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Home arrow Marketing arrow Value-ology: Aligning sales and marketing to shape and deliver profitable customer value propositions
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What Is a Value Proposition?

We have seen in our example that, like value, the meaning of the term ‘value proposition’ can be ambiguous and influenced by previous experience. So, after you’ve got a clear definition of value for your organisation we suggest that the next step is to agree what a value proposition is. By the end of this section you will have our view on this. We have also included some definitions from other authors, as they may help you develop your own definition.

It's About Customer Benefits

The term value proposition is about how value is framed and communicated to the customer prior to purchase. Barnes et al. (2009) describe the evolution of the term value proposition as rooted in the 1950s with the notion of the unique selling proposition (USP). This led to the movement of benefit-led selling, where sales teams were coached to move from product features through to describing customer benefits. Only then did it dawn on organisations that a benefit can only be such if it solves a customer problem, a solution to a need. This is when the term value proposition was conceived.

The origination of the term is credited to McKinsey consultants Bower and Garda (1985), who discussed the making of promises of satisfaction. Lanning and Michaels (1988) built on this, developing consultancy tools that focused on the creation of value propositions. Here a value proposition was defined as a statement of benefits being offered to a customer group at a price they were willing to pay. So, a value proposition is traditionally taken to mean the marketing offer of value promise formulated and communicated by the seller, with the intention for it to be accepted by a buyer. If you are embarking on a customer value-led path then you take the view that customers do not buy ‘things’; they buy the experiences that the ‘things’ are able to deliver.

 
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