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The Six Forces of Brand Value

February 18, 2009

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Michael Porter’s 5 Forces is an industry and market assessment framework first introduced in 1979 to help companies better understand the nature and extent of the competition arrayed against it. The problem it tries to solve is competition – how to manage it, how to deflect it, where to fight it and where to walk away – because as we know, the greater the competition, the more likely profit will be squeezed. But at the root, competition is ultimately based on value models.

And while businesses have the option of divesting from unvalued units, brands once engaged must stay engaged and endeavor to extract the most profit they can. One of the problems this can lead to is a zero-sum view of the world, which by definition perpetuates short-term solutions.

To break through this impasse we need to adopt a different paradigm, a reconfiguration of the existing pieces of the puzzle, the incorporation of some new pieces along with a positive-sum view. To help get us there, we’ll revisit the question of brand from a dynamic FORCES paradigm, to help us uncover better more valued, stable and resilient configurations. At the end of the journey we will come to recognize and blend both the Brundtlandian notion of sustainability with Rappaport’s customer-based value-creation view to yield a brand new dictum,

“Without sustainable customer value there can be no sustainable shareholder value”.

To get us there we first have to come to accept that a consumer’s perception of a brand’s value is shaped by up to six forces of value. Each (I.S.P.I.E.D) dimension works in concert with the others strategically and tactically to help support the price zone the brand seeks to compete in. It stands to reason that until consumers are made aware of the complete value bundle throughout the consideration process (Awareness, Interest, Desire, Action) those dimensions can hold no sway and the brand competes on less – perhaps just on price alone.

After we have neatly positioned our brand on some graph, the how and how often we communicate the brand’s value proposition (as well as its price proposition) will define the way the brand’s value is judged. CRM offer push efficiency driven by gains in data capture, pattern extraction and the ease by which offers can be pushed out puts us at one of the most perplexing cross roads.

Therefore one of  the most critical (and telling) questions you can ask  is when your volume is down, how are you going to stimulate sales. That answer will define your brand’s reality more clearly than anything else you say or do.

The Six  Forces of Brand Value

Iconic value – is simply how desired the brand is.

Not all brands can have iconic value; some categories simply do not lend themselves to this as they aren’t 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’s 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. Perhaps the most advanced thinking can be found by studying the works of Duncan J Watts and his model for Big Seed marketing blending as it does both ‘viral’ and mass media across 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 Design value (see below) since 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 – encompass the benefits the brand enables/supports in the community

For some consumers, the allure of self-centric gratification evolves to a higher level to include the world/community 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.

R eliability value – reflects the brand’s value of enhanced up-time and the mitigation of downtime.

This force, refers to those aspects which can extend a brand’s utility, be it from ensuring performance reliability (and the fall back support) through to performance utility/efficiency. It’s an exciting dimension that can either establish unshakable value, help the brand recover from a past indiscretion or if mismanaged, totally eviscerate the brand.

The spectre of downtime risk (insurance/warranty extensions/service plans) is typically seen by consumers as a way brands try to recoup profit margins given up in the heat of competition. And while everyone recognizes the utility of managing downside risk, the challenge lies in its pricing. Brands therefore need to come to better consumer 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, it was envisaged, consumers would come to view Lysol as the cleaning expert, begin to use the product more frequently, with greater confidence and share their triumphs with friends and relatives, thereby extending the brand’s franchise-building impact.

Integration value – refers to 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 and the more entrenched with the customer/user.

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 creates a total solution superior to 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 – relates to 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, this 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 – links to how well the brand functions in solving the primary problem

This dimension refers to both the design of the product, its attractiveness and 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 premium market differentiation.

A brand with a strong design ethic also tends to be more successful because it considers the consumer’s use of the brand from a holistic perspective, sometimes uncovering indirect value it can 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 are 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 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.

See part 1:  Of Building and Pricing Brand Value

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