Value Prposition

Topics: Value added, Customer value proposition, Marketing Pages: 9 (2386 words) Published: April 23, 2011
Value proposition
From Wikipedia, the free encyclopedia
Creating a value proposition is part of business strategy. Kaplan and Norton[1] say "Strategy is based on a differentiated customer value proposition. Satisfying customers is the source of sustainable value creation."

Developing a value proposition is based on a review and analysis of the benefits, costs and value that an organization can deliver to itscustomers, prospective customers, and other constituent groups within and outside the organization. It is also a positioning of value, whereValue = Benefits - Cost (cost includes risk)[2].

|Contents |
| [hide] |
|1 Models |
|2 Strategy and marketing |
|3 See also |
|4 References |
|5 External links |


One model[2], the Value Proposition Builder for creating a value proposition states six stages to the analysis:

1. Market: for which market is the value proposition being created?

2. Value experience or customer experience: what does the market value most? The effectiveness of the value proposition depends on gathering real customer, prospect or employee feedback.

3. Offering: which products or services are being offered?

4. Benefits: what are the benefits the market will derive from the product or service?

5. Alternatives and differentiation: what alternative options does the market have to the product or service?

6. Proof: what evidence is there to substantiate your value proposition?

Neil Rackham believes that a value proposition statement should consist of four main parts: capability, impact, proof, and cost[3].

Organizations do not directly communicate the outputs of the value proposition creation process (i.e., the value proposition statement and template) to external audiences;[4] value proposition statements are internal documents, used by organizations as a blueprint to ensure that all the messages they communicate, inside and outside the organization, are consistent. Some of the ways that organizations use value propositions include in marketing communications material or in sales proposals[5].

[edit]Strategy and marketing

Organizations can use value propositions to position value to a range of constituents such as:

▪ Customers: to explain why a customer should buy from a supplier (see customer value proposition). ▪ Partners: to persuade them to forge a strategic alliance or joint venture. ▪ Internal departments: to influence the outcome of business decisions. For example, an IT department may use a value proposition to convince its board to support funding its projects. ▪ Employees: to "sell" the company when recruiting new people, or for retaining and motivating existing employees. This is sometimes called the HR or employee value proposition. ▪ Suppliers: to explain why a supplier should want to be a supplier to an organization or customer. Why CVPs are important

A good customer value proposition will provide convincing reasons why a customer should buy a product, and also differentiate your product from competitors. Gaining a customers attention and approval will help in build sales faster and more profitable, as well as work to increase market share.[2] Understanding customer needs is important because it helps promote the product. A brandis the perception of a product or service that is designed to stay in the minds of targeted consumers.

[edit]Creating a strong CVP

|[pic] |This section is written like a manual or guidebook. Please help rewrite this | | |section from a neutral point of view. (June 2010) |

In order to achieve objectives, a customer value proposition needs to be clear, concise and compelling. In order to develop a strong customer value proposition,...
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