Value proposition

In marketing, a value proposition is the economic value that a company or product delivers to its market segment of customers. The phrase was coined by McKinsey consultants Michael Lanning and Edward Michaels in 1988.

Value propositions facilitate product differentiation and market positioning and form part of a company's overall marketing strategy. A customer's value proposition is the perceived subjective value of a product or service, and it may differ from the value proposition that a company has constructed as part of its marketing strategy.

The creation of a value proposition can be based on various analytical tools, including the marketing mix, balanced scorecard, and cost-benefit analysis. A value proposition statement usually contains references to which sector the company is operating in, what products or services they are selling, who are its target clients, and which points differentiate it from other brands and make its product or service a superior choice for those clients.

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