The Brand Value Chain

Abstract

The value creation of brands lies in their impact on customer purchase decisions. The manifestation of brand value is the economic value that can be derived from current and future purchases of the brand’s products and services. In order to maximize the value generation of a brand it is important to understand the flow from the brand to its impact on customers’ purchase decisions. This flow can be described in a brand value chain. There have been several concepts that have tried to describe and explain the relationship between brand, marketing actions, and financial outcomes. One of the most well-known academic approaches comes from Kevin L. Keller, a professor at Tuck Business School who identified a value chain consisting of four elements: marketing program investments; customer mindset; brand performance; and shareholder value.¹ While Keller’s four building blocks describe the main marketing investments and metrics their interplay remains at a very top-level view. Another value chain concept is the “purchase funnel” and its derivatives which has been made famous by McKinsey but is also used by other consultancies in different variations.² Based on market research studies it starts with the total possible market for the brand and then analyses how many potential customers are lost at each stage of the funnel until the actual customers that buy the brand remain. Over the last couple of years the purchase funnel has been criticized for its strict linear nature. Nevertheless, it is still a widely used tool.