the Buck" (a greater return on an investment).
Achieving Superior Perceived Value is highly desirable because it allows a company to establish market leadership while charging for its product a price that is higher than the average market price. In Blackblot's Product Manager's Toolkit® (PMTK) methodology there are three templates that constitute the value documents and whose purpose is to capture and articulate the business value of the product. These templates are the Sales Axioms, PSFB (Problem/Solution/Feature/Benefit), and USP (Unique Selling Proposition).
Each template records a different value aspect of the product and helps build a documented understanding of the product's value. This information is later used in the Blackblot Value-Marketing Model which is the core and foundation of the PMTK Market Plan (a description of the long-term goals, and messages delivered to the target market, relative to a particular product). For more information, please see the relevant models and templates in Blackblot's Product Manager's Toolkit® (PMTK). These issues are explained in length in the Blackblot "Concept of Marketing" and the Blackblot "Value-Marketing Model" chapters in the Blackblot PMTK Book.