Customer Value Proposition (CVP)

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Customer Value Proposition (CVP): this article explains the Customer Value Proposition (CVP) in a practical way. Next to what it is, this article also highlights the different categories of the CVP, the combination with Customer Insight and from USP to UBR. After reading you will understand the basics of this marketing theory. Enjoy reading!

What is Customer Value Proposition (CVP)?

A Customer Value Proposition (CVP) is a promise of potential value that an organisation delivers to its customers and stimulates customer engagement.

In marketing, the term “value proposition” is elucidated from different angles. From the angle of an organization, this term focuses on creating an extra value, which is linked to the product and/or service as part of the unique selling propositions (USP).

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From the (potential) customer’s perception, the term focuses on the extra value that a product and/ or service represents, as a result of which the customer’s needs are responded to and the customer will respond by making a purchase.

A product with a good customer value proposition equals a product with good performance. The two important characteristics that consumers distinguish when it comes to products are price and quality.

A product with the right balance between the two will not go unnoticed and will lead to a successful sale, in case there is sufficient demand.

If a company offers the same level of quality for a lower price than the competition, this will give the consumer a price advantage.

A competitive advantage can be gained in even more, such as appearance, packaging and more.

Customer Value Proposition

By placing the (potential) customer / target audience at the centre of the business, added value is created. The products and/ or services do not represent this added value as such, but because they are used, Customer Value Proposition (CVP) is created.

There are different categories that a customer considers to be important and that lead to the development of the CVP:

Customer Value Proposition (CVP) - toolshero

Figure 1 – different categories of customer value proposition

1. Functional Value

The product / service focuses on convenience, has a problem-solving ability, is better, easier to use and is more comprehensive than other products / services.

2. Emotional Value

The product / service is pleasant or attractive. The customer is attached to the product / service because of nostalgic reasons, tradition or the advice of other people.

3. Economic Value

The product / service offers a financial advantage, promotes energy conservation, saves time or is innovative.

4. Symbolic value

The customer attaches value to the status that the product/ service gives. This status may be oriented towards social responsibility or may be derived from a brand.

5. End value

In the end value the above-mentioned categories are represented. What image does the product / service convey?: health, prosperity, youth, independence, etc. Moreover, customers it is very important to take customers very seriously. An excellent service, a clear explanation and an airtight guarantee are factors that will contribute to high levels of customer satisfaction. In turn, these will lead to the end values of a product / service.

Customer Value Proposition and Customer Insight

In order to create a good CVP, companies need to obtain a good customer insight from their target audience, i.e. by using tools like Customer Experience Mapping, Customer Value Proposition Canvas or setting up a Customer Journey Map. But can companies obtain information about their customers’ needs and expectations?

Market research and trend watching enable companies to quickly discover what these needs and expectations are. It is also very important to keep an open communication with customers themselves / target audience and to study their feedback seriously.

This feedback (including pain points) may be obtained from complaints made, customer panels, reviews on the Internet, case studies, Customer Experience Mapping sessions, Customer Journey Maps and social media.

Customer Value Proposition and Added Value

Added value can also create a unique CVP. This could be achieved by adding something extra to the product/ service, which is perceived by the customer as valuable.

This is how a company can distinguish itself from its competitors. An added value does not have to be complicated. The recipe cards in the fruit and vegetable section of a supermarket are an example of this.

Customer Value Proposition and communication

But how can you make your customer value proposition clear to customers. Marketing distinguishes four strategies:

1. Emphasize the benefits

All the benefits a customer receives are mentioned in which quantity plays an important role.

2. Emphasize the favourable differences

A company mentions all favourable points with which they distinguish themselves from the competition. These differences are called USPs.

3. Emphasize the critical value factors

The company mentions no more than two buying advantages with which it successful.

4. Emphasize the threshold removers

Possible purchase thresholds are removed as a result of which the customer is convinced to choose for the product/ service.

Customer Value Proposition: from USP to UBR

A Unique Bying Reason (UBR) gives a customer a reason to buy a product or service. This buying motive addresses the product benefits and the emotional benefits (Values).

This is why it is important for companies to work hard at the Unique Selling Proposition / Points (USP´s) or product characteristics in combination with the added values. By placing the customer at the centre of the business, the value proposition can increase.

A good value proposition is valuable this enables a company to distinguish itself from its competitors (competitive advantage).

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It’s Your Turn

What do you think? How important is it to write a Value Proposition in today’s modern business world? Do you recognize the practical explanation or do you have more suggestions? What are your success factors for creating a good customer value proposition? Do you include the benefits of your product in the value proposition in bullet points?

Share your experience and knowledge in the comments box below.

More information

  1. Rintamäki, T., Kuusela, H., and Mitronen, L. (2007). Identifying competitive customer value propositions in retailing. Managing Service Quality, Vol. 17, No. 6, pp. 621–634.
  2. Anderson, J. C., Narus, J. A., and Rossum, W. v. (2006). Customer Value Propositions in Business Markets. Harvard Business Review, p. 90-99.
  3. Macdivitt, T. & Wilkinson, M. (2011). Value-Based Pricing: Drive Sales and Boost Your Bottom Line by Creating, Communicating and Capturing Customer Value. McGraw-Hill Education.
  4. Slater, S. F. (1997). Developing a customer value-based theory of the firm. Journal of the Academy of Marketing Science, 162-167.

How to cite this article:
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Published on: 01/06/2012 | Last update: 11/03/2022

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Patty Mulder
Article by:

Patty Mulder

Patty Mulder is an Dutch expert on Management Skills, Personal Effectiveness and Business Communication. She is also a Content writer, Business Coach and Company Trainer and lives in the Netherlands (Europe).
Note: all her articles are written in Dutch and we translated her articles to English!


5 responses to “Customer Value Proposition (CVP)”

  1. Zubida says:

    Nice to read your article. In addition, the mistake we often do in marketing is that cut the price of products so that we can compete with others business. But price cutting is a very dangerous and unsustainable. Once we cut down our price then it will be different to increase it again. Instead of price lowering, discover the value proposition and kick start the marketing strategy with value proposition.

  2. Priyank Shah says:

    Customer Value Proposition is a wide term. It can be bifurcated further as
    1. Create something new than current industry standards.
    2. Eliminate something in current industry standards,
    3. Reduce something in your company than current industry standard
    4. Raise something than your current industry standards

    and most important SOMETHING here means anything which gives potential customer a good UBR.

  3. Sam Bauer says:

    “Nice review Patty. A good customer value proposition will provide convincing reasons why a customer should buy a product, and also differentiate your product from competitors. Gaining a customer’s attention and approval will help build sales faster and more profitably, as well as work to increase market share. A brand is the perception of a product, service or company that is designed to stay in the minds of targeted consumers. A business will typically use a customer value proposition as part of its marketing strategy to consumers.

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