Brands Create Customers

One of the best ways to improve brand program effectiveness is to employ the concept of the brand chain. The brand chain is a new way to understand the configuration and value steam of brand programs. No brand should be without it. The brand chain has illustrative power:; it helps us to visualize and analyze the process of brand value creation and brand program flow. It  has strategic power, too. It helps brands to focus their resources where they can create and grow strategic customer outcomes.

As shown in the diagram below, the brand chain is analogous to the supply chain. The key difference is that where the supply chain is made of value inputs leading to product production, the brand chain is made of value inputs headed toward the customer.

While the supply chain helps create products, the brand chain helps create customers.

The brand chain defined

Here’s how I define the brand chain in our New Brand Glossary:

Brand Chain
The brand chain begins where the classic supply chain ends. While the supply chain is made up of value-adding inputs leading to the product, the brand chain begins with product development and heads toward the customer. Through brand platforms and programs it delivers multiple forms of downstream value. The brand chain consists of creative brand interactions between customer and company, customer and product, and between customers themselves.

The brand chain plays a critical role in advancing both the customer and the brand platform, primarily through open-ended brand innovation and continuous customer integration.

The brand chain is vital to business

In business, the brand chain is every bit as important as the supply chain. Many companies with superb supply chains fail their customers by under-performing in their brand chain. They envision the brand chain as “sales,” when in fact it is a whole new level of value creation.

In practice, the brand chain is powerful tool that helps clarify the distinctive forms of value that brands can deliver. When a company analyzes its value creation process in terms of its brand chain, it can begin to focus on creating customers with brand platforms and brand programs that are both more effective, and more efficient, than media-based brands structured as broadcast “communications.”

The brand chain and value-based brands

A brand chain implies value-based brands. In effect, you want your brand chain to be a chain of strategic brand deliverables that advance your customers where competitors can’t follow. The more value contained within the brand chain, the more unique brand pathways a company can create for its customers. A fundamental step in this process is to develop your brand as a customer-focused application, not as a static “thing.”

The brand chain and the value chain

Conceptually, you can include both the supply chain and the brand chain in an overall value chain model. The value chain, which classically dates to Michael Porter’s work several decades ago, is itself ripe for re-assessment. A lot of value now comes from customers, who are partners in the value creation process. We need new ways to model that. (Ideally, your customers would radiate part of your brand chain back to you as value added to the brand, and would also radiate brand value into a wider value net.)

Managing the brand chain

Carefully managing the supply chain enables a business to optimize production and supply cost management. Carefully managing the brand chain enables a company to optimize how it advances its customers, and how it integrates them into its chosen innovation pathways. This can create a competitive advantage by raising the “barriers to brand” that competitors must overcome.

A company’s customers are its greatest competitive weapon. The purpose of your brand chain is to create these customers and to whip them into fighting shape.

Brands as vertically-integrated value

For analysis purposes, dividing the value chain into a Supply Chain and a Brand Chain is very helpful in that it helps us visualize the complete brand picture and its components. The next step (overdue from me) is to call the whole process the Brand Value Chain and include a proactive section for customers. In other words, we define “brand” as a system of vertically-integrated value, where the brand values championed by the company are extended back to suppliers and forward to customers. As a result, more brand value flows through to the customer, and that’s a strategic win.

See also: The brand goes in before the brand goes on.

 

Note: Updated 6/1/11

 

This entry was posted on Monday, October 2nd, 2006 at 6:12 am and is filed under Brand Leadership, Brand Mission, Brand Models, Brand Strategy, Brand Value. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.