The consumer perception of a brand’s value is shaped by up to six forces. Each I.S.P.I.E.D dimension works in concert with the others to help support the price the consumer is being asked to pay. Understanding and managing their strategic and tactical utilities becomes the answer to the ultimate questions;
Does the customer recognize and appreciate the proffered value bundle enough to exchange their monies for the brand over the competition?
Does the brand merit a premium price, and/or
Does it merit an increase in share of consumption?
Do I need to buy that now?
Are brands A and B that different (is brand B good enough)?
However the consumer comes to understand the answer to those questions, it stands to reason that until they are made aware of the complete value bundle throughout the consideration process (Awareness, Interest, Desire, Action) those dimensions will simply hold no sway and the brand will have no choice but to compete on price. This underscores the critical shortfall many marketers face, the unnecessary handicap they create for themselves and the inevitable growing reliance some brands come to have for CRM offer-push efficiency (vs demand-pull) in order to hit their ROI sanctioned numbers.
The Six Value Forces
Iconic value – How desired the brand is.
Not all brands can have iconic value; some categories simply do not lend themselves to this as they are not on the leading, creative or aspirational edge. But just to prove that one can never say never seemingly non-descript ‘un-brands’(Converse canvas running shoe, DocMartins) succeed by rocketing into the iconosphere.
Creating and sustaining a brand’s iconic value is typically accomplished in two steps. The first, a key brand dimension is selected where it is hoped that it can be elevated above the category to achieve some level of brand envy among a particular brand constituency.
The second, harder step involves creating an aspirational loop that reinforces the brand’s rise in popular desire, yet avoids crossing the line and becoming ‘common’. This can be managed by evoking fresh imagery (preferably some lifestyle affirmation by a role model) to reinforce the brand’s dynamic and elevated leading edge status. But the true test of sustaining iconic value comes with a strict adherence to pricing integrity and retail channel distribution. The cult of desired belonging will tolerate some level of inevitable wannabe-ism from the onlooker fringe, but the brand must remain true to its economic pact – else it be seen as having sold out’ its original cachet and become less ‘valued’.
Much excitement exists in the marketing community with the premise and promise of viral marketing which many hope to be able to mainline into the iconosphere. Perhaps the most advanced thinking can be found by studying the works of Duncan J Watts and his model for Big Seed marketing with the blending of ‘viral’ and mass media involving three variables:
Seed: How many people initially exposed to the message
Propagation (Z): How many people this message has been forwarded to
Responsiveness (B): The % of the propagated folks that will ultimately act on the message when received
Frequently a brand’s iconic value will be intertwined and reinforced by its designed value (see below) as both are critical to defining the brand as a sought after category trailblazer. Therein lies the truth of iconic brands, they are the trailblazers, they push the envelope, take the risks, define the category which the rest then scramble to copy. The challenge is finding a group that will support the brand and help evangelize it to its maximum profit potential.
Societal value – What benefits the brand enables/supports in the community
For some consumers, the allure of self-centric gratification evolves to include the world around them. For these people the brand’s societal value will define a deeper evolution in the relationship and responsibilities consumers and organizations come to expect from each other. For example, Edelmann’s annual global study of good works reveals that 76% of consumers like to buy from brands that make a donation to worthy causes and also that when choosing between two brands of a similar quality and price, a social purpose has the greatest impact on consumer decisions (42%) ahead of design/innovation (30%) and brand loyalty (27%).
While these are reported intentions and not necessarily behavioral actions, clearly there is a substantial core belief among consumers that the economic value they bestow upon brands comes with a required reciprocity in good corporate citizenship.
Enlightened corporations have long viewed this as an inherent responsibility separate from any payback expectations, but indeed an ROI of GOOD is emerging enabling brands to craft a benevolence program that has a calculated strategic competitive advantage
Whatever the motivation – moral or mindful, consumers are driving the change and placing an increasing importance on the societal value the brand supports. Failure to acknowledge and accommodate this will likely decrease brand value and increase brand risk over time.
value Potential – The brand’s value of enhanced up-time and the mitigation of downtime.
