Value, product advantage, performance: how you can use the differences for your products
Jonas Reuter
Value, product advantage and performance are often mixed up and not clearly differentiated from one another. However, it is particularly important to make this distinction in strategy development, pricing and marketing. Because only those who know exactly what constitutes the value of their product can optimize pricing and align marketing accordingly. However, differentiating between value, product advantage and performance is no easy task and requires a certain amount of practice. Even those who are already trained may find it difficult to formulate these factors in a concise and understandable way. It is therefore very important to get to grips with this topic in order to maximize the return on investment.
Performance describes what a product can do and how it works
The performance of a product describes what it can do and how it works. It is about the specific features and the fulfillment of the customer's needs. The performance of a product should always be tailored to the customer's requirements and expectations.
The performance of a product is often measured on the basis of technical data such as size, weight, speed, capacity or storage space. However, it is not just about the purely technical features, but also about meeting the customer's needs. A good example of this is a smartphone. The technical features such as processor, storage space or camera are important, but the performance of the smartphone also depends on whether it meets the user's needs, such as the ability to check emails or use social media apps on the go.
To optimize performance, it is important to understand the customer's needs and tailor the product accordingly. Customer needs can change over time and it is important to continuously adapt the performance to ensure it meets current requirements.
The product benefits describe the specific features
Product benefits describe the specific features that a product has over other products. The aim here is to differentiate the product from the competition and create a competitive advantage. Product advantages can be, for example, better quality, higher performance or a unique design.
Other examples may include
- Longer service life: a product that lasts longer than comparable ones offers the customer a clear advantage, as they will need to purchase a replacement or have it repaired less often.
- Environmental friendliness: Products that are manufactured in a more environmentally friendly way or have a smaller ecological footprint can appeal to customers who value sustainability.
- Personalization: Products that can be adapted to the customer's individual needs and wishes offer significant added value and can stand out from standardized products.
- Customer support: Good customer support that responds quickly and reliably to inquiries and solves problems can give customers the feeling that they are in good hands and strengthens customer loyalty.
These product benefits can be weighted differently depending on the industry and product category and should be examined for their relevance to the customer as part of the value analysis.
The value describes the customer benefit
The value of a product is determined by the benefit that the customer derives from it. It is therefore about satisfying the customer and offering them added value that they are willing to pay for. The value can vary greatly and depends on various factors such as quality, brand image or exclusivity. To determine the value, the customer's needs, wishes and expectations must be understood. It can also change over time, depending on developments in the market or changes in customer needs. The benefit can be both monetary and non-monetary. For example, a car can provide both monetary benefits, such as the ability to drive to work, and non-monetary benefits, such as an increase in prestige.
It is important to note that the value of a product or service can be different for each customer. What is of great value to one customer may not be important to another. Therefore, it is important to consider the target audience when determining and pricing. By identifying the needs and desires of the target group, it can be ensured that the offer is tailored to the needs of the potential customers and thus a higher value can be offered.
Practical examples - can you do it too?
In the following, we would like to use a table to provide an overview of some examples of value formulation so that you can test the difference in concrete terms. In the last few lines, we have only added the benefits so that you can try it out for yourself. You are welcome to send us your answer via LinkedIn and I will give you feedback.
| Product/Service | Performance | Product advantage | Value |
|---|---|---|---|
| Smartphone | Make calls, send messages, surf the Internet | Long battery life, high speed | Communication, security, access to information |
| Gym membership | Access to a wide range of fitness facilities and offers | Extensive range of classes and exercise equipment | Improvement of physical fitness, good looks, higher performance |
| Car insurance | Cover for costs in the event of an accident or damage to the car | High level of protection in the event of accidents, Europe-wide cover, round-the-clock availability | Risk minimization, cost security, peace of mind |
| Cloud storage service | Saving and sharing data in the cloud | High data security and automatic data backup | Access to data from anywhere, peace of mind |
| Online language course | Access to learning materials and interactive exercises, support from a teacher | Flexible learning times and locations | Learning a new language, better communication, better career opportunities |
| Designer furniture | Offering furniture that is both functional and decorative | Exclusive design and high-quality workmanship, long service life | Prestige, status symbol, pleasant room appearance |
| Luxury travel | Offering trips with a higher level of comfort and more amenities compared to normal trips | Higher standards in terms of accommodation, catering and service | Rest and relaxation, satisfaction of high expectations |
| Ice cream machine | |||
| eBike | |||
| Game console | |||
| Luxury watch |
Landing pages that work: Convincing product communication for market success
Design customer-centric landing pages to communicate your product benefits convincingly. Accelerate and optimize your content creation with the help of AI. Clearly differentiate your products and services from competitors through targeted value communication.
