Value Chain Essay

The brand value chain The majority of companies that still follow the main principles of the industrial economy will face great difficulties in the value economy of the future. When the company defines itself by its products, far too many resources will be tied up in the product system. Alarm bells should ring when investment in products, services, divisions and departments are inflated when compared to a company’s actual market access. Fortunes are spent on developing new products without taking a critical view on their relevance in the market.

At the same time companies will find it increasingly difficult to push their new products through the value chain to the people who are expected to buy them. It is becoming still more difficult to penetrate the communication flow – and the more products that are fighting for the same resources, the less these resources will suffice. Brand Value Chain is a model that illustrates the fact that the company must change its focus to win the optimal value position.

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In contrast to the traditionally thinking company that optimises itself according to its products, the mantra in Brand Value Chain is the concept that in the future, the company must optimise itself according to its value position. Internally, the employees must be made to understand the value position and its importance for the company’s existence. The value position must be made relevant and present so that the employees understand how they, through their daily work, can contribute to the company achieving the desired value position.

Externally, the company must send a clear signal through its collective behaviour about which value it offers to the market. This can be effectuated through the product programme, its customer relations and through all its marketing and communication. To win a strong market position the company must pull in the same direction in everything that it does. The company’s strategy and actions must be optimised according to how the company can achieve the desired value position. The Brand Value Chain way of thinking works with 8 focus points:

To successfully enter the value economy, the core of corporate strategy must be the optimization of the brand value chain. Only then can it win the best value position in the market. The entire company must be built and shaped according to the brand. The brand value chain mindset: 1. Defining the value position you want in the market, depicted as a circle to the very right of the figure, is key. 2. At the far left link in the brand value chain it is important to appear as one company. Only a single, centralized company is in a position to be unique.

It has a soul and is a living organism. 3. The company must be built into a brand because the brand mindset is good at gathering and communicating a set of values and attitudes externally and internally. 4. You must develop a brand culture that can hold the brand together globally. 5. It is important to define the product programme on which you focus when building a brand position in the market. 6. You must define the most important target groups for the brand, both those who buy the brand directly and any indirect decisionmakers, who are often the most important carriers of value.

Direct connection to these decision makers must be made via a brand relation management system. 7. You need to build a consistent and value-accumulating brand communication that focuses on the brand and not on a lot of different product launches. 8. The brand communication must deliver the brand position in the market, which should equal the value position you wish to capture. The Brand Value Chain way of thinking leads to a strategy in which the company must focus on becoming brand oriented instead of product oriented.

Use the model as a checklist when preparing a status of the company’s branding strategy. In addition to this the company can use the model to take a critical look at the way resources are being spent. It would be utterly incorrect to think that branding is all about spending more money on marketing. It is about reallocating the company’s resources so that more is spent in the customer system and less in the product and distribution system. It is about organisational changes, creating an efficient marketing system etc.

To illustrate this you could look in your warehouse and note how many brochures for the last products you introduced are still there. If you expand your survey to include subsidiaries and distribution system, you are guaranteed to become depressed. Or you could check out the company’s investments in new machinery and product development costs. What would it mean to the strength of the company’s brand and market position if these were cut down by 10-20%? Could this money be better spent somewhere else?