This force, the potential value of a brand refers to all aspects that can extend a brand’s utility, be it from ensuring performance reliability (and the fallback support) through to performance utility/efficiency. It’s an exciting dimension that can help either establish unshakable value, help the brand recover from a past indiscretion or if mismanaged, totally eviscerate the brand.
The specter of downtime risk is typically seen by consumers as way brands recoup profit margins that were given up in the heat of competition. Everyone recognizes the utility of managing downside risk, the challenge lies in its pricing. Brands therefore need to come to better pricing terms in light of the long-term (strategic) value of establishing a deeper level of customer engagement. (A combined model that allows for a retainer plus a pay per use might be worthy of consideration.)
Fixing problems is one thing; the other is to be able to use the brand to its fullest efficiency/ potential. Many brands appear to be content their job is finished once the product is purchased. But with the growing technical sophistication and the feature rich capabilities that are engineered into many products, leaving it in the hands of customers to become self aware of their evolving needs is simply not enough. Smarter brands will develop proactive programs to promote knowledge enhancement thereby benefit from the deeper level of brand entrenchment and subsequent positive word of mouth referrals this will achieve.
For example, in a past life as brand manager of Lysol, I had initiated work to complete a Lysol centric cleaning tips knowledge base. The intent was to become the ‘go to’ place for consumers with any cleaning problems. In so doing, they come to view Lysol as the cleaning expert, begin to use the product more frequently, with greater confidence and share their triumph with friends and relatives, thereby extending the brand’s franchise building impact.
Integration value – How the brand contributes to creating greater value by being part of a larger system.
The idea of ecosystems was first developed in the B2B/IT world where the host product is often a conduit for enhanced customization by external providers. The larger, more powerful the ecosystem, the stronger the brand becomes in the market place.
In B2C, a growing number of categories (hair care, personal care, fabric care, oral care) have thrived by creating system approaches where different tasks are solved by specific sub-products. The more interesting development will be when the integrated products unleash a catalysis that provides a superior total solution than that which can be achieved individually – perhaps a development for the future.
Food products face a more difficult challenge as they fight for share of stomach against a vastly wider competitive set. Hence they try to achieve integration value by taking ownership of specific recipes to gain prominence at key consumption moments. Those moments then become the value added link to the customer. For example Kraft Cheez Whiz gained ownership of microwave nacho cheese sauce – which it rode to double digit gains for several years on the rising popularity of Mexican food. However given the long tail of recipes the greater strategic imperative is taking ownership of a class of recipe ideas, to be the “go to” place for healthful menus, microwave ideas, kids food ideas, BBQ ideas, ideas….ideas….ideas
Experiential value – How the brand enhances a shared experience
This is a higher order value dimension that community based brands (pop, beer, alcoholic beverages and digital products (cameras, videos, games)) tend to adopt. This value dimension refers not to the consumption of the brand, but in the community experience of that consumption – reminiscent of Kodak’s “Share the Moment” communications. Just as playing/competing with friends is often times more pleasurable than a solitary experience, the higher dimension allows the brand to establish superior value. The all important consumer connection is of primary importance, from which the brand consumption will naturally follow.
Design consumption value – How well the brand functions in solving the primary problem
This dimension refers to both the design of the product, its attractiveness, ease of use as well as how the product itself delivers against the core problem.
Not many companies give enough consideration to the design aspect of their brands. Design tends to be something that is done once for the product launch, and then refresh package graphics every 3 years or so, to get some new buzz in the market place. Other companies embrace design as a core brand differentiator and seek to evolve their design continuously. Apple is famous for its relentless pursuit of elegance and simplicity which gives it a tangible and substantial market differentiation.
