THE VALUE PROPOSITION

The Value Proposition

The Value Proposition

Introduction

The importance of the value proposition concept and the related issue of co-creation of value have been highlighted in recent work on service-dominant (S-D) logic. In this work these authors develop ten foundational premises (FPs), which include: recognition of the significant role of value propositions; how the firm and the customer should be considered in a relational context; and, how the customer is always a co-creator of value. Initially, these authors focused on customer-supplier interactions. More recently they extend their work to consider value configurations of social actors interacting and exchanging across networks. (Lanning, 1988, pp. 71-81)

Prior research in the area of relationship marketing contributed substantially to this discussion. However, despite considerable emphasis in the relationship marketing literature on the importance of multiple stakeholders, the stakeholder perspective has, to date, received relatively little attention within S-D logic. Our paper addresses this gap in the literature. (Layton, 2009, pp. 349-62)

Marketing scholars are becoming increasingly interested in this broader stakeholder context. Bhattacharya and Korschun (2008), drawing on work by the Stakeholder Marketing Consortium (a Marketing Science Institute collaborative project); identify the need to better understand relationships within an enterprise's network of stakeholders. Recently, Vargo (2009) acknowledge that a relationship “captures the networked, interdependent, co-creative, nature of value creation through reciprocal service provision”. While the focus of this special issue is on research relating to S-D logic, there are also broader ramifications of value propositions as a research area. From a marketing strategy perspective, Webster (2002) argues that the value proposition “should be the firm's single most important organizing principle”. However, there is little extant research in this area and we find that no detailed review of the value proposition concept exists. (Wilkinson, 1989, pp. 59-69)

The Value Proposition Concept

Over the past 20 years, the value proposition term (hereafter VP) has been increasingly used in both the academic and practitioner settings. The origins of the customer VP concept lie in work by (Lanning, 1988, pp. 71-81). This work focuses on two key activities: developing a VP; and, creating a value delivery system. Their approach involves three processes: analyzing customer groups by the attributes that customers consider of value; assessing opportunities in each segment to deliver superior value; and, explicitly choosing the VP that optimizes these opportunities. (Ballantyne,2003, pp. 341-4)

Customer Value Proposition Research

A review of the literature on customer VPs shows that, although the term VP is widely used within industry and academia, there is only a very small amount of literature considering the concept in depth. This is not surprising as, prior to the late 1990s; detailed discussion of VPs was restricted to consulting firm's internal documents (Lanning, 1988, pp. 71). More recently, several contributions have developed the customer VP concept further.

First, Kambil et al. (1996) suggest using a value map for developing VPs. This approach identifies a value frontier, positioning a company and its competitors in terms of a trade-off of cost and performance variables. The value map suggests three strategies for extending the value frontier and ...