Porter Prize for Creating Distinctive Value
The value proposition is the element of strategy that looks outward at customers, at the demand side of the business. It reflect choices about the particular kind of value the company will offer. The value chain focuses internally on operations. It defines the value proposition as the answers to three fundamental questions:
- Which customers?
Within an industry, there are distinct groups of customers, or customer segments. A value proposition can be aimed specifically at finding a unique way to serve the chosen segment profitably. It focuses on end users and the channels.
- Which needs?
It appeal to a mix of customers who might defy traditional demographic segmentation. It focuses on products & services and the related features.
- What relative price?
The companies have two value proposition: deliver higher value at a premium price or offer a low relative price according to their efficiency.