A brand with a strong design ethic tends to be more successful because they consider the consumer’s use of the brand from a holistic perspective, sometimes uncovering indirect value they then come to own. Tide Cold Water detergent for example gains value by its ability to perform without the additional energy cost of warm water cleaning. (Tide wasn’t the first, All Tempra Cheer owned that positioning in the 1960’s) In fact P&G (The Game-Changer) feel so strongly about design and its power to help unleash disruptive changes that elevate brand value in the market place, they routinely conduct internal and external design reviews. Additionally regular ethnographic field studies plumbed to ensure all sources of inspiration are tapped, that the brand promise is understood in its entirety and managed proactively.
Conclusion:
Years ago, Michael Porter formally introduced the “5 forces” model to help companies understand and manage the shaping of value in an industry, their competitors and themselves. Today we have come to view the consumer value dynamic as a win-win, co-creational model based on a pull versus push based perspective of marketing from which we have come to recognize the 6 forces of value acting on/with/through the brand and its constituents. Managing those value dimensions is not a task to be divorced from the day to day duties of a marketer. In fact they are perhaps the most important things a marketer can do for the brand as the successes here come to define all other metrics.
In the next section we come to appreciate some of the dynamics in the pricing of value.
See part 1: Of Building and Pricing Brand Value
This post was first published on the Canadian Marketing Association blog on January 29,2009 and recently revisited (Let’s Vote) by Hollie Shaw at the National Post.
In between there have been several venerable print/newspaper properties succumb to declining ad revenues as business models adjust themselves to changing competitive and economic conditions.
Over at Millward Brown – Nigel Hollis has also been asking questions (see here, here and here) regarding TV commercials making the point that despite media fragmentation it remains a leading, powerful and current weapon in the marketer’s arsenal.
But I ask that as you read through the rest, to wonder aloud…. if advertisers had to compete for audiences (and not simply buy access to them), whether the competition wouldn’t unshackle the advertiser’s craftsmanship – to make one stop and engage with the communication instead of reaching for the fast forward button.
One might argue marketers best interest is to create sales generating ads from the outset…perhaps … but that doesn’t explain why so many commercials are being zapped. The only answer is to have marketers, advertisers, broadcasters and consumers working together learning how to create better value for each other. No doubt these ideas need further refinement – but the point remains the status quo is quickly becoming an ineffective option.
Here’s the original post:
For some time now parts of the marketing world have been wondering if the growing problem advertisers are having getting their commercials seen by their intended targets is not a problem of their own making.
One only needs to look at the Clio awards to see some great commercials being produced that stop traffic (and drive sales?), but these are the showcase creative executions that do not reflect the main stream advertising that is broadcast day in and day out. And that’s part of the problem, its push based advertising and some of it is not as good as it could/should be. This started me to wonder if we might see greater success (on many levels) if we adopted a google customer voting approach to TV commercials.
So here’s the idea:
What if we allowed consumers to come to the program/station website to preview and select which commercials they would like to see? They’ld have an opportunity to pick from a pool of let’s say 10 commercials from which they select their final 5. The “Top 5” commercials with the most votes get aired, the rest…
Now the financial model for the networks would be based on 3 streams.
1. A fee from advertisers who wish to be submitted into the pool, plus a second fee for each commercial viewed and voted on.
2. A subsequent fee for the airing of the winning commercials.
3. Free analytics for the winners while losers would have to pay.
The station/program have an opportunity to wrap a contest around the voting event, spike program interest with teasers and get important viewer data in advance of the airing. Those ads that don’t make the cut, can try again – but if it fails to solicit a customer following then the advertiser has learned something about their commercial execution. Consumers could be encouraged to watch the aired commercials by participating in some on-screen promo/QR code event.
If you think this is a little far fetched – have a read of a similar approach being taken by Pepsi for the Super Bowl as they seek to get consumer input on which spots consumers will get to see. Pepsi Tries Super Bowl Spot Selection 2.0
So what do you think?
