Value Proposition

From Open Risk Manual


The Value Proposition is defined by the Customer and/or the end user.

Conceptually, it is the relationship between benefits and cost/damage of a product or service. It is expressed in terms of a product/service ability to meet the required needs at a given price and at a given time. It is also possible to talk of the value perceived by the customer as all the features of the product/service that the customer deems necessary and valuable. Any activity that consumes resources (including time) and does not create value is waste.

Value Propositions have both quantitative attributes, such as price, speed of service) and qualitative ones, such as design, customer experience, novelty, brand name, effectiveness, performance and customization. The value proposition is defined per customer segment as different segments will be experiencing the product or service in different ways. Almost always the price aspect is a key contributor to the value proposition. Further, the Value Proposition is typically relative versus alternative offerings. The fundamental relationship is that higher value proposition leads (other things being equal) to more sales and revenue

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