value proposition

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A value proposition is essentially the offer to provide value by a business to its market. The offering has a price, which the potential consumer weighs against their means to pay and the value the offering provides, and makes a decision as to whether or not to purchase.

The value proposition should be explicit - answering the question in the potential customer's mind as to why they should buy the offering. The more tangible the benefits, the more the offering is differentiated from other offerings, the more affordable the offering, the more the customer feels they gain over what they give up to obtain the offering, and the more the offering price fits within their means, the more likely they are to buy the offering.

An effective value proposition has the following elements --

  • Identification of a target customer
  • The problem solved or opportunity produced by the offering
  • The benefit the target customer is intended to receive through obtaining the offering
  • A clear identification of what the offering is
  • What differentiates this offering from others; how it compares to others and why it is unique

Tangible operational results of value propositions for businesses --

  • increased revenues
  • faster time to market
  • decreased costs
  • improved operational efficiency
  • increased market share
  • decreased employee turnover
  • improved customer retention levels

Strategic results of value propositions for businesses --

  • increased organizational learning
  • improved organizational flexibility
  • faster and less costly organization transformations
  • improved strategic thinking
  • business model innovation
  • management innovation
  • improved customer retention levels
  • strategic focus
  • distinctive competency development
  • alignment of actions and resources to the strategy
  • strategic management competency development
  • competitive advantage
  • an evolving organization