Value network and positioning

 

There is an increasing need for companies to gain insights into what is actually happening around them and where value can be created and captured. Linear value chains have in many cases been replaced by complex, interdependent and dynamic relationships between multiple sets of actors in different industries, different parts of the world, using different business and revenue models.

The increased turbulence creates threats and opportunities for organizations to respond to and quickly reconfigure its business models and with that its different roles in relation to external actors. To capture opportunities more quickly than rivals do, organizations must have agile business models and constantly analyze where value can be created and captured.

An intricate network of roles and relationships

The value network surrounding an organization comprises of different stakeholders and organizations (nodes) that have an effect on the outcome of the organization's activities. Between the nodes are different forms of formal and in-formal relationships connecting the nodes, forming the network. In contrast to linear value chains and One-Sided Business Models, such as buying ingredients to sell lemonade on the driveway, the number of different actors having multiple roles creates an intricate network of roles and relationships.

Nodes with multiple roles

One actor in the value network can simultaneously be a value provider (e.g. out-licensing important technology, co-educating customers, partner in working towards establishing a standard, co-developing new technology, supplier of services, providing user data), a value recipient (e.g. in-licensing technology, buying products and services, having access to process knowledge and technical know-how, benefiting from complementary products and services), a value neutral (e.g. competing with similar products and services, providing substitute technology, products or services, non-connected experts, authorities and regulators, standardization bodies). Additional to the complexity of nodes having multiple roles is that roles, relationships and business models are constantly changing.

Different business and revenue models

Each of the actors in the value network has its own business and revenue models and actors outside the industry may at any time enter with business models disrupting the whole industry, such as Apple entering the music industry or Google entering the navigation technology industry. Organizations need to constantly monitor actors in the value network, at the edges of the industry and potential outside actors that could for example provide something at a much lower cost or even for free. A good question to ask is what an industry outsider would do to take advantage of the weaknesses in existing value network and business models? Some examples of potentially disruptive business models:

• Give away or subsidize hardware to sell software or services
• Give away or subsidize software to sell hardware or services
• Give away or subsidize services to sell hardware or software
• Give away one version of the hardware, software and/or service to sell another
• Give away or subsidize hardware, software and/or services, supported by advertising
• Give away or subsidize hardware, software and/or services, sell access to 3rd party

Mapping the value network

To understand the value network, an organization should for every value proposition map out each and every actor that could have an effect on the outcome. This should initially be done as broadly as possible generating a very long list of actors. Different approaches can be used to identify actors such as:

• Roles in relation to one’s own organization "all suppliers, partners, competitors, customers, substitutes…"
• Type of organizations "all incumbents, SMEs, start-ups, research institutes, university research groups, governmental organizations…"
• Different forms of activities or expertise "content idea, content creation, publishing, distribution, content aggregation…"

The next step is to categorize each actor in the list to make it more manageable. This can be done in the style of a mind-map or in Excel lists that are perhaps more easy to sort and filter. The way to categorize and group actors is very situational specific and the approaches above can be used as a starting point.

Analyzing the value network

It is important to understand how value is converted from one form to another across the value network. Ideally each actor and relationship should be analyzed and a starting point is to analyze each group of actors and each identified key actor:

• How do value move through the network?
• Where are the bottlenecks?
• Who are benefiting from whom?
• What values are provided from each actor?
• Who are the main value creators?
• What are their objectives and strategies?
• Where are the unique assets and capabilities?
• How well are assets being used?
• How well are the values being realized?
• Who are the main value recipients?
• What do the value recipients need to compromise?
• What social value or cost is generated by each actor?
• Where are the main costs and risks of each actor?

With an understanding of the value network the next step for an organization is to analyze its own position in the value network.

Analyzing one’s own position

Based on the value network analysis the organization can start evaluating its own situation and different alternatives for adjusting its position in the value network:

• What roles and relationships is it dependent upon?
• What are the value propositions (including benefits) it provides to other actors?
• How are different external offerings affecting own value propositions?
• What are the financial and non-financial transactions in these relationships?
• How will success increase other actors' success and vice-versa?
• How will the organization enable other actors to win versus their competition?
• How can it change the game to its own and others advantage?
• How will its position evolve over time?

