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Importance of Customer Value and Value Proposition

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The customer is the king of the market having high expectations and little loyalty towards the company if it does not meet the expectations. Customer value is the satisfaction or experience provided by the company in the form of goods and services by taking a given action relative to the cost incurred on the action. The cost incurred on the activity is desirable to forfeit benefits such as money, data, time and knowledge. Companies design marketing strategies to create, communicate and deliver the value to customers. All the supply chain of the company starting from resource collection, operations, processing of raw material, sales, marketing, and customer service provides the value to the customer. It also includes supporting operations such as HR and Accounting, thus all factors affect the customer directly or indirectly. The result of the value creation can be measured from the perception of the customer related to a particular product of the company or overall company. The buying decision of a customer depends upon the perceived value of a particular product and its related substitute or complementary goods. A company can influence buying decision or behavior through different marketing techniques but cannot control it. The customer value can be calculated with a mathematical formula of perceived value:


Perceived Value: Perceived Benefits/ Cost


Value Proposition is the promise to deliver value to the customer through the marketing statement of the company. which summarize the reasons to buy a particular product and what value will be created through it. the statement of value proposition provides the answers of following questions of the customer:
• It provides the reason to buy the product and which problem of the customer will be solved through it and improve the situation of a customer.
• It provides the knowledge of specific quantified benefits of the product.
• It provides the basis of comparison between the product provided by the particular company and its competitors.

The value proposition statement must be clear and easily understandable so that a customer can get the appropriate information and generate the value to a customer. The position of the proposition statement on the official site of the company must be appropriately chosen that will catch the eyes of the customer or a viewer and the size of the font must be appropriate and in bold form. The main components of the value proposition are as follows:
• The target buyer
• The problem a product solves
• The reason why a company is different from other companies.

Importance of Value Creation and Value Proposition

The significance of value creation and value proposition is as follows:
• The value creation creates a strong differential between a particular company and its competitors.
• The value proposition attracts the right prospect and influences the target market to increase the quantity demanded and overall sales of the company.
• It helps the company to increase its market share.
• It provides a basis to evaluate the results of marketing strategies followed by the company.
• The better influence in the market and higher quantity demanded will increase the operational efficiency of the company.
• With the proper information provided to the customer about a product and its benefits will influence customers to buy a product at determined prices.
• The value creation and proposition provide a competitive advantage to the company.
• Through the evaluation of the impact of marketing strategies, a company can evaluate the potential of a market to enter it and plan other operations of the company. it will provide knowledge of a new market or market segment to the company to design a new business model and grow in different markets.

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