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The output and consumption elements of our diagram outline that the process is ongoing and that once 
something is created by the organisation (the product or service) it is passed on. Marketing as a 
discipline reminds us that, in order for this process to continue, the organisation needs to ensure that 
the output will meet the needs of specified customers and this must relate to the 
customer value 
proposition
. 
The
 customer value proposition 
consists of the sum total of benefits which a vendor promises that a 
customer will receive in return for the customer's associated payment (or other value-transfer). 
In simple words: value proposition = what the customer gets for what the customer pays. 
Accordingly, a customer can evaluate a company's value proposition on two broad dimensions with 
multiple subsets: 
1 
Relative performance: what the customer gets from the vendor relative to a competitor's offering
2 
Price: which consists of the payment the customer makes to acquire the product or service; plus 
the access cost
The vendor-company's marketing and sales efforts offer a customer value proposition; the vendor-
company's delivery and customer-service processes then fulfil that value proposition. 
When faced with their next purchase decision, whose product or service is a customer most likely to 
buy? Will it be yours or will it be that of a key competitor? This is the most important question most 
business managers will have to answer. Most of the time, customers will make that decision based on 
the benefits that are most valuable to them, and the price they must pay to receive those benefits. In 
other words, most purchase decisions are based upon perceived value – the trade-off between the 
quality of the most desirable benefits and the price paid for those benefits. 
CASE STUDY 
Imagine the following scenario for a hypothetical organisation called Premier Motors which produces 
high-performance sports cars.
If, for example, Premier Motors has used the very best input resources available to them and has the 
ultimate management and organisational workings to produce the most exceptional cars ever designed, 
you might think that this would be highly lucrative. If, however, they were based in Mongolia, which has 
one of the lowest levels of car ownership, they would not have a significant local customer base. 
Equally, they would find that to transport the product to other parts of the world would be very 
expensive. For some exceptionally wealthy consumers the opportunity to purchase the best car in the 
world regardless of cost would mean that there is a market for the cars; however, the potential size of 
this market is highly limited and not necessarily cost effective in the long term.
We now need to add in the additional environmental elements to our example. In the micro 
environment, the lack of many customers is clearly a disadvantage. Also, within the high-performance 
sports car market Premier Motors may well have a number of competitors who may not produce such 
exceptional cars but are more affordable and therefore have a larger market. At the macro level, in times 
of economic prosperity there may be a larger global number of 'high worth' individuals, while in turbulent 
economic times there may be a reduced propensity to purchase such ostentatious cars not only for 
financial reasons but also possibly due to a change in social and cultural expectations.
Although this is a completely fictitious and extreme example, it at least demonstrates how the whole 
process is embedded in a complex picture to be assessed and anticipated by the marketer.