In the modern world’s ultra-competitive marketplace, a critical factor in determining the success of a company is how good of a job it does of identifying, expressing and communicating a unique value proposition to potential customers.

A company’s unique value proposition is a primary marketing tool. A value proposition is a concise statement of the value that the company offers through its goods or services. The proposition is crafted to communicate the idea that consumers can receive the highest possible value or benefit from purchasing the company’s products, greater value or benefit than they can receive from any other company’s products. A company's value proposition is often included in its mission statement.

There are essentially three elements to a good value proposition. The first involves identifying the company's main target market, the consumer group that is likely to provide the bulk of the company’s sales. A business needs to have a clear idea of who its ideal customer is and shape its value proposition to appeal to that customer. A company must identify key demographics, such as age, singles versus families or income levels and then design its value proposition to speak to that target market.

The second key element of a value proposition is the specific value the company’s products
offers. A company must clearly answer for its potential customers the question of why they should choose the company’s products over all other available choices. Some companies offer value in the form of lowest price. Others offer the value of highest quality. Time saving is another potential value. If a company markets a proprietary technology or product not available from any other source, then that is a unique value that it offers consumers.

The third element of a value proposition covers how a company meets the individual needs or desires of its customers. This element is aimed at appealing to the emotional side of the customer and establishing a relationship that hopefully engenders ongoing brand loyalty.

As an example of using a well-crafted, unique value proposition, assume a small business in the highly competitive market of film lighting equipment seeks to enter the market with a strategy that enables it to compete with much larger, well-established companies. The company identifies its target market as lighting directors working in the film and television industry who are concerned with being known for providing the best possible production lighting. The lighting company distinguishes itself from its competitors, much larger companies that carry every possible equipment brand, by carrying only one brand of equipment, the brand that research has shown as being universally considered the best. The company then goes to market with the slogan, “Do you want to be known for providing the best lighting, or the cheapest lighting?” Not only can the company be successful in gaining a large share of the market, but it can also do so while selling the higher-priced, premium equipment brand.

Having an easily communicated and recognizable value proposition is increasingly important in the modern world where people are bombarded by an overload of information from a variety of media sources and where there are numerous competitors for a company’s business. Successful firms craft their unique value propositions prior to entering the marketplace and design their business operations in accord with their value propositions.