MASTER OF BUSINESS ADMINISTRATION

2020-22

Summary 1: Customer Value Propositions in Business Markets

By:
Aakansha Gaikwad (2011074)
Avom Goyal (2011298)
Battagiri Sai Jyothi (2011299)
Komal Agrawal (2011111)
Marmik Upadhyay (2011329)
Siva Brahma (2011124)
Vineeth Pachava (2011274)
Yashwanth Chowdary Kaperla (2011101)

Term – V
2021-2022

Product Strategy and Management (PSM)

Course Instructor

Prof. Prantosh J. Banerjee

INDIAN INSTITUTE OF MANAGEMENT UDAIPUR

In recent years, “customer value proposition” has become one of the most commonly used
expressions in commercial sectors. However, according to the management research, there is no
consensus on what constitutes a customer value proposition or what makes one appealing.
Furthermore, researchers discover that most value propositions include assertions to the
consumer about savings and benefits that are not really backed up by evidence. Although a
product may deliver better value, customer management will likely disregard it as a marketing
bluster if the provider fails to demonstrate and justify that claim. Customers’ managers don’t
have the option of just believing suppliers’ claims since they are increasingly held accountable
for cost reduction.

The systematic way of developing value propositions to the target customers and supplier’s
efforts of creating superior value are as below:

Three types of Value Propositions

1. All Benefits
The type of value proposition requires minimal effort and work. Here, you need little
knowledge about the customers and their competitors. Most of the managers list out the
benefits of the offerings they will provide to the target customers. This proposition has
certain drawbacks:
 Benefit Assertion: Managers provide the benefit for the features and not for the
actual target customers.
 Most of the benefits in “all benefits” are the points of parity with the best alternative
and lessen the effect of points of difference. The managers fail to identify the
difference between the points of parity and points of difference.
2. Favorable Point of Difference
The value proposition focuses on recognizing an alternative for the customers. The
supplier needs complete information about the offerings whether they buy the product or
solve the customer’s problem.
3. Resonating Focus
This type of value proposition delivers perfectly captive decisions that the customers need
while purchasing or solving any other critical issues. This type of approach is used by
managers while making purchase decisions with major and ever-increasing responsibilities.
 Resonating focus focuses on one or two points of difference that will continue to get the
most significant value to the target customers.

Document Customer Value

It is vital to demonstrate higher value, but it is no longer sufficient to be labeled a best-practice

organization. Suppliers must also show the cost reductions and incremental profits that their
products bring to the businesses who buy them. As a result, suppliers collaborate with their
customers to specify how cost reductions or incremental profits will be measured and then work
with customer management to document the outcomes after a sufficient length of time.
Organizations use-value documenters to improve their customer value models, develop value
case histories, and provide credit to customer managers for cost reductions and additional
earnings.

Superior Business Performance

A significant contribution to business strategy and performance is considered when the customer
value propositions are appropriately constructed and delivered.

The organizations believe that distinctive value propositions are important to support the growth
initiatives. Each of the value propositions must have the following characteristics:-

 Distinctive
 Measurable
 Sustainable

Each of the companies has made the customer value proposition a cornerstone of their business
strategy. They offered a customer value propositions strategy based on best practices that
organizations may use to communicate their solutions’ more excellent value to target market
segments and customers with resonant emphasis. Customer value propositions can serve as both
a compass and a cornerstone for achieving improved business results. As a result, senior
management and general management, not simply marketing management, are responsible for
ensuring that their customer value propositions are precisely that.