If consumers could pick which commercial they would see, would that:
1) Raise the level of commercial entertainment/communication value of the ads
2) Provide additional value to advertisers and revenue for broadcasters
3) Increase the % of viewers that watch and retain the messages being broadcast to them
4) Give consumers a sense of ‘programming control’ that would help broadcasters ‘engage’ their audience
Or do you feel it’s too little, too late.
In case you haven’t had your fill of TV commercial, this links to my collection of favorite commercials like Apple 1984 and others…
CNN’s Anderson Cooper ranked the consumer as first on the top 10 list of culprits for the collapse. Michael Useem writing in the Washington Post (The Officer Should Eat Last) places the blame on an absence of (corporate) leadership. Others point to the media as this watershed exchange between Jim Cramer (MadMoney) and Jon Stewart on The Daily Show – Thursday March 12,2009 (official clip, unedited clip)
In truth, the ultimate culprit IS us and our tendency to pursue short term solution paths because of our constrained ability to measure/predict beyond the near-term and perhaps impatience brought upon by the accelerating pace of change around us as illustrated by Ray Kurzweil.
Until we become better forecasters, the only ’answer’ is a set of higher guiding principles as the logical pursuit of short-term can result in unintended consequences as illustrated in this seminal article (The Tragedy of the Commons) by Garrett Hardin.
Which ultimately raises the question of cause and effect – if we acted with one set of beliefs – then our assumptions for the future would be made easier because of our appreciation/understanding of those implicit underlying assumptions…believing in long-term allows us to better at long-term.
The Problem:
Peppers & Rogers call it Short-termism. (Rules to Break and Laws to Follow)
A condition so dire they rank it as their #1 rule to break for a company to succeed. It speaks to the pressure the stock market places on meeting short-term profits and expectations – sometimes culminating in truly tragic consequences as evidenced by; Enron and Arthur Anderson, the $300+Billion US sub-prime mortgage crisis and even reaching into allegations of fraud:
“SEC Commission charges that Adelphia, at the direction of the individual defendants: (1) fraudulently excluded billions of dollars in liabilities from its consolidated financial statements by hiding them in off-balance sheet affiliates; (2) falsified operations statistics and inflated Adelphia’s earnings to meet Wall Street’s expectations”
Ironically, the quest for trying to meet the short-term profit goals of the stock market (perhaps also spurred on by a desire to merit contracted bonus targets) actually wiped out more shareholder ‘value’ than ever would have happened otherwise had but a modicum of fiduciary responsibility prevailed.
“…But along with the goal of accountability, there’s an unintended consequence since it effectively tells CEOs that their continued employment depends on meeting short-term goals. That’s because Sarbanes-Oxley has made boards less hesitant to dismiss CEOs, and the boards themselves serve at the pleasure of shareholders and their institutional fund managers, who are increasingly looking at short-term results.” according to Jagdish Seth, Professor of Marketing at Emory University: Are U.S. Companies Doomed to Keep Planning for the Short Term?
While dramatic and extreme, these aren’t isolated cases. Consider Southwest Airlines, often sited as a leading customer-centric organization (Ranked #2 on Fortune’s 2003 Top 10 Most Admired Companies in America) and their fall from grace in 2007 as reported by CNN:
“Discount air carrier Southwest Airlines flew thousands of passengers on aircraft that federal inspectors said were “unsafe” as recently as last March, according to detailed congressional documents obtained by CNN.”
While the airline claimed flight safety was never an issue that message was not heard judging by responses to the story from readers.
“…..Once trust is broken, it is hard to hand over the lives of my family to a company that does not have our best interest and safety at heart.” Phil – March 10, 2008
“I’m a retired airplane mechanic.…Thank de-regulation for your cheap tickets, but the excessive competition in the industry means cost controls eventually get a stranglehold on every part of an airline, except executive compensation…The next time you buckle in, remember that you are only getting as much airline safety as you were willing to pay for, and have a nice flight.” JC March 7, 2008
There’s a sizable concern that things just aren’t right. When Bain completed their 2007 global survey they found a ratio approaching 2:1 of managers (43 percent agreed while 25 percent disagreed) who felt their companies would have better long-term results if privately owned.
