Operations strategy: Value proposition and competitive advantage

The value proposition is the heart of a business model . It encompasses a whole series of benefits that the company brings to the customer and that the customer recognizes as different and unique to the brand with respect to its competitors.

The value proposition of a company represents the promise that the company makes to its client in exchange for it to acquire your product or service . That is why an adequate segmentation of the target audience in order to achieve an attractive value proposition is essential, as well as an in-depth knowledge of the competition’s offer.

What is the value proposition?

The value proposition can acquire very different nuances, although its importance lies, in any case, in that it derives the competitive advantage . It is an advantage that the company enjoys exclusively with respect to its competitors and that gives it a unique and superior position in the market .

According to Michael Porter, a professor at the Harvard Business School and an authority on issues of business strategy, it is said that a company has a competitive advantage when it obtains a return higher than the average profitability of the sector to which it belongs.

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The competitive advantage must materialize in an offer clearly appreciated by the client and differentiated from its competition. It is summarized as “being better than my competitors at some point and that this aspect represents a preference on the part of a certain type of client.”

How do you write a value proposal?

The value proposal is written thinking of the client or user, in those problems that can be solved. It is a text aimed at differentiating the company and does not need to be too extensive, although accurate, without becoming a slogan.

You have to measure the words, so that the message is full of meaning and not a set of empty phrases. The objective should be to reflect the mission of the business, capture the attention of the reader and make an impact.

As the value proposal is a statement of the benefits that the company can provide, in addition to a title and subtitle, it is possible to incorporate a small list of those advantages that it promises, although without being too exhaustive since the first sentence, which heads the proposal is always the one that most influences the reader.

Characteristics and benefits of a successful competitive advantage

The effectiveness of a competitive advantage is measured based on many factors, but basically depends on the following qualities of differentiation:

  1. Be unique and enjoy strong barriers to be imitated.
  2. Be sustainable over time.
  3. Being clearly superior.
  4. Be applicable and flexible to adapt to market variations.
  5. Be closely related to the core business of the company.

A key function of the operations strategy is precisely to take advantage of its ability to create or contribute to the competitive advantage of the company . The strategic orientations can be of various kinds and run in different ways, but always in order to provide a benefit to the client:

  • Minimized production costs.
  • Very superior quality of the product or service.
  • Flexibility and personalization of the product or service.
  • Constant update and leadership in avant-garde products or services.
  • Speed ​​and responsiveness.

Enjoying a competitive advantage does not mean that the company stands out as the best in all aspects or that it necessarily always is. What it really means is that a certain group of customers or consumers prefer that brand because, consciously or unconsciously, they identify it as the one that best meets their needs. Competitive advantage is the different element that leads them to feel that this brand is superior, which gives them more in exchange for less and finally choose their product ahead of their competitors.

To give some clarifying examples, competitive advantages of a company are usually the possession of patents or trademarks , exclusivity contracts in distribution, brand value and good reputation, qualified professional team, monopoly protected by the government, low cost production techniques , excellent management of information and knowledge. We see that the competitive advantage can originate in different departments of the company and come from many different sources. The area of ​​operations is one of the most important as a facilitator of competitive advantages for the company. These will be the central axis of the operations strategy.

In conclusion, a well-crafted value proposition provides the reasons why a customer must buy our product , compared to the competition. The indissoluble set of value proposition, plus the way it is produced and delivered, form the basis of the company’s competitive advantage. That is why it is essential to generate “unique value propositions” for our business model.

We can affirm that the proposal of value and the competitive advantage represent two props of the strategic business direction . Although segmentation strategies have evolved into finer nuances, customer orientation remains at the foundation of modern marketing and competitive advantage continues to be its most powerful ally.

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