In the last couple of months, CXM welcomed new team members to redefine itself and create a true CX community from the insight out. During several meetings where we discussed our mission and vision, we gave a lot of thought and attention to the brand value. Throughout the time, we realized this is a topic that all brands talk about but do not always know how to address.
Therefore, we created a comprehensive guide to support all entrepreneurs out there. In it, you’ll find everything you need to know about designing brand value chain stages to help you build your business with purpose. If you’re just starting your business and trying to create brand value, this is the article for you.
What is brand value?
Brand value stands for the economic worth of a brand, which is determined through sales. Simply put, the general brand value is derived from the number of product or service purchases throughout time. The higher the purchases, the bigger the brand value.
Still, a brand is more than just products or services offered for sale. To be successful in the first place, every business needs a purpose customers can identify with or choose to support. Brand value is about creating a point of connection with customers who can find purpose in a particular business.
Therefore, there are two sides to the brand value coin: financial and perceived worth. The latter comes from the worth customers see in a brand, which creates long-lasting relationships and directly impacts the financial side of a business.
Understanding the brand value chain
Following the above stated, it’s important to highlight the importance of building brand value in reference to the economic side. It was long established that brand value produces customer value and vice versa, influencing the relationships between the two in many positive ways. Increased visibility, associations, and loyalty are just a few of them.
However, the question is – how would we define brand value? Considering the term refers to more than just a monetary statement, we should perceive brand value as an active process within an organisation. One of the ways to understand this is through the concept of the brand value chain.
Brand value chain definition
As Kevin Lane Keller would describe the brand value chain, it is a structured approach to sources that allow you to focus and implement activities to create brand value. Therefore, this concept should encompass all the steps you need to perform for establishing and improving your brand value. It should also serve as a model for tracking information and calculating the customer responses to value created through various activities. We will dive deeper into this topic later on.
Measurements and improvements
One of the ways to measure brand value is by looking into the revenue achieved over a certain period. Tracking the number of (repeated) purchases should give you a sense of how customers perceive your brand. However, it’s important to highlight that following the number of sales is not the only nor most reliable indicator.
As we mentioned above, brand value consists of more than just the financial side and should be perceived through the set of actions in a chain. These better represent the value of a brand to the customer throughout the entire lifetime and the future.
In essence, a brand’s value is determined through key factors such as recognition, image, usage, and loyalty. Thanks to the recent improvements in analytics technology, you can measure all of these at a mass scale through customer feedback. Once you gather the responses, you can feed up your future decisions and spread the gained insights across the entire organisation.
We should also highlight that determining and maintaining brand value needs to be embedded deeply in the organisations. Employees are a vital part of creating a meaningful and highly functioning business. Although this is a very important topic, we won’t be exploring it further today. You can read more about employee experience at the following link.
Brand value chain stages
According to the now widely known opinion of Kevin L. Keller, a professor at Tuck Business School, a brand value chain has four key stages:
| Marketing Investment Programme | Customer Mindset | Market Performance | Shareholder Value |
| Product Communication Trade Employee Other | Awareness Associations Attitudes Attachment Activity | Price premium Price elasticities Market share Expansion success Cost structure Profitability | Stock prices P/E ratio Market capitalisation |
These are followed by three multipliers:
| Programme Quality | Marketplace Conditions | Investor Sentiment |
| Clarity Relevance Distinctiveness Consistency | Competitive reactions Channel support Customer size and profile | Market dynamics Growth potential Risk profile Brand contribution |
- Marketing investment programme
The first stage is about the investment in the future that will contribute to brand value development. It includes marketing activities such as product research, employee training, trade, communications (e.g. promotion, sponsorship, public relations, and more). The main goal of this stage is to reach the customers with good marketing suited to their needs. Communication is key in the marketing investment programme.
- Customer mindset
Customer mindset encompasses all the feelings, attitudes, and beliefs a customer has about a brand. Therefore, the second stage is primarily focused on customer perception businesses try to track and influence over time.
Following the customer mindset, brands begin a journey of raising awareness. They take action to aid in the recognition and showcase the major brand attributes and benefits to increase positive associations. This step further influences customer attitudes, as they begin to develop feelings toward a brand and grow attached to it. The ultimate result of this attachment is customer loyalty that fuels action represented in purchases and brand recommendations.
- Market performance
The third stage is all about the brand’s effectiveness on the market. It is a result of good marketing and solid relationships built in the previous two stages. When a brand creates a name for itself, it’s much easier to establish the status on the market, increase sales, and think about expansions. Take a look at the above-provided chart for other factors within this stage.
- Shareholder value
The market performance also affects shareholder value. Because the value of a brand relies on strategic decisions taken by the management, it should also take into account the needs of shareholders.
While these are the four main brand value chain stages, there are also multipliers that affect each one of the above.
We call them:
- Programme quality
The first multiplier comes between the first and the second stage of the chain. It mainly refers to the actions needed to make the communication with customers clear, relevant, distinctive, and consistent. These key points should further drive increased engagement and brand awareness.
- Marketplace conditions
Competitive reactions, channel support, and customer size and profile are at the heart of the second multiplier. These points should help brands in giving customers more value than the competition and explaining the differences. They go between the second and the third stage of the brand value chain.
- Investor sentiment
The last multiplier is fully oriented towards investors’ perception of a brand’s value. Typically, they evaluate the following factors when deciding on future investments: market dynamics, growth potential, risk profile, and brand contribution.
We understand all these brand value chain stages can be challenging to grasp all at once. Therefore, take your time and explore all of them thoroughly. If you need a successful brand value chain model example, we recommend you take a peek at Nike’s famous one.