Positioning through strategic moves

Based on the existing and sought for position, the organization can then use strategic moves to affect identified actors, formulate alliances and partnerships and change its business models, to manage the value network:

• Who to collaborate with, for what purpose, in what form?
• Who to form strategic alliances with?
• What to bring to the table and what to expect from the collaboration?
• What actions to take to affect other organizations or relationships?
• How to adjust value propositions and business models?

Turning turbulence into an advantage

To understand the current and future capability for value creation, it is essential for every organization to understand the surrounding value network and how value is converted from one form to another across the network, and adjust its business models accordingly.

Opportunities arise from strategic moves and from pure luck. The challenge is for organizations to have agile business models to be able to act on these opportunities. I believe that organizations that really understand their different roles and surrounding value networks can turn the turbulence into an advantage.

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What is brand positioning and why aren’t you doing it yet?

 

Learn how to identify and leverage your brand position to create a competitive advantage with our actionable template

Think of some iconic brands. What pops into your head? Perhaps it's Coca Cola’s distinctive bottles, Apple’s sleek, futuristic presentation, Amazon’s UX (User Experience). These businesses realized and harnessed the power of brand positioning, and as such are easily recognizable and distinctive. Of course, these examples are of some of the world’s powerhouses - with a whole heap of money at their disposal. But any business has the opportunity to carve out their brand position and identity at any time to create a competitive advantage. And if you haven’t already, we’d suggest you start right now.

What is brand positioning?

Brand positioning involves enhancing the positive differentiation your brand offers against competitors and the perception of value in your customers’ minds. While it comprises of elements like your company name, logo, etc., successful brands incorporate positioning as part of their overall brand strategy.

A useful way to think of positioning is considering your USP (unique-selling-point). What is unique about your business? What is your purpose? Why would customers come to you rather than a competitor?

Why is brand positioning important?

Brand positioning helps you leverage your unique benefits and take control of your reputation and how your business is perceived. It’s a chance to really differentiate yourself from your competitors and showcase your values and brand ethos. That’s where the competitive advantage comes in - you are consistently and effectively showcasing the unique benefits of your brand to your target market. And if you do this right you can use it to justify price and promotional strategies.

“Striking the right balance between centrality and distinctiveness is critical, because a company’s choices influence not just how the brand will be perceived, but how much of it will be sold and at what price—and, ultimately, how profitable it will be.” (Harvard Business Review)

B2C branding example

Let’s take an example of two candle companies. They both sell candles online and offer a range of products. However, Candle company A realized that their audience cares about their carbon footprint and their impact on the environment. They have tapped into this need by positioning themselves as an environmentally-friendly brand. They use organic ingredients and ensure each part of their production is kind to the planet, with biodegradable packaging and a ‘recycle’ scheme for customers to re-use their containers to get money off their next candle. As a result of their ‘kind-to-planet’ positioning and business model, their processes are more expensive, but they can charge a higher premium for their candles due to their brand positioning.

Candle company B has no set positioning. Their target audience also cares about the environment, but they haven’t used that as part of their business or brand strategy. As they offer a similar product, they are losing market share to Candle company A who have a clear positioning strategy that aligns with their audience.

Regardless of the size or industry your business is in, it is always worthwhile taking the time to carve out your brand position to give clarity to your communication and conversion tactics. Forbes list four compelling benefits of brand positioning:

1. Brand recall
2. Emotional appeal
3. Increased sales
4. Improved customer loyalty

Convinced it's important yet?!

Ask yourself: If you don’t know your positive differentiation against your competitors, how are your customers supposed to know? Or worse still, what if through this process you realize that maybe you don’t have a strong positive differentiation at all? If that is the case, you'll want to identify that now so you can start making changes fast.

How do I identify my brand’s position?

Identifying your brand’s position falls into two parts. You need to start by looking at your brand’s current position so you can then carve out how you want to enhance your brand positioning in the future.

To get started on reforming your positioning, download our brand positioning template with editable slides for you to complete and share with your teams.

Understanding your current brand

Before you can position your brand, you need to know its current identity.

There are two viewpoints to consider:

1. Imagine your brand as a person. What is unique about them? What qualities do they have?
2. Consider your customers’ perspective. How are you perceived by them?

Top Tip: Here you are shedding light on your current brand positioning. The answers to these questions may not be what you want them to be yet, but that’s ok. The beauty of investing time in positioning is you are giving your brand space to develop.

