Entrepreneurship and Small Business (ESB) Certification Practice Exam

What is the term used to describe a statement that explains why a customer should do business with a company?

1. Value proposition

2. Business model

3. Mission statement

4. Cost advantage

The correct answer is: Value proposition

The term that describes a statement explaining why a customer should do business with a company is the value proposition. A value proposition clearly outlines the unique benefits and value that a company offers to its customers, helping them understand how the product or service meets their needs or solves their problems. It effectively communicates the advantages of choosing one company over competitors, focusing on aspects such as quality, pricing, service, or specific features that resonate with potential customers. In contrast, a business model refers to the overall framework of how a company creates, delivers, and captures value, but it does not specifically address why a customer should engage with the company. A mission statement articulates the purpose and values of a company but does not necessarily highlight the customer benefits directly. A cost advantage pertains to a competitive edge gained through lower expenses, which can be a part of a value proposition but does not encompass the broader context of customer value.