Value-based brands: Overview

When we talk about brands it’s important to define the type of brand model we’re discussing. Yes, there are different kinds of brand model. Some are far more productive than others. In fact, using the wrong brand model can be worse than having no brand at all.

The value-based brand model

In this overview I’ll discuss key points about the value-based brand model. In my view, value-based brands constitute the top-tier brand model, standing head and shoulders above all others. As I see it, value-based brands are the only brand model that can unlock the strategic potential of brands. Moreover, they’re the only form of brand that can deliver maximum traction to both companies and customers.

This is a working paper, with more installments to come. Once I’ve assembled all the pieces I’ll produce a finished paper with tighter logic and (hopefully) some helpful diagrams. This is new territory for brands, and any and all comments are welcome.

Value-based brands defined

Let’s start with a definition: Value-based brands deliver value that customers can use. This is value beyond that of the product proper. Their intent is to sink brand roots into the customer base, and to grow the customer in ways that can grow the business. Value-based brands do so by using integrated brand platforms and programs to advance customers to richer forms of living and higher levels of achievement. In short, their job is to make customers become better off through the brand.

The importance of the brand model

As noted above, value-based brands are a distinct brand model. The brand model you chose dictates what your brand can accomplish, tactically and strategically. Here’s how we define “brand model” in our New Brand Glossary:

Brand Model
As critical as the business model. While the business model defines a company’s profit logic, the brand model defines a firm’s customer logic: the structure and meaning of the brand program, its internal and external engines, and how, when, where and why it creates and sustains customer value.

Most current (mainstream) brands employ the communication brand model. While this is the traditional approach, supported by a huge media infrastructure, it has serious shortfalls. In this post we’ll compare that model briefly with the value-based brand model. We’ll provide extended comparisons in later posts. For earlier discussions of how these two models compare, see here and here.

Aren’t all brands “value-based”?

“Wait a second,” you might say. “Aren’t all brands value-based? At least they get attention. And they add some pizzazz to a product.”

The answer is No. Attention and pizzazz is a not a basis for customer value, and neither is glitz, glory, flash and spin. They might blitz a few eyeballs, but they don’t have what it takes to grow and sustain customers.

In fact, many highly visual brands are little more than stylized sales stimulants, not much deeper than a veneer of packaging. Their goal is to deliver a sales pitch, not value. And like most pitches, they tend to be short-term, and emotion-based. Thousands are on display at your local supermarket. (They are one reason we like to say: “If you want to make your products fly off the shelf, give wings to your customers.” Value-based brands are those wings.)

Value-based brands are fueled by organic, customer-generated emotion, rather than artificial campaign-generated emotion. (More on this in a subsequent post. It’s a big issue.)

Building blocks of the brand ecosystem

Value-based brands are the building blocks of the brand ecosystem. Through the value they deliver they create the customers who can add value back to the brand, thereby increasing a company’s competitive advantage. They do this through brand API’s that enable customer brand initiatives, and via brand-centered value networks. In action, they’re collaborations in context between companies and their customers, a blend of the practical and the pragmatic, business realities, strategy, and sheer customer-focused creativity.

Moving customers beyond the reach of competitors

One of the key benefits of value-based brands is that they initiate a customer ramp-up, or an upward spiral, that moves customers beyond the reach of competitors. They do this in a way that positions customers to adopt the next sequence of a company’s planned innovations. In other words, value-based brands are both a customer defense and a strategic innovation driver. Their job is to push the customer curve so that creative companies can feed their innovations into robust markets. (Brands have many more resources to push the customer curve than bare products on their own.)

Not your typical media-based brand

Value based brands are not your typical media-based brand. They are in-sourced, rather than outsourced. Instead of being whipped up as campaign creations, they’re working brands that link a company and its customers through many levels of interaction, in a nap-of-the-earth earth process that creates shared value for both parties. Their streams of interaction take the place of classic media campaigns.

Why brands as communications fall short

Communication-based brands restrict themselves to messages and message elements, aimed at persuading customers to perceive a company and its products in a certain way. They are forms of persuasion rather than instruments of building customer value. They deliver little of substance. In fact, their one-way broadcast model keeps customers at arm’s length and actually inhibits customer collaboration.

Simple brand identities don’t leverage brand value

Some brands may exist as simple, one-dimensional marks: a name, symbol or logo that affirm an identity, with no programs or platforms to add value. These are typically under-leveraged brands; without a brand value strategy, they certainly don’t do much to leverage their customers.

Please note that there is nothing “wrong” with these non-value approaches cited above. They’re the basis for most brands today. They can all be made to “work,” if enough money is spent. They just can’t create the kinds of strategic customers that value-based brands can generate.

Value-based brand strategy

Value-based brands are designed to create strategic customer value. They enable customers to do more with their lives through the brand, and in the process add value back to the brand and the company through innovation, collaboration, social networks or new market creation. The value-based brand approach recognizes that your customer is your greatest competitive weapon. The operative strategy is: “Grow the customer, grow the brand, grow the business.” By “grow” I mean strategic nurturing through brand leadership.

Value-based brands are holistic

A value-based brand strategy is holistic, aimed at giving full expression to the whole company, and aimed at developing the whole customer. It works on two levels. First, it addresses customer potential: what the customer might be in a different/better/higher context, as conceived by the most creative minds at the company (i.e., the brand team.) For example, Starbucks amps the context of coffee drinking and delivers more brand value than Folgers. Starbucks has elevated you and me beyond the reach of Folgers, forever.

Value-based brands take the long view

Second, value-based brands work across time. The customer of the value-based brand is not just today’s “buyer.” He or she is also the customer you will want three, five, seven and 10 years out. That customer will be a more proactive piece of work than the customer of today. You can create him/her with value-based brand strategies, or you can leave the process to chance (and to your competitors.)

Cultivate brand hacks

The key to the holistic approach is to open your brand to customer initiative and participation, to tap into customer intelligence and sensibilities. These help grow and diversify the brand organically, where the rubber meets the road. Value-based brands do this by recognizing that half of brand value is produced by customers. Thus, they rigorously cultivate brand hacks, to evolve their brand at the edge to meet changing market conditions.

More to come

I’ll be adding more installments to this series in the next few weeks. Among them: value-based brands and innovation strategy, the new role of the brand team, and how to build a value-based brand.

Part II is here.
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