How do trust networks affect the value creation process?

Companies create the value that they offer to customers in a five-stage process that spans offer-market development, demand creation, sales conversion, satisfaction fulfillment, and strategic development. Value creation thus integrates product development, marketing, sales, service, and training.

Value Creation Consists of a Five-Phase Process

The figure above depicts the sell-side perspective and emphasizes an inward-looking focus on business processes and how the firm relates to its market through these business processes.

Offer-Market Development
In this stage, the brand firm develops a relevant offering (a product or service that meets a need) and through research identifies a market for it. The firm also develops the market infrastructure (field sales organization, repair depots, customer help desks, etc.) necessary to support the offering. This stage ends and the next stage begins when brand managers have defined a pre-emptive positioning.

“Pre-emptive” suggests that when the firm brings a new satisfaction to market it reshuffles the hierarchy of desired or expected satisfactions within the customer’s brandspace. When Apple Computer unveiled its iPod, for example, and positioned it as complete solution (“whole widget”) that included iTunes and personal computer platforms, it drove most of the other players into very small niche markets.

Demand Creation
With an unserved customer need, a world-beater product, and service now locked and loaded in the branding machine, brand managers must now generate demand. This generally corresponds to traditional marketing and product management activities: packaging, distribution, advertising, direct mail, publicity, point of purchase merchandising, and training of support staff, field operations, and distribution partners. But the principal task remains development of the unique selling proposition, at which point brand managers exit this stage.

A unique selling proposition cogently frames a problem, concern, or desire not adequately filled by alternate product or service offerings, and proposes a satisfaction, benefit, or end result that customers instantly recognize as both desirable and different from other offerings. For some offerings, this proposition conveys a quality that we call wow—a crisp, engaging story or pitch that frames the proposition as, at least in part, an entertainment experience. The sheer delight a prospect feels on imagining a Lexus parked in her driveway, the unexpected pleasure of design, the anticipated compliments of friends and passersby: it all adds up to “Wow!”

Sales Conversion
In this stage, the firm converts demand into sales to paying customers. Brand managers identify points of market presence (retail outlets, field sales force, channel partners, catalogs and direct mail, and other sales locations), work hard to achieve maximum visibility in each venue, and develop programs for the ongoing care and feeding of the people who staff these points of market presence. Customers then begin to buy the branded product or service.

Brand managers move on to the next stage when they have identified the critical success factors of customer satisfaction through research. They use these findings to produce a set of best practice prescriptives—dance steps that prospects can follow, based on proven routines of successful customers. Brand managers may also need to identify solution partners—third- and fourth-party companies that offer complementary products or solutions (retail organizations, consultants, etc.)—to clinch the sale of their branded offering.

Satisfaction Fulfillment
In this stage, the customer transforms the offering into a satisfaction by successfully buying and using it. The offering meets expectations, solves a problem, or otherwise satisfies the customer. In addition to excellent product or service design, ease of use, training, and peer group support play an important role. At this point, it becomes evident whether or not brand managers have anticipated problems that might arise and have made appropriate contingency plans: botulism in the tomato soup can, exploding lithium batteries, etc. Effectively dealing with such problems will let brand managers maximize their chances for keeping the customer satisfied.

This stage comes to a close as satisfied customers start talking to each other and form communities: kenships (ad hoc groupings of like-minded individuals), peerages (more elite groups with a hierarchy of prestige), and