Customer value proposition

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Marketing
Key concepts

Product / Pricing / Promotion
Distribution / Service / Retail
Brand management
Marketing effectiveness
Market research
Marketing strategy
Marketing management
Market dominance
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Advertising / Branding
Direct marketing / Personal Sales
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In the field of marketing, a customer value proposition consists of the sum total of benefits which a vendor promises that a customer will receive in return for the customer's associated payment (or other value-transfer).

In simple words: value proposition = what the customer gets for what the customer pays.

Accordingly, a customer can evaluate a company's value-proposition on two broad dimensions with multiple subsets:

  1. relative performance: what the customer gets from the vendor relative to a competitor's offering;
  2. price: which consists of the payment the customer makes to acquire the product or service; plus the access cost

The vendor-company's marketing and sales efforts offer a customer value proposition; the vendor-company's delivery and customer-service processes then fulfil that value-proposition.

[edit] Value-proposition as marketing tool

A value-proposition can assist in a firm's marketing strategy, and may guide a business to target a particular market segment. For example: "Firm Any Co. can provide benefits a, b, and c because of competencies x, y, and z."

Whether for a product, service or a company as a whole, this formulation can allow a firm to see if its competencies align with the segment that it plans to target.

[edit] Theory

The company has always[citation needed] had the value-proposition of increasing its market share and growing revenue by:

  1. providing superior customer service
  2. product differentiation
  3. operational efficiency

A value-proposition should[citation needed] contain at least five elements:

  1. current situation (including problems, causes and effects)
  2. target situation
  3. when to reach the target situation
  4. cost of reaching the target situation and opportunity cost analysis
  5. the benefits of both the targeting and the achievement phases

[edit] See also

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