Some companies have intentionally avoided a stock exchange listing for that very reason.
“Certainly one of the advantages is being able to manage for the long term without having to become obsessed with quarterly results. When a company like ours (Bechtel) is taking on major projects with long-term risks, it is certainly advantageous to have that longer-term perspective.” Jonathan Marshall – Bechtel Source
Others purposely engineer their ownership structures to protect their ability to thrive in the long term. Google’s IPO submission read in part:
“The standard structure of public ownership may jeopardize the independence and focused objectivity that have been most important in Google’s past success and that we consider most fundamental for its future. Therefore, we have designed a corporate structure that will protect Google’s ability to innovate and retain its most distinctive characteristics.” Source:
Some point out the short-termism problem is “contained” to certain stock markets.
“…Other than London, the European stock exchanges and especially their Asian counterparts tend to have limited liquidity because of family ownership and bank holdings. … So the biggest stock owners don’t see their shares as commodity items. Instead they’re something to be developed and passed on to the next generation.”
Source: Professor J. Seth, Are U.S. Companies Doomed to Keep Planning for the Short Term?
Others still, may feel the current situation simply requires better risk management practices, management oversight and/or a realignment of compensation practices (see Rotman’s “The Risk Issue” Spring 2007 for an excellent overview). Perhaps they’re right, but I think we need to consider that these are all symptoms of the same underlying short-termism problem. For those who agree the short-term focus is “wrong” – shouldn’t we do something about it?
An alternate view of the purpose of an enterprise:
The prevailing view (for many) that customers exist to create profit for the enterprise’s shareholders is in contrast to an emerging alternate vision which notes that the purpose, indeed the very existence of the enterprise is to profitably serve its customers. Without them, there is no enterprise….there are no shareholders. In this new paradigm we come to see that the ultimate stakeholders that define the success of the enterprise and to whom the enterprise is ultimately “accountable” to are its customers… not the shareholders.
So if we come to recognize that:
1. having a short-term focus does not have a privileged profit generating status
2. the enterprise’s profits are created by the will of customers, and
3. profit streams typically require some investment to ensure their continuation,
then we need to ask ourselves the final question…
IF we have shareholders demanding short term profits that will come at the expense of the long-term value of its customers, shouldn’t the enterprise seek to “fire” those shareholders? …Just as surely as it would fire an employee or supplier that was working at cross purposes . Just as surely as it ‘fires’ customers that aren’t profitable by minimizing interaction expenses and/or realigning fees.
If the pressure for delivering near-term profits puts the brand on a path that exposes the enterprise to greater risk, then surely the C-suite and the Board of Directors must take a stand and uphold their fiduciary responsibility. As noted earlier Boards may be afraid of being exposed to lawsuits from shareholders for not maximizing profits – but with this emerging viewpoint, they may face a similar legal threat from the other side (although I am not a lawyer). Shareholders after all, are free to select other enterprises or financial instruments benefiting as they do from their capital liquidity if they wish to maximize their short-term profitability objectives. Shareholders with a short-term investment horizon ……are not stakeholders.
This doesn’t mean the enterprise isn’t held accountable for meeting profit and other objectives. Quite the contrary, it places an even greater premium on identifying, developing and implementing sustainable value. Short term profits and time to market pressures don’t have to win out over the long term investment decisions since it is not any less profitable if it is done right (if over the slightly longer term).
Collins & Porras (See: Built to Last) spoke of the need to have a BHAG (Big Hairy Audacious Goal), a long-term vision that is supposed to be so daring in scope that is seems almost out of reach. What is needed is a willingness to pursue this path led by the CEO adopting the mantle of responsibility of the Chief Brand Officer. (see Ted Matthews) The resulting realignment of systems, people, skills, program implementations and performance compensation will provide a stronger balance of what is good/better/best for the maximum accumulation and retention of profitable customers and the realization that retention is in fact the new acquisition.
