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What is a Brand Value Chain?
A brand value chain is a framework that helps businesses understand how value is created, delivered, and captured within their brand. It is a tool that can be used to assess brand performance and identify areas for improvement.
Different value stages and multipliers within the brand value chain can help businesses to pinpoint areas where they may be able to create more value for their brand. The Brand Value Chain is a process that links each stage of the brand development process, with each stage influencing and determining the next.
The brand value chain combines a set of marketing activities that create and build brand equity which is the portion of a company’s value that is attributable to its brand name.
The brand value chain describes the process by which a company can create value for itself and its shareholders through different value stages and multipliers.
The chain brand begins with the identification of opportunities and ends with the realization of returns on investment through increased sales, profitability, and shareholder value.
What are Value Stages & Multipliers in a Brand Value Chain Analysis?
The brand value chain is made up of four value stages-
- Marketing Program Investments
- Customer’s Mindset
- Market Performance
- Shareholder Value
The Brand Value Chain model not only has four stages in the chain, but each stage also has its own “multiplier.”
These multipliers are represented by ideas and actions that will support and even speed up the marketing process if applied correctly. These three multipliers are-
- Program Quality
- Marketplace Conditions
- Investor Sentiment
Let’s now go through each of the stages of a brand value chain and their multipliers
Stage 1 – Marketing Program Investment
The first stage in the brand value chain is Marketing Program Investment. This stage is all about creating and executing a marketing strategy that will reach the target audience and create brand awareness.
The goal of a successful marketing program investment is to generate interest in the brand and get potential customers talking about the product or service. Key elements in this stage are-
Product: The product must be able to meet the needs of the target market and solve a problem that they have. It is important to have a clear understanding of the target market and what they are looking for before investing in marketing programs.
Communications: All brand communications should be consistent and on-message. This includes advertising, public relations, social media, and any other brand touchpoints. The goal is to create a unified brand identity that potential customers can easily recognize and remember.
Trade: The brand should be visible in the places where potential customers are looking for products or services like theirs. This includes both online and offline channels such as retail stores, websites, directories, etc.
Employee: All employees should be trained on the brand message and be able to articulate it to potential customers. They should be able to answer any questions that a customer might have and provide them with a positive brand experience.
Multiplier 1 – Program Quality
This multiplier takes a brand from the Marketing Program Investment stage to the Customer Mindset stage and its key elements are-
Clarity: The brand message should be clear and concise. It should be easy for potential customers to understand what the brand is offering and how it can benefit them.
Relevance: The brand message should be relevant to the target market. It should address their needs and pain points.
Distinctiveness: The brand should be differentiated from its competitors. It should have a unique selling proposition that sets it apart in the marketplace.
Cohesiveness: All brand touchpoints should be consistent with each other. This includes advertising, public relations, social media, website, etc.
Stage 2 – Customer Mindset
The second stage in the brand value chain is the Customer Mindset. This stage is all about creating positive perceptions of the brand in the minds of potential customers.
The goal is to get potential customers to think of the brand when they are making a purchase decision. Key elements in this stage are-
Awareness: Potential customers must be aware of the brand before they can develop any perceptions of it. This is why marketing investments are so important in the early stages of brand development.
Associations: Potential customers will form associations with the brand based on their interactions with it. These associations can be positive or negative and will influence their purchase decisions.
Attitudes: Potential customers’ attitudes towards the brand will be influenced by their associations with it. If they have positive associations, they will have a positive attitude toward the brand.
Activity: Potential customers’ activity level with the brand will be influenced by their attitudes toward it. If they have a positive attitude, they will be more likely to seek out the brand and interact with it.
Multiplier 2 – Marketplace Conditions
This multiplier takes a brand from the Customer Mindset stage to the Market Performance stage and its key elements are-
Market Size: There must be a sufficient number of potential customers in the target market to make the brand viable.
Competitive Reactions: The brand must be able to compete effectively against other brands in the marketplace. This includes knowing the competitive landscape and developing strategies to differentiate the brand.
Channel Support: The brand must have the support of key channels such as retailers, distributors, etc. These channels must be willing to invest in the brand and promote it to their customers.
Stage 3 – Market Performance
The third stage in the brand value chain is Market Performance. This stage is all about achieving commercial success in the marketplace.
The goal is to generate sales and grow the brand. Key elements in this stage are-
Sales: The brand must generate sales to be successful. This requires being aware of the target market and developing effective marketing and sales strategies.
Market Share: The brand must grow its market share to be successful. To succeed, you must first understand the competition and what they are doing right. Then, set your brand apart by utilizing original strategies.
Cost Structure: The brand must have a cost structure that allows it to be profitable. Developing, manufacturing, and marketing a brand can be costly, so it’s important to have a clear understanding of all associated costs.
Brand Expansion Success: The brand must be able to successfully expand into new markets and channels. This means understanding what the brand does well and where it falls short, then coming up with ways to make use of opportunities and reduce risks.
Profitability: The brand must be profitable to be successful. This requires generating enough sales to cover all costs associated with the brand and then some.
Multiplier 3 – Investor Sentiment
This multiplier takes a brand from the Market Performance stage to the Shareholder Value stage and its key elements are-
Investor Sentiment: The brand must generate positive sentiment among investors to be successful. In order to be successful, you must understand the target market and know how to communicate the brand’s story.
Market Dynamics: The brand must have a clear understanding of the market in which it operates to be successful. It offers a clear understanding of the various forces that influence demand and supply.
Growth Potential: The brand must have growth potential to be successful. You should know the brand’s strengths and weaknesses and develop strategies to take advantage of opportunities and mitigate risks.
Brand Contribution: The brand must be able to make a positive contribution to the company’s bottom line to be successful. This requires generating enough sales to cover all costs associated with the brand and then some.
Risk Profile: The brand must have a risk profile that is acceptable to investors to be successful. This includes having a clear understanding of the brand’s risks and developing strategies to mitigate them.
Stage 4 – Shareholder Value
The fourth stage in the brand value chain is Shareholder Value. This stage is all about creating value for shareholders.
The goal is to increase the brand’s share price and market capitalization. Key elements in this stage are
1. Share Price: The brand’s share price is the most important element in this stage. The brand must be able to generate enough sales to cover all costs associated with the brand and then some.
2. Market Capitalization: The brand’s market capitalization is the second most important element in this stage. The brand must have a clear understanding of the market in which it operates to be successful. This includes having a clear understanding of the various forces that influence demand and supply.
3. P/E Ratio: The brand’s P/E ratio is the third most important element in this stage. The brand must have the growth potential to be successful. You should know the brand’s strengths and weaknesses and develop strategies to take advantage of opportunities and mitigate risks.
Conclusion
The Brand Value Chain is a tool that can help businesses understand the process of branding and how to create a strong brand. By breaking down the Brand Value Chain into its parts, businesses can see where they need to focus their efforts to create a strong brand.
Marketing activities create brand equity, and with a well-defined brand value chain, businesses can create a strong brand that will reap better rewards of a marketing campaign in the form of increased sales, customer loyalty, and new customers.
Creating a strong brand is essential to the success of any business. The Brand Value Chain can help businesses understand the process of branding and how to create a strong brand.
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