Gendernomics: Value Propositions

When I came up with the idea for this essay, I was actually surprised that I hadn’t written it before because the idea of a value proposition is so central to Gendernomics. Investopedia defines a value proposition in the following manner:

“A value proposition refers to the value a company promises to deliver to customers should they choose to buy their product. A value proposition is also a declaration of intent or a statement that introduces a company’s brand to consumers by telling them what the company stands for, how it operates, and why it deserves their business.

A value proposition can be presented as a business or marketing statement that a company uses to summarize why a consumer should buy a product or use a service. This statement, if worded compellingly, convinces a potential consumer that one particular product or service the company offers will add more value or better solve a problem for them than other similar offerings will.” [1] 

When we interact with other people, or move about our daily lives, we are constantly being inundated by various value offerings and propositions from companies and other people, some of these are on point, some of these are exaggerated, but the shared characteristic of all of them is that an exchange is being proposed. You give them something, and they’ll give you something in return. What determines if you engage in a trade is whether you consider the price being asked is smaller than the value being delivered.

To clarify the former statement, if I have $5 and you have a sandwich that you want to sell to me, in order for the transaction to take place, I will have to value the sandwich as being worth $5 or more, and you have to value the $5 as being of equal value or higher value than your sandwich. If both of us make the judgment that we prefer what we already have, then no trade can take place. This is Ludwig Von Mises subjective value theory in practice. When someone buys a $487 course, then they value that course at $487 or higher, and they expect to be able to get more value out of it than they paid.

The accuracy of their judgment being the determinant of the outcome. If you consider paying a personal trainer $200 in hour, you expect to get results that deliver equal or higher value in order to justify your investment. It’s basic what is the cost of investment and what is the return on the investment? Continue reading

Gendernomics: On Value Part 2

This essay is part 2 of a 5 part series. You can find part 1 here

Contextual Value

In various forms of business, one will often experience conflicting valuations in some form or another. In finance, it’s quite clear from the outline in an upcoming section of this post that there can be many different valuations for a company. Likewise, within marketing one can have differing valuations for a new product or a market depending on the underlying premises one utilizes when conducting an analysis. A fairly common method to establish the potential market size for a brick-and-mortar business is to determine how many people live in the area where the business will operate, then how many of those are potential customers and how frequently they will need the services offered by the company. In this simple mathematical problem, the definitions of “operating area”, “potential customers” and “frequency of service”, will greatly affect the valuation of the project.

The idea of  contextual value is that things outside of an item influence the value placed upon that item by rational actors. The most simple example is how an item for which there is high demand tends to be viewed as more valuable than an item for which there is little if any demand. Some prefer to look at demand as an indicator of value, meaning that high value products will also have a correspondingly high demand, however this is a conflation of a products’ capability for satisfying a need, with the product’s popularity. While one can easily argue that there are correlations between product quality and product popularity, the correlation between the variables are varied.

It is entirely possible to have a low quality product, for which there is high demand, or a high quality product for which there is low demand. Within the dating sphere this often takes the form of “social proof”, which as a variable influences the value of the product either up or down. However, social proof is transitory, as it is composed of variables that communicate and signal high value within a social group. Thus, many of the factors that lead to high social proof, are in and of themselves a part of the product, they are in fact the joint subjective perceptions of the product communicated externally. Continue reading