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In the field of marketing, a customer value proposition consists of the sum total of benefits a customer is promised to 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:
- relative performance: what the customer gets from the vendor relative to a competitor's offering;
- 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.
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.
Other information
The company’s value-proposition has always been to increase its market share and grow revenue by:
- Providing superior customer service
- Product differentiation
- Operational efficiency
A value-proposition should contain at least five elements:
- Where I am now (including problems, causes and effects)
- Where I want to be
- When I will get there
- How much it will cost
- The benefits of my getting and being there
