VALUE PROPOSITION DRIVES BRAND GROWTH
Understanding and leveraging value components vital to success in difficult times

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In his excellent book entitled “The Momentum Effect,” author J.C. Larreche describes the unique characteristics of momentum driven brands like Apple, IKEA, Wal Mart and Toyota. They grow consistently, have a lower ratio of marketing spend to revenue results and routinely produce greater shareholder returns. Why? Consumers resonate to their extraordinary value proposition. He says: “Momentum powered firms don’t just offer good customer value, they offer compelling value – a value so intense and personal that it resonates with their needs in a transfixing and powerful way.”

Value is not just a quick summation of product benefits, features, price and the rational assessment of those pieces. Nor can heavy investments in brand communications and promotion make up for an inadequate or misguided value proposition. Rather the proposition must be complete as well as gripping before it can be powerful.

What does value look like?

We now market products and services in an era dominated by customization, choice and individualization. Categories have, in amoeba-like fashion, sub-divided into smaller, narrower segments based on the unique needs of distinct consumer groups we affectionately refer to as “tribes.” So value will have different faces to different tribes:

• Performance value
• Time value
• Physical value
• Aesthetic value
• Entertainment value
• Education value
• Community value
• Social value
• Growth value
• Purpose value
• Relationship value
• Financial value
• Involvement value
• Identity value

The goal for agencies and clients together is this: identify and manage the ingredients that can optimize customer value. It’s worth noting that functional benefits are only a part of this evaluation, and even in a bundle, must also be seen in context with the intangible and emotional values consumers also place on brands.

What are the components of a compelling value proposition?

There are four that require systematic investigation among various customer segments.

• Functional
  This includes the physical properties, performance and features such as taste.

• Financial
  And its not just price alone. High prices, for example can be a benefit when it reflects an important sense of quality or exclusivity.

• Intangible
  Does a brand convey a form of social status that’s important to its user? Time has value to some consumers – does the product help reduce time commitments? Perceived innovation can be important to those who define themselves as always being “on trend.”

• Emotional
  To what extent does the brand foment happiness, pleasure or perhaps fear? Most often emotion will be the primary driver of purchase and holds influence over the logical arguments presented in functionality.
  

Larreche developed a useful tool to help us organize these ideas. Here it is in graphic form:



Note the “business end” of the wedge is pointed down like an ax blade and lies in the least understood zone of emotion. It’s the most important component of value that can work to crack open new market opportunities. It is emotion more than rational thinking that drives purchase decisions.

Tom Asacker, one of our favorite branding experts, believes brands are all about feelings -- and how marketers work to deliver an expectation of a feeling when in the presence of their brand or business. “We create feelings by making peoples lives simpler, more convenient, less risky, more fun, less boring, more productive, better informed, more connected, more fashionable, more successful, more alive….”

The challenge: conduct a rigorous, systematic analysis of all the value wedge components. This review will help brands refine and tune the right elements to produce the highest potential level of perceived value. Once compelling value is properly dialed in, brands can use this knowledge to create a compelling offer that will resonate persuasively with consumers.

Additionally, the cooperative effort between agency and client to examine these elements will lead to more effective strategy, messaging and tactics for brand PR and communications – you’re going to know exactly what buttons to push! And in tough economic times, your extraordinary value proposition, well communicated, may spell the difference between success and something less than that.

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