resource integrating, value-creating practices, through service’ is an essential requirement for innovation. Consequently, defining the value proposition concept in the broader context of a service ecosystem represents an important issue that needs to be addressed in marketing theory. To assist in clarifying the characteristics of value propositions, in this next section we consider various metaphors that help illuminate the concept. Then we review current definitions of value propositions and identify specific elements. Finally, we use these insights to propose a new definition in the context of ecosystems. Table 1: Illustrative value offered, value sought and value shared, shaping an ecosystem Actor Value offered Value sought Value shared shaping an ecosystem Employee Pay (premium/fair) Equity in business Job security Training and Career path Work-life balance Pride in job / Community status Health and safety Staff loyalty Championing company Ideas for improvements Involvement, commitment Productivity Shared purpose/ Shared vision Shared identity Flexibility Customer Product /service performance Choice Convenience Responsiveness Security Feel-Good Retaining existing customers Broadening/ deepening relationships Recommendations to prospects Expansion of customer base Improving customer profitability Ideas for improving service “One stop shop” Access to ecosystem actors’ goods and services Reduced costs Supplier Volume guarantees Price (premium / fair) Payment terms / Contract length Status (platinum, etc) Information sharing Recommendation Supply security Supply prioritization Cost savings - supply chain integration Cost savings – price paid Information sharing Shared knowledge Integrated supply chain with ecosystem actors Reduced risk, time, cost and offers flexibility. Partner Performance Status (platinum, etc) Information / IP sharing Recommendations / introductions Shared marketing Partner performance Status/accreditation enjoyed Information received Recommendation / introductions Shared marketing Shared knowledge Access to partner relationships across ecosystem
proposal; (3) invitation to play; (4) bridge connecting our worlds; (5) wild card; and (6) journey destination, as summarised in Table 2. Promises and proposals. The metaphors identified in Table 2 demonstrate that value propositions operate at all three levels of the service ecosystem. A promise and a proposal describe how value propositions might operate at the micro level because they align most closely with the integration of defined resources to achieve defined benefits by specific focal actors. A promise is distinguished from a proposal because it is unidirectional: a promise of value to be delivered to a potential customer. Promises are also explicit. As such, promises are either accepted or rejected by non-active customers. In contrast, reciprocity between active actors is implicit within a proposal (Ballantyne and Varey, 2006). The operation of promises and proposals at the micro level is also suggestive of stable market relationships where there is high congruence between the value proposition and the value in context experienced by relational actors. Table 2: Value Proposition Metaphors Metaphor Perspectives highlighted by the metaphor Value Proposition as a ‘Promise’ Micro level Martinez (2003) defines a value proposition as “an implicit promise a company makes to its customers” to offer a particular combination of values.” Other authors suggest such a promise is much more explicit. ‘A value proposition is a promise – one the company makes to customers about which benefits it will deliver for a given price’ (Gattorna, 2003, p. 58). Promises are therefore explicit and can be used to form specific representations by the firm as in, for instance, a sales brochure or an advertisement. Promises imply an active role for the actor providing the promise but an inactive, or passive, role for the recipient of the promise. Value Proposition as a ‘Proposal’ Micro level Holttinen, (2011), drawing on Korkman et al. (2010) and Vargo and Lusch (2004), argues that value propositions are firms’ proposals of how customers can derive value from integrating the firms’ offerings with other resources. Ballantyne and Varey (2006b) argue that value propositions should be considered as reciprocal ‘promises’ of value. Reciprocity implies active roles for all actors.
exchange system, allowing electronic data exchange across the supply chain. This allowed Tesco to work with its suppliers, managing inventory, minimising stock outs, developing products that related to customer demands and improving every aspect of the customer shopping experience. Engaging the commitment of dedicated employees was also vital to the retailer and Tesco embarked on extensive training programs and an improvement of working conditions. Tesco encouraged recruitment from a wide demographic, recognising that customers liked employees who they could relate to. The store developed an innovative shift system that encouraged Mums to work during school hours and retirees to re-enter the work force for short shifts. Across all stakeholder markets, Tesco and its stakeholders shared reciprocal value propositions. The value proposition: “Every little helps” now related to multiple stakeholders and also indicated the reciprocal offer from stakeholders to Tesco’s. The retailer recognised that creating value propositions with each stakeholder group was important to realise its strategic ambitions. Phase 3: Value proposition within the ecosystem: Tesco operates within a complex ecosystem with value propositions that connect this web of relationships. Entering the 21st Century, Tesco has gained massive global strength, operating in 13 countries with significant success (their recent demise in the US and Japan are exceptions). Tesco is keen to share its success and recognises the responsibility that comes with global leadership. The retailer has a commitment to become a zero carbon business by 2050 and acknowledged that to achieve this goal requires redesigning its value propositions throughout its service ecosystem of relationships.
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