The Brand Value Chain

Building brand value should be at the forefront of every marketer’s goal orientation. The promotion of specific products, services, or events is important in and of itself, but it should be interwoven with the building, reinforcing, or utilization of the brand value at all times. But brand value at its core is more than just an idea, it is also a process. One useful way of understanding this process and its implications is by conceptualizing it with the brand value chain. In Strategic Brand Management, Kevin Lane Keller describes the brand value chain as “a structured approach to assessing the sources and outcomes of brand equity and the manner by which marketing activities create brand value.”

The chain’s structure and its elements’ interactions are illustrated in the graphic above. There are four stages of brand value, and as one moves into the next, there are multipliers that affect how well value is transferred through the process. Since the visual above lays out the concept’s structure fairly well, rather than simply describing it, let’s better conceptualize it instead by applying it to a real-world example.

Think of when the iPhone was first released. It added an unbelievable amount of brand value to Apple, but that did not happen overnight. First, there had to be a marketing program investment to develop the initial amount of added brand value. This investment included the design of the product, the communications sent out to the public to promote it, and the training of Apple employees in product-specific sales and support. The value created by this initial investment carried over into the next stage only to the extent determined by the program quality. The marketing program had success because it was both meaningful to customers and distinctive from the competition.

The value was then able to carry over successfully and manifest in the customer mind-set. Audiences were well aware of the iPhone and began to determine what sort of attitudes they had about it in comparison to other available phones. A certain number of people made positive associations with this new phone and were motivated to enact them as a purchase activity. For value to carry over, however, the marketplace conditions had to be favorable. Competitors certainly reacted to the new player in the cell phone market, and those reactions may have affected some people’s decision to purchase the iPhone or not. Additionally, the right distribution channels had to be put in place to get the product out in a way conducive to customer satisfaction. Most importantly, there had to be a large enough number of people with the intent to purchase the iPhone.

Favorable market conditions allowed value to carry over and expand into market performance. Market share rose incrementally, Apple was able to raise price premiums and profitability, and iPhone expended into several models successfully. Positive market dynamics and the increasingly obvious growth potential of the iPhone’s added brand value, has allowed investor sentiment, the last multiplier, to continue to contribute to shareholder value in the form of Apple’s stock price and its market capitalization.

Understanding each component of the brand value chain is critical because it will allow you to account for and plan around all the many factors that can positively or negatively affect your brand value at every step. For more on understanding brand value, check out this Forbes article, Brand Value: What It Means (Finally) And How To Control It.”

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