Glossary » Value Proposition

Value Proposition

A value proposition is a promise to deliver and acknowledge value, in addition to the customer’s conviction that value should be given and experienced. A value proposition can be applied to a full company, or parts of it, as well as customer accounts, products, and services.

Business strategy involves developing a value proposition. “Strategy is predicated on a differentiated customer value proposition,” explain Kaplan and Norton. Customer satisfaction is the source of long-term value generation.” A review and analysis of the advantages, costs, and value that a company may offer to its customers, prospective customers, and other constituent groups within and outside the business can be used to develop a value proposition. It also has “value positioning”, where Value = Benefits-Cost (cost includes economic risk).