Value proposition
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A value proposition is an analysis and quantified review of the benefits, costs and value that an organization can deliver to customers and other constituent groups within and outside of the organization. It is also a positioning of value, where Value = Benefits - Cost (cost includes risk)[1].
The creation of the value proposition is a work of strategy[2] and the outputs of the value proposition creation process, ie. the value proposition statement and template, are not themselves communicated externally[3]. Rather, it is the messages created out of the value proposition statement that are communicated externally. These can be used in a variety of ways such as in marketing communications material or in sales proposals[4].
Value propositions can be used 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 - for the purposes of strategic alliances or joint ventures.
- Internal departments – for example where an I.T. department is creating an internal business case to present to the board for funding.
- Employees – for recruiting new people or for retaining and motivating existing employees. This is sometimes called the H.R. (Human Resources) or employee value proposition.
- Suppliers – to explain why a supplier should want to be a supplier to an organisation or customer.
References
- ↑ Barnes, Cindy; Blake, Helen; Pinder, David. Creating and Delivering Your Value Proposition: Managing Customer Experience for Profit, Kogan Page, 2009. ISBN 978-0-7494-5512-5
- ↑ Kaplan, Robert; Norton, David. Strategy Maps, HBS Press, 2004. ISBN 1-59139-134-2
- ↑ Lanning, Michael. Delivering Profitable Value, Basic Books, 1998. ISBN 0-7382-0162-6
- ↑ Anderson, James; Kumar, Nirmalya; Narus, James. Value Merchants, Harvard Business School Press, 2007. ISBN 1-4221-0335-8
