The Importance Of The Value Proposition In Identifying The Value Offered To Customers, And The Processes Involved, Are Equally Important To Both Customers And Value Chain Partners

1454 words - 6 pages

IntroductionThis paper discusses the statement "The importance of the value proposition in identifying the value offered to customers, and the processes involved, are equally important to both customers and value chain partners". Since this statement, given by Walters (2002:198), can be interpreted in different ways, the meaning is to be determined. In this paper this statement is understood as arguing that the value proposition was equally important in identifying the value offered to customers and in identifying the processes involved to both customers and value chain partners.Webster (Walters 2002:193) describes the value proposition as being a statement which puts the strategic positioning into words and communicates it externally to potential customers as well as internally to the whole organisation. According to Walters & Lancaster (1999) and Walters (2002:8) the value proposition is the company's strategic statement about what is to be delivered to the customer and by what means. It uses aggregate capabilities, skills and resources to identify the benefits and costs to the customer and the necessary processes. Davenport & Short (1990) describe these processes as a set of tasks, related in a logical order. Walters (2002:6) specifies the generic processes of the value chain as being design and development, production, procurement, marketing and service.Since the above mentioned statement has two parts, each part will be referred to separately. First, this paper will discuss the importance of the value proposition in identifying the value offered to customers. Secondly, the importance of the value proposition in identifying the processes involved in the value chain will be discussed.Importance of the value proposition in identifying the value offered to customers.The customer of a company needs to know the value, a product or service offers to him. The expression 'value' hereby refers to the value, the customer perceives in buying the product or service. If the customer did not know the value of an offer, he would not know what exactly he gets with the purchase. Therefore the customer would not know, which amount he should pay for the product or service and he would not know what differentiates this specific product or service from the product or service offered by competitors. Furthermore the customer would not know to which member of the value chain he should go to get what he seeks.Consequently the company must clarify what value the customer gets. This is possible through the value proposition. The value proposition is a clear statement. Thus, by developing and communicating it, the company is able to differentiate itself precisely from the other providers in the value chain as well as from its competitors. Hence, it is able to meet the expectations of the customers. Walters (2002:193, 286) points out that because the value proposition identifies the costs and benefits and thus the value for the customer, it can identify how...

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