We've created a helpful editable template where you can define your brand as a person to help you really unlock your current situation. Give your brand a name, then describe their personality, mission and perception.

In this space we recommend highlighting your brand’s key attributes. Can you pick 5 qualities from this list? (Be honest with how your brand is positioned now).

Defining your brand positioning

Now you know where your brand is right now, you can get to the fun bit of positioning where you want your brand to be!

It is helpful to use a positioning framework to visually highlight your brand identity across key areas. This is great for sharing in presentations too when getting company by-in. Here is a completed example for Smart Insights:

We also want to define our value messaging across core brand elements. Here we are asking, what are our core values, beliefs, personality, benefits? This information will be useful in applying to your messaging across digital (and non-digital) channels. In our template we have a handy template for you to fill out covering these elements:

Positioning across RACE

You now have an established positioning framework to help you enhance your competitive advantage and better connect with customers.

You can further integrate and personalize your brand positioning impact by getting granular across each stage of our RACE Funnel. To be successful with your positioning, it needs to be weaved throughout all your digital touchpoints, which is why we suggest using the RACE Growth System to align your activities.

We’ve created a template to highlight where you can position your brand across digital touchpoints, assigning media examples and team responsibilities. See example below - for the full example download our template.

Implementing your brand positioning

You’ve defined your brand position - great! Now the work begins. Using the brand positioning RACE template you can start to roll out your implementation across touchpoints. Here don’t forget things like updating your social media bios, website ‘about us’ page and any promotional decks. You want to be as consistent as possible across your channels to create effective brand positioning: “Omnichannel excellence requires a laser-like focus on value creation” (McKinsey.com).

Brand positioning is a long-term tactic and for large organizations it is worth documenting an annual brand strategy. The review and implementation process should be a continual part of your strategy. For real success with positioning you need to ensure everyone in your organization is on board with the new vision and messaging. From sales colleagues speaking to prospects on the phone to social media execs scheduling posts, your omnichannel brand experience needs to be consistent and reliable to achieve a competitive advantage long-term.

By Amelia Mayes 

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A Guide to Measuring Brand Health

 How to measure brand health

The role of a brand in developing a loyal and profitable customer base and providing a strong differentiation from competitors, has never been more important. The ease with which companies can now communicate globally, multiplies the number of effective competitors in many sectors. If brands fail to distinguish themselves in this explosion of competition, they will be seen as interchangeable, leaving price as the key discriminating factor. There may be a ‘brand’ name, but without a clear, relevant and differentiated brand positioning, this is simply a label to write on the box.

The brands owned by the Forbes 500 organisations are estimated to account for 30% of their combined balance sheets. Furthermore, the top 100 brands in the Millward Brown Brandz list of the Most Valuable Brands show an increase in value of 14% in the past year alone, and 126% over the 10 years of the study.

Brands clearly have a value, and yet, when we ask business people how important the brand is to them in their business decisions, they routinely attach an insignificant weight of around 5% to its importance. Business buyers claim to be rational in their decisions and driven by price, availability or reliability of a product or service.

We think otherwise. Statistical analysis of the impact on satisfaction and advocacy of more emotional and intangible attributes, as well as observed behaviour tell us that emotions play a very important role. Buyers of business products and services switch suppliers relatively infrequently and sometimes stay loyal for years – despite there being cheaper and possibly better products available to them. The reputation of a company (its brand by any other name) is so important that it could account for 50% not 5% of the buying decision.

The risk manager who returns to the account manager who puts his mind at rest, the tradesman who enjoys a free coffee or newspaper at the builders’ merchant, or the IT manager who insists on a single printer manufacturer are certainly influenced by the brand, as well as the functional features of the products they choose.

The crux of the issue here is ‘what is the brand?’ and ‘what makes it strong’?

There are three main components to brand health tracking and these we describe as “the brand health wheel”.

Awareness and usage – if potential customers have no awareness of your brand, they cannot consider it. Measuring levels of awareness and use is a critical component of brand health.

Brand positioning – your brand has to stand for something and that something should be what customers and potential customers want.

Brand delivery – the brand must live up to its promise.

These three important components of brand health can be further broken down into other factors which can be measured. These measurements lead to an overall brand health score. This is illustrated in the diagram.

