from Wikipedia 6/13 enhanced by Peter/CXO Wiz4biz
VP/CVP Defined: a Promise of “value” to be delivered, plus a belief from the Customer that “value” will be experienced. Satisfying customers is the source of sustainable “value creation” and will lead to a long life of the organization. A Value Proposition is a clear, concise & compelling articulation of “How the factors that are important to the customer are satisfied by the company”. A deep knowledge of the potential / current customer base is invaluable in coming up with a strong VP. Firms can develop a strong VP by identifying customer needs through formal & in-formal Market Research & Analysis. A strong VP reflects the tangible & in-tangible results that customers can reasonably expect from using the organization’s products or services. Strong VPs are also expressed from the customer’s perspective and discuss the experiences & benefits that the customer will have when using the product.
Developing a Value Proposition is based on a Review & Analysis of the Benefits, Costs & Values that an Organization can deliver to its customers, prospective customers, and other constituant groups within & outside the organization. It is also a positioning of value, where Value = Benefits – Cost (cost can include Economic Risk)
Use of VP: Organizations usually do not directly communicate their Value Proposition & creation process (ie, the VP statement & template) to external audiences. Value Proposition statements are normally internal documents, used by organizations as a Blueprint to ensure that all the messages the organization communicates, inside & outside, are consistent. Some of the ways that organizations use Value Propositions include in Marketing Communications material or in presentations to Funders.
Who to use VP for? Organizations can use Value Propositions to position “value” to a range of Constituents such as:
· Customers: to explain “why” a customer should buy/use you as a organization over organizations
· Business Partner: to persuade them to forge a strategic alliance or joint venture with you.
· Internal Functions: to influence the outcome of business decisions. For example, any department may use a VP to convince its Manager or Board to support funding its projects.
· Employees: to “sell” the company when recuiting new people, or for retaining & motivating existing employees. HR should create their own HR\VP about the organization to be used for recruiting, motivating & retention.
· Suppliers: to explain “why” a supplier should want to be a supplier to your organization.
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