Marketing managers, product owners and sales managers
Knowledge of product portfolio, customers and online editing
Two intensive days (9:00 to 17:00) plus arrival the evening before (from 15:00)
Value-based pricing can increase sales
Value, product advantage and performance are important factors in the implementation of value-based pricing. Value-based pricing (VBP) is a concept that helps companies to increase the value of their product for the customer and at the same time optimize their business model. The aim is to determine the price not on the basis of costs, but on the basis of the benefit that the customer derives from it. The aim is to set the price in such a way that the customer is prepared to pay more for it than for the pure service and the company makes a reasonable profit as a result. It is therefore about satisfying the customer and offering them added value that they are willing to pay for.
An important element in determining value and price is to analyze the competition. It is important to know what the competition is offering and at what prices to ensure that your own offering is competitive. By analyzing the competition, you can also identify your own product advantage, which can then be taken into account when setting the price.
From value-based pricing to a customer-centric strategy
Value-based pricing is not just an approach to pricing, it is a strategy that forces the entire organization to adopt a customer-centric mindset. Companies that apply value-based pricing need to understand the value of their products or services from the customer's perspective and thus gain a deeper knowledge of their customer needs. This means that the company must get to know its customers better and understand their needs, desires and pain points in order to develop products or services that truly represent value for the customer.
A customer-centric strategy has many benefits for a company. On the one hand, it helps to increase sales and market share by using customer feedback to improve products or services and thus increase value for the customer. On the other hand, it can also help to make the company more resilient to market changes. If a company knows the needs of its customers, it can react more quickly to changes in the market and make appropriate adjustments.
A customer-centric strategy can also help to increase customer loyalty. When a company focuses on the needs of its customers and develops products or services that are tailored to these needs, customers feel understood and valued. They are therefore more likely to remain loyal to the company and provide positive reviews or recommendations.
In addition, a customer-centric strategy can also help to improve employee satisfaction. When a company encourages its employees to focus on and fulfill the needs of customers, employees can take pride in being part of a company that truly creates value for customers. This can lead to a better working environment and higher employee motivation.
Overall, value-based pricing forces companies to put their customers at the center of their strategy, which can help make the company more resilient to market changes, increase customer loyalty and improve employee satisfaction. However, this approach is only successful if entrepreneurs and employees are able to clearly differentiate and communicate value, product benefits and performance.
10 impulses to increase the value of your services
You have seen the impulse questions at the end of this article and perhaps you have already started to formulate your own answers. But what if you had the opportunity to discuss these answers with experts and delve deeper into the subject matter?
We invite you to take part in a free 30-minute sparring call. In this call, we will go through the value, product benefits and performance of your products or services together. We will help you structure your thoughts and make clear distinctions that can help you shape and communicate your offering more effectively.
Landing pages that work: Convincing product communication for market success
Design customer-centric landing pages to communicate your product benefits convincingly. Accelerate and optimize your content creation with the help of AI. Clearly differentiate your products and services from competitors through targeted value communication.
Marketing managers, product owners and sales managers
Knowledge of product portfolio, customers and online editing
Two intensive days (9:00 to 17:00) plus arrival the evening before (from 15:00)
We ask the right questions
Our workshop card set includes a selection of around 50 cards with impulse questions on the topics of sustainability, digitalization, values and customer centricity, which you can use to work on new business models. You can find more impulse questions in our digitalization tool MORGEN People.
We facilitate the exchange of know-how and expertise between managing directors in a protected space and help with the right impulses to transform companies sustainably - and make them ready for the future MORGEN for the future.
Jonas Reuter
More articles on the topic of values
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MORGEN is a specialized management consultancy that focuses on the development of new business models for medium-sized companies. In particular, it supports owner-managed companies in their future-proof transformation. Knowledge transfer is at the heart of its consulting activities, which is why the MORGEN Blog regularly publishes articles on key topics such as digitalization, transformation, customer centricity and sustainability.