Organizations need to be more customer-oriented
in order to increase their value and the focus of its strategy should be its
target customers.
The crux of the strategy must be based on the
reasons that why the customer will prefer the products/services over the competitors’
products/services. The reasons must be the benefits the customer will receive
in return of the price paid. And the clearly designed statement (promise) which
expresses these benefits is known as customer
value proposition.
It persuades the customer to buy the product/service
and differentiates it from the competitors.
It broadly classified in three categories:
1. Customer intimacy.
2. Operational excellence.
3. Product leadership.
1.
Customer intimacy.
When organization adopts such strategy, it is saying
to its target customers that the reason they should choose the organization is because
it understands and responds to their individual needs better than its
competitors.
2.
Operational excellence.
When organization adopts such strategy, it is saying
to its target customers that the reason they should choose the organization is because
it delivers products/services faster, more conveniently and at a lower price
than its competitors.
3.
Product leadership
When organization adopts such strategy, it is saying
to its target customers that the reason they should choose the organization is because
it offers higher quality products/services than its competitors.
An organization can choose any one or
combination of the above strategies for better profits and market share.
Sources:
https://en.wikipedia.org/wiki/Customer_value_proposition
Management accounting by Garrison Noreen Brewer.
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