Value propositions

Lynette Ryals
Cranfield School of Management

Developing a strong value proposition can improve a company's bottom line and make customers understand why they should buy that product

A good value proposition is one of the most important sales tools that the marketing department can provide. The value proposition is a statement of the value that a company, product or service offering provides to a customer. The stronger the value proposition, the more value customers perceive that they get and, therefore, the more willing they are to buy.

Value is something the customer is prepared to pay for. In other words, value to the customer equals benefits minus cost. How do companies generate this value? In The Discipline of Market Leaders, Michael Treacy and Fred Wiersema suggested that companies can grab market dominance in one of three ways: operational excellence, product leadership, or customer intimacy.