Customer Value Proposition (CVP)

Customer value proposition - ToolsHero

This article explains the Customer Value Proposition (CVP) in a practical way. After reading you will understand the basics of this powerful marketing tool.

What is value proposition?

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).

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.

Customer Value Proposition

By placing the (potential) customer 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, a Customer Value Proposition is created.

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

Customer Value Proposition - ToolsHero

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 Insight

In order to create a good customer value proposition, companies need to obtain a good customer insight.

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 and to study their feedback seriously.

This feedback may be obtained from complaints made, customer panels, reviews on the Internet and social media.

Added Value

Added value can also create a unique customer value proposition.

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.

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.

From USP to UBR

A Unique Bying Reason (UBR) gives a customer a reason to buy a product / 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.

It’s Your Turn

What do you think? How important is Customer 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?

Share your experience and knowledge in the comments box below.

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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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