How Brands and Advertising Create Value
An old wedding photograph.
That engagement ring.
The doll with the broken hand and
tattered dress my little girl won’t part with.
The holiday with our parents.The look
in their eyes, the smiles.
That super bike.
The Smartphone.
In fact, my first phone.
Our home.
Peace. Love. Trust.
How does
one define Value?
Is it something we cannot even put a
price to? Or something we are willing to put any price to.
Value is personal, intangible and
loaded with emotions.
30% MORE
or FREE is a myopic way of defining Value.
What we call Tactical strategy as
offering value is not wrong, but maybe myopic. Stems from the fact that we
still operate in a world where we perceive the brand as the arbiter of value.
The baton has moved to the consumer
for quite some time now.
The “what’s in it for me?” or “what
difference will it make to my life” questions are being asked more often.
And after all, the More and the Free
can become competing propositions very
easily. It’s after all, just about numbers.
Michael Porter’s Value Chain
The term ‘Value Chain’ was used by
Michael Porter in his book "Competitive Advantage: Creating and Sustaining
superior Performance" (1985). The value chain analysis describes the
activities the organization performs and links them to the organizations
competitive position.
Value chain analysis describes the
activities within and around an organization, and relates them to an analysis
of the competitive strength of the organization.
Key areas: inbound logistics,
operations, outbound logistics, marketing and sales, and service. The
competitive advantage can be created by adding value at each of these areas.
From Needs to “Experience”: The Value Spectrum
Cadbury’s India has moved up the
Value Chain very well, through its change of positioning and therefore product
portfolio. From being a kids brand to an adult snack to finally a symbol of
celebration, the brand has occupied a place of relevance that very few have
been able to replicate.
Increasingly, it is the “experience”
which is proving to be the strong Value Discriminator. Experience is no longer
the forte of the service industry and every brand, across categories are making
a beeline for that differentiated experiential quotient .
Experience creates the quotient because it has the power of
engagement.
The
buyer-brand relationship moves from being transactional to one of
conversations and interactions. More time spent with each other. More
knowledge. More inputs. More transparency. Works at various levels.
Luxury Brands have been good at creating intangible
Value Perceptions
We don’t buy luxury. We buy
exclusivity. We buy a slice of status. An empowerment.
The BMW, the super bikes, the luxury
watches, vacations, apparel- all push for one thing. That the world of luxury
is Small and Exclusive. No open entry. In fact there are entry barriers and
that itself creates value.
Value Injection Points
a.
Find the Gap: Identify new markets, define segments, find
an unmet need or desire. The right Gap gives one a distinct value creation edge. Apple has been doing
this consistently. Consumers see value when there is innovation relevant to
their lives. It all starts with the right market creation.
b.
What’s Next: Even
if there is an existing need or segment, consistent innovations leading to
upgrades, new experiences can again be a strong value creator.
c. Communicate
the Value proposition: Consumers need to know what the differentiator
is. Where the value lies. The job is not
so easy. Value, as we said earlier, can be quite personal, unique to users, and
loaded with emotions. Some brands have managed to do this very well.
d.
Discover. Experience. Engage: This can be
the key differentiation, and leverage the value perceptions of a brand. That is
why A Starbucks is not just another coffee. Or a Harley not just a bike. Or an
Angry Birds is not just a game.
Role of Advertising in
communicating value perception
Value, whether innovative, of finding
the gap, or shared- has to be communicated to the consumer. This is where the
role of advertising lies.
The communication strategy for
creating value perceptions depend on
where or at which stage is the value being created in the system. For eg. If it
is about catering to a new market or a segment- about Finding the Gap- the
brand has to talk about the “gap” and how the brand offers a solution for
bridging that gap. I remember a very old ad on “Ceasefire”- a home fire
extinguisher that created waves when it was launched. It identified and created a need when there
was none and consumers paid for it. They saw value. The most recent example that strikes me is
the Nike Fuel Band, encouraging people to be fit, and keep track of their own
fuel burn . A gap on the wrist and Nike
has started claiming it.
If the value is in the innovation
itself, the communication clearly has to drive home the innovation. Ipad, ipod,
the smartphones,anti aging wrinkle creams, fuel smart bikes and cars and so on.
When experience and solutions are the
key drivers for value, the communication strategy focusses around driving
engagement to bring alive the experience. Whether it is Apple’s legendary
retail experience, or Zappos’ customer service.
Advertising
communicating the “Intangible”
The role of advertising becomes even
more crucial when the value creation is a benefit which is a new mind space or
life proposition, and not just a strong product or segment differentiation. For
eg: Helix watches and their recent “Waste
Time” campaign. Or Fastrack and their communication of the smart and bold
generation. Pepsi’s Change the Game. KitKat’s Break Banta Hai. Bombay Times Be Glamorous. The Times of India Lead India, Teach India,
Aman ki Asha. Airtel’s Friendship campaign. Where the value creation is
inspired from a life truth or insight and connects the brand proposition
strongly with that insight.
Co-Creation: The new value generator
Consumers
today are the new arbiters of value. Consumers input, discuss, build on,
critique and co-create concepts and ideas which add value to their lives. This
goes beyond mere consumer research to understand relevance and gaps, but
actually involve consumers at various stages of the process , so that value is
not handed down by the brand but shared by the users themselves.
Tanishq’s “My
Expression” for their Mia range, Coca Cola’s “Energising refreshment” online
cocreation, E.ON’s crowdsourcing initiative to support a documentary on Channel
4, Heineken’s Open Design
Explorations Edition 1: The Club are some examples
.
Still
nascent. But is increasingly emerging as a trend.
Shared Value: When Business and Society is One
Creating
Shared Value (CSV) is a concept
first introduced in Harvard
Business Review article Strategy & Society: The Link
between Competitive Advantage and Corporate Social Responsibility by Michael Porter. The
article provides insights and relevant examples of companies that have
developed deep linkages between their business strategies and corporate social
responsibility. This concept goes beyond a CSR program to
identifying common goals between the business and society, or social good.
For example, Nestle’s
global CSV program focusses on the future water challenge and Nestle.
Adidas
has partnered with Nobel Laureate Muhammad Yunus’s micro-finance organization, Grameen bank to manufacture a low-cost
shoe for the poor in Bangladesh.
Or
the BMW Guggenheim Lab, a mobile
laboratory that will travel to nine major cities worldwide over six years. Its
goal is to explore new ideas, experiment, and ultimately the create
forward-thinking solutions for urban life. This program establishes a social
purpose for BMW that could help address the exclusiveness/elitism of the
“Ultimate Driving Machine”.
How
Advertising as an industry creates Shared Value
The industry itself creates shares value and
is not just a canvas where brands paint their promising dreams.
By creating choice for consumers.
By keeping the competition alive in the
marketplace and minds
By raising public awareness and consciousness
By creating jobs, directly and through
related fields
Finally, advertising creates conversations.
And creates interactions, perceptions,
engagement.
Therein lies its role in communicating brand
value.
After all, there are still some things money
can’t buy.
That’s the ultimate value.