For those interested in more, this clip starts off Niall Ferguson’s The Ascent of Money series
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Nigel
re your post: The great media debate – evolution or revolution you said:
“I believe that we are watching evolution at work. By and large, technology is changing far faster than humans can adapt to it. But when a new technology satisfies a basic human need better than an old one does, that technology takes off. Social media satisfy the basic human need to connect with others….
…But if your business model requires economies of scale to produce a product at an attractive price, then you need a mass market. And to communicate with the mass market and create mass demand, you need good old-fashioned reach….”
As you mentioned and noted by others (Kurzweil (see here) and Hagel, Seely Brown & Lang at HBR (see here) technology induced change has shortened the life span of many things. By virtue of the flow of information we are exposed to our attention span has (sadly) become shorter.
But the real game changer in this new dynamic are the power laws of network connectivity – our ability to form, be influenced and influence groups is no longer linear in scale. While individual attention spans are shortened in aggregate they become more powerful – the pass along buzz becoming a currency of perceived worthiness elevating its value above traditional communication.
While any transition is by definition fragmentory, the critical question rightly noted about this transition is whether will we be able to manage and convert PULL activities into demand generation on the scale and timeline demanded of us by (PUSH) shareholders.
“We’re moving from a world of push to a world of pull. Push programs operate on one key assumption – that it is possible to forecast future demand. When demand can be forecast, we can efficiently push resources to where they will be needed when they will be needed.” Hagel et al
“But unfortunately what makes Facebook a great venue for connecting with others does not make it a good medium for marketing. Social media can’t replace traditional media for marketers….There is a fundamental problem facing marketers today. Fragmentation is rampant, online and off. So the cost of reaching a mass audience continues to climb…”
The answer to that question rests on our ability to create and communicate differentiated value. More than ever, undifferentiated ‘value’ will be lost in the noise. Setting aside for the moment the more critical question about the scale of value intimacy we can achieve, Duncan J Watt’s Big Seed Marketing model recognizes the confluence of the two worlds, of using “mass” media to seed messages which are hopefully embraced and propagated by the social component. Either can be sufficient, but both working together elevate synergies by providing co-creational “value with” to reinforce the “value at” customer communication allowing mass scale businesses to accomplish a critical ’slight of hand’.
The soul searching debate about the ROI of “social media” rages without appreciation of the larger dynamic shifts. One must learn to accommodate both since both messages add value and increasingly both will be needed to stay in the game.
Which of the old and new channel frequencies survive is open for speculation as both will be reconfigured or perish. It is important to remember that the ability of a channel to facilitate ’social’ requires more than a label, it inherently needs to support some form of co-creation, interaction or dialogue – let’s call that interactive. That we think 140 characters is enough to constitute a dialogue is an indication of the compression we are undergoing.
The only certainty I can point to is that media fragmentation can be better managed with pull based brands. The process of communication is a multi-frequency endeavor, each having its role to play at different times for different reasons. Yet somehow we have forgotten that communication can/should be measured as everything that happens between purchases and attributed back to that ROI.
Still there are many unknowns, at the top is the opacity of the individual tipping points between the new polarities (scale Vs intimacy, Push Vs Pull, “value at” Vs “value with”) and how the herding instinct emerges from intimacy – which will provide scale advantages of a different sort. The is a key point that many marketers fail to recognize, within a networked community, the greater our effort to communicate and relate to individual customers the greater its impact on all customers – just look at Zappo’s, apple or any customer intimate brand.
For some, these are scary times. They feel paralyzed without the safety of an ROI to support their initiatives. The only thing I can offer is to heed the ancient warning of mariners “here be monsters” as today that applies more to the status quo than to the uncharted waters we have entered – because once the shift happens…
cheers
Miro
