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Meaning of Customer Value Propositions

Over the last couple of years, the customer value proposition has been a commonly used term in business markets, although no evidence exists on what constitutes persuasion. A supplier needs to demonstrate and document a superior value offering for a customer manager to consider. The customer value proposition can be viewed as a spin developed by an organization’s marketing departments to enhance promotional copy as well as advertisement. Therefore, companies should show knowledge about their customers for easier and effective decision-making regarding the allocation of company resources (Kumar&Reinartz, 2016). This would ensure that the developed value propositions are helpful to the targeted customers and superior value is created through the suppliers’ efforts.

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According to Kotler & Keller (2016), the business market constitutes three types of value propositions; resonating factors, all benefits, and favorable points of difference. In all benefits value proposition, managers acquaint themselves with all the benefits that the target customers will get from their offer. The construction of this proposition, therefore, requires minimal effort because it needs little knowledge about competitors as well as customers. However, this proposition is associated with a major drawback of benefit assertion. This implies that sometimes, managers may look at features that would not benefit the target customers. Additionally, in the value propositions, managers should identify points of difference and parity. This will ensure that the points of parity do not dilute genuine points of difference.

Favorable points of difference value proposition acknowledges the availability of alternatives to customers. Managers should not only convince a customer to accept an offer but also demonstrate why the customer should not consider alternative offers from other suppliers (Sheth 2019). Therefore, suppliers should create a clear distinction between their offer and the best alternative. This process requires that suppliers seek extensive knowledge about the alternative. However, this knowledge does not guarantee that customers would get the value arising from the difference since a product could be having multiple points of difference. This scenario would complicate the supplier’s knowledge regarding the offer, resulting in a greater value. Sometimes, a supplier may lack extensive knowledge on the preferences and requirements of a customer and why fulfilling them is critical. In such a case, points of difference delivering little value to customers are stressed by the supplier leading to value presumption, a pitfall associated with this value proposition (Patala et al., 2016). Therefore, favorable points of difference should not be assumed to have value to targeted customers.

Although the value of proposition of the favorable points of difference is preferred to that of all benefits, the gold standard should be the value of proposition of resonating focus. The resonating focus proposition considers that managers are always pressed for time. It also acknowledges that purchase decision-makers have a big responsibility which is ever increasing. Such managers want to develop a value proposition for the customer, simple but captivating. Further, they are in an environment where suppliers they would like to engage have a grasp of all critical issues related to the business. Suppliers can provide a compelling value proposition to customers by making special offers, especially on target customers’ critical matters. Suppliers can also achieve this proposition through demonstration and documentation of such a superior performance and communicating it in a manner that fits the business priorities of the customers. Therefore, targeted customers need to identify the cost savings and any other added value derived from choosing a supplier’s offer rather than that of the alternative.

By acknowledging that more is not necessarily better, the resonating focus proposition differs from that of points of difference. The resonating focus approach emphasizes a few points of difference capable of delivering greater value to customers and which, if improved, will continue to generate this value (Payne et al 2017). Suppliers seeking to adopt the best practices should know that constructing a resonating focus proposition is not one-time. Therefore, they educate their customers on the next possible value propositions. In addition, the resonating focus approach may consist of a point of parity. This arises when target customers’ consideration for the supplier’s offer requires a point of parity. It may also arise when a supplier decides to counter mistaken perceptions of the customer regarding a point of difference of a given element favoring competitors’ offers. This is often experienced whenever the customer believes in the superiority of the competitor’s offer while the supplier believes that the offers can be compared (Hudson 2017). Despite being difficult to craft, the effectiveness of resonating focus propositions is unquestionable, and therefore, suppliers need to research customer value to construct these propositions.

Properly created customer value propositions contribute to the strategy and performance. Irrespective of all talks regarding customer value, few suppliers have taken the necessary extra step to research this area. This research requires not only time but also effort, persistence, and high creativity. Therefore, suppliers must acquaint themselves with as much knowledge about customer satisfaction to develop customer value propositions that would meet the requirements of the target customers.

References

Hudson, D. (2017). Value propositions for the internet of things: Guidance for entrepreneurs selling to enterprises. Technology Innovation Management Review, 7(11).

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Kotler, P., & Keller, K. (2016). Marketing management (15th ed.). Upper Saddle River, NJ: Prentice Hall.

Kumar, V., & Reinartz, W. (2016). Creating enduring customer value. Journal of Marketing, 80(6), 36-68.

Patala, S., Jalkala, A., Keränen, J., Väisänen, S., Tuominen, V., &Soukka, R. (2016). Sustainable value propositions: Framework and implications for technology suppliers. Industrial Marketing Management, 59, 144-156.

Payne, A., Frow, P., & Eggert, A. (2017). The customer value proposition: evolution, development, and application in marketing. Journal of the Academy of Marketing Science, 45(4), 467-489.

Sheth, J. N. (2019). Customer value propositions: Value co-creation. Industrial Marketing Management, 87, 312-315.

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