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Concept
Value proposition
Summary
In marketing, a company’s value proposition is the full mix of benefits or economic value which it promises to deliver to the current and future customers (i.e., a market segment) who will buy their products and/or services. It is part of a company's overall marketing strategy which differentiates its brand and fully positions it in the market. A value proposition can apply to an entire organization, or parts thereof, or customer accounts, or products or services.
Creating a value proposition is a part of the overall business strategy of a company. Kaplan and Norton note thatStrategy 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 its customers, prospective customers, and other constituent groups within and outside the organization. It is also a positioning of value, where Value = Benefits − Cost (cost includes economic risk).
A value proposition can be set out as a business or marketing statement (called a "positioning statement") which summarizes why a consumer should buy a product or use a service. A compellingly worded positioning statement has the potential to convince a prospective consumer that a particular product or service which the company offers will add more value or better solve a problem (i.e. the "pain-point") for them than other similar offerings will, thus turning them into a paying client. The positioning statement usually contains references to which sector the company is operating in, what products or services they are selling, who are its target clients and which points differentiate it from other brands and make its product or service a superior choice for those clients. It is usually communicated to the customers via the company's website and other advertising and marketing materials.
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