The Brand Health Wheel

Awareness and usage

For a brand to do its job, it stands to reason that people must know about it. But that’s not enough – brand owners must consider their target audiences in the widest sense. These include but are not limited to:

• Specifiers
• Influencers
• Decision makers
• Approvers
• Users
• Order placers

B2b purchase decisions, in particular, require rather more justification to other stakeholders, than a personal consumer decision. It is far less likely that a high value purchase, or ongoing contract will be awarded to a business that a key decision maker has never heard of.

More directly related to the business bottom line, is the percentage of the target audience who use a brand. Strong brand penetration, as well as a high share of wallet within a category, are key to building and maintaining a profitable customer base. Retaining, and building spend with a given customer is always less costly than spreading sales thinly amongst an ever changing audience.

Brand positioning

The awareness that a brand has amongst its target audiences is clearly critically important. If somebody doesn’t know of a brand, it will have no position in their mind and quite probably will not be included in a consideration set. IBM, HSBC and Samsung have lost billions of dollars off the value of their brands in the past year, according to Millward Brown Brandz. They had slipped back not in awareness but in the positioning within customers minds.

The positioning of a brand is inextricably linked to brand benefits, perceptions and associations such as:

• Relevant to the needs of the individual and their business
• Clear and distinct from the associations with competitor brands
• Credible and consistent across all touchpoints and experiences of the brand

Relevance to a potential customer is at its most basic ‘do you supply the product type I’m looking for?’ It’s no good being a leading brand in cameras, if no-one knows you make office printers. A brand that has a level of awareness linked to a positioning that is relevant to the target audience is one step closer to being considered in a b2b purchase decision. At its most compelling, a relevant brand so strongly connects with its audience, their lives and needs, that nothing else will do. Ask a Manchester United fan to fly with an airline whose brand is on the front of arch rival Manchester City’s shirts and watch them squirm!

Distinctiveness is the key to differentiation and can take many forms. A product can be distinguished by its functional features or benefits, whilst a brand needs to feel different. Only then can there be loyalty beyond reason. A strong brand gives reassurance and trust that the company’s money has been well spent, and that you, the decision maker, are a smart and competent businessman. Beyond this, a brand may offer emotional benefits of inspiration, fun or belonging.

With an understanding of what the ‘ideal’ brand in a market will represent to its target audience, a brand must then be inextricably and uniquely connected to that positioning. Which brings me to the final part of the Brand Health Wheel…

Delivery of the Brand Promise

I use the word ‘delivery’ rather than ‘communication’ because a brand’s beauty is in the eye of the beholder. This is not about a business’s advertising messages, or even its marketing output in a wider sense. A brand’s position in the hearts and minds of its b2b target audience is a product of all messages and impressions received from all sources.

Though I am discussing business decision making, it is as human beings that we gather and process experiences to create our view of a brand. If delivery of the brand promise comes down to one word, it is ‘consistency’.

• Consistency means that your brand’s positioning has the chance to transmit loud and clear through the noise of business life to mean something, rather than nothing, to your b2b audience
• Consistency of message, customer knowledge and experience lends credibility and ownership of your brand positioning
• Consistency means that every single experience of a brand should fit together as part of the same entity,
• from the first time a brand name passes your eyes sponsoring a local golf event
• through advertising, and every kind of marketing communication, including a brand’s visual identity
• the way your phone call or email enquiry is answered when you get in touch
• the enquiry, proposal and business development process
• the service design and set up phase
• the quality and attributes of the product and service itself (though this may in rational terms differ little from the competition)
• your experience as a customer and the way you are dealt with by all people from all departments and functions of the business
• the values by which a business is seen to operate
• and, most difficult of all to manage; comments, reviews and news stories from customers, competitors or press – our multi-media world makes this an ever growing and changing challenge

Early in this article I suggested that the greater role played by personal relationships in many b2b business models may reduce the importance of the brand. However, when a brand is consistently delivered across all touchpoints, these relationships are powerful tools in embodying the values of the brand itself, and strengthening emotional relationships with the brand. Will you really turn down a proposal from an account manager you trust and get on with, if there is no rational difference from a competitive offering?

In short, the brand is something that your business IS and not what it wants, or claims to be. Building a strong brand is the biggest single determinant of long term business success. As b2b marketers join their b2c colleagues in building strong and powerful brands that are relevant, unique and consistent across every touchpoint, who wants to be the ‘product’ left behind?

Written by Catherine Firth

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