An explanation on Value Proposition, Market Size, and Market Traction

In regards to a value proposition, A value proposition is the central element of a business model, and is critical for this purpose. However, how entrepreneurial ventures modify their value propositions to increase the attractiveness of their comparatively inferior offerings is not well understood (Antonio, J.L. et al., 2024). In other words, A value proposition is a statement that describes why should a consumer purchase your product or service. It is an explanation about the unique benefits being offered. Having a strong value proposition is essential in order to be able to clearly identify the target customer and how the offering solves a customers pain points. Passion for ones work allows entrepreneurs to engage in the development and implementation of new value propositions, including customer relationships. Hence, innovativeness has a positive impact on offerings and markets within new value propositions (Turulja, L. et al., 2025). To have an effective value proposition it should include; Target audience, and Specific benefit.

Additionally, a value proposition should describe who benefits the most from the business offerings and then tailor the message to that specific group. Some effective propositions usually compare against alternatives. For example, cheapest price, highest quality, or a unique feature or technology.

A good start would be to begin by researching potential customers and then conducing interviews, or running surveys. The next step can then be to identify the specific problem your product or service will solve. Once the value proposition has been finalized, it will become essential to communicate it consistently in marketing, on the business website, and in investor pitches. A well-crafted proposition not only guides product development but also makes it easy for customers and investors to see why your business matters.

Market Size

Estimating market size may help in estimating the total opportunity and set realistic goals. Three frameworks usually include Total Addressable Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM). Some businesses always spend money to increase their market awareness, and then they can grab market size on their new businesses. Analogously, the market awareness decision and market size could affect the competition of potential entrant platforms and incumbent platforms (Li, J. et al., 2023). TAM is the overall revenue opportunity if you could sell to every customer in the defined market. In other words, TAM is the total demand for a product or service. As for SAM, it is the portion of the market the business actually has the opportunity to capture based on sales/marketing capabilities and competition. On the other hand, SOM would be the market share you expect to initially obtain. In summary, TAM indicates the full growth potential of the market; SAM shows which customer segments you should target first; and SOM helps set achievable sales/revenue targets. Investors and executives can use this data to judge if a market is big enough to support the business and to make decisions about resource allocation. The location a company chooses to operate in has an affect in the market size that is immediately available. Hence, companies should choose the location that maximizes profit. By choosing a location where both market share and price demand meet the market, the total fixed cost of entering a specific market can be in equilibrium with the market size (Kim, D., 2023). In practice, market sizing can be done by top-down or bottom-up approaches. Top-down means starting with published industry or market data and then applying filters to narrow it down to your niche. Bottom-up means building estimates from the ground up. In reality, companies often use a mix: top-down for a sanity check and bottom-up for more precise targeting.

Several data sources and tools can support these estimates today. For example, government and public data provide broad market figures: the U.S. Census Bureau and Bureau of Labor Statistics are free sources of market data. Industry analysts such as Gartner, and Forrester publish market research reports with total market values and growth projections.Lead-generation platforms like ZoomInfo compile millions of companies, useful for B2B TAM estimates. Analysts may also purchase or license reports tailored to specific sectors. Finally, the key is to use multiple sources such as public stats, industry reports, company databases, and even surveys to assemble enough reliable data for TAM, SAM, and SOM.

Market Traction

Market traction refers to evidence that your product or service is gaining real-world adoption. Hence, traction signals that customers care about what you offer. A common definition is that traction measures a startup’s progress in customer acquisition and revenue generation. Traction can be viewed as a confirming validation that a startup has potential, since it proves there is actual demand for the product or service. Hence, gaining traction shows the businesses value proposition is seen as compelling to its customers and that there is an effective business model in place. While emerging market international new ventures (INVs) in high-technology sectors are gaining traction as entrepreneurial actors, It is still essential to employ effective marketing campaigns to raise brand awareness and product offerings in new markets in order to gain market traction. Hence, businesses need to take calculated risks towards uncovering new product-market opportunities, identify new ways to create value for customers, and forge customer relationships for developing offerings in niche markets (Buccieri, D. et al., 2022). Early indicators of traction include measurable user/customer and revenue metrics. Key signals can be; initial users, early revenue, user growth, and repeat usage. Having Initial users shows willingness to try the product and reflects that customers are interested in the product or service. Additionally, any sales made can reflect that people are willing to pay, and having recurring paying customers, such as subscriptions, can be a strong indicator of future growth since it a subscription model allows for predictable growth. Furthermore, a steadily rising user base can confirm that demand is real. Finally, a high customer retention rate means users derive ongoing value, and having repeat customers can hint that the business actually has a product–market fit.

To build traction, startups can use several strategies. Practically, this means focusing on meaningful progress in priority areas, and then concentrate on improving metrics. In creating rapid market traction, iteration is important. This would be where launching a minimum viable product, collecting user feedback, and improving the offerings is important because poor execution can kill momentum early on. Additionally, getting strategic partnerships can accelerate traction by collaborating with established brands in order to access larger audiences. Founders can then use traction metrics to tell a coherent story: for instance, “X users joined in our pilot, Y% became paying customers, and we’ve retained Z% of them over 3 months,” and relate that back to market potential. As one expert advises, turning projections into “measurable reality” via data-driven traction is far more convincing to investors than promises alone.

References:

Antonio, J.L., Schmidt, A.L., Kanbach, D.K. and Meyer, N. (2024), "Enacting disruption: how entrepreneurial ventures innovate value propositions to increase the attractiveness of their technologies", International Journal of Entrepreneurial Behavior & Research, Vol. 30 No. 4, pp. 885-915. https://doi.org/10.1108/IJEBR-07-2023-0688

Turulja, L., Smajlović, S., & Šimičević, V. (2025). Business Model Innovation: Impact of Entrepreneurial Competencies to New Value Proposition. Business Systems Research, 16(1), 40-59. https://doi.org/10.2478/bsrj-2025-0003 

Li, J., & Zhang, Y. (2021). More market awareness, more profit? Competitive environments, business expansions, and two‐sided markets. Managerial and Decision Economics : MDE., 42(2), 249–267. https://doi.org/10.1002/mde.3231 

Kim, D. (2023). Market size, competition, and entrepreneurs’ location choices. Economics Letters., 229. https://doi.org/10.1016/j.econlet.2023.111203 

Buccieri, D., Javalgi, R. G., Gross, A., & Javalgi, R. G. (2022). Examining the formation of entrepreneurial resources in emerging market international new ventures. Industrial Marketing Management the International Journal for Industrial and High-Tech Firms, 103, 1–12. https://doi.org/10.1016/j.indmarman.2022.02.011