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A value proposition is a promise of value to be delivered and a belief from the customer that value will be experienced. A value proposition can apply to an entire organization, or parts thereof, or customer accounts, or products or services.
Creating a value proposition is a part of business strategy. Kaplan and Norton say "Strategy is based on a differentiated customer value proposition. Satisfying customers is the source of sustainable value creation."
Developing a value proposition is based on a review and analysis of the benefits, costs and value that an organization can deliver to its customers, prospective customers, and other constituent groups within and outside the organization. It is also a positioning of value, where Value = Benefits - Cost (cost includes risk).
Why cloud computing for value proposition
Calculating or finding value proposition
An extremely simple method to determine value proposition for any business.
There are 9 possible combinations of a value proposition. Here they are:
More for Less
More for Same
More for More
Less for More
Less for Same
Less for Less
Same for More
Same for Less
Same for Same
Okay…I know this sounds confusing. I will make it simple in a moment. Let’s put this in perspective…
A street vendor and a chain like Starbucks, both offer coffee to its customer. Each of these vendors have a different value proposition for the same product i.e. Coffee. A street vendor demands less price for the coffee and in turn do not offer ambiance or a great customer experience. On the other hand, Starbucks’ offer a unique experience to every visitor with a great ambiance and courteous staff along with the coffee, so they charge more for the same coffee. So what do you think each of these businesses’ value propositions are?
Here is the answer…
Starbucks value proposition is More for More – It offers not just a Coffee but a whole experience that goes along with drinking coffee
Street vendors value proposition is Less for Less – It fulfills only the basic need i.e. coffee
Likewise, think about your business and what value proposition you offer. Try to brainstorm and find out if this value is really what your customers need…if not, you might not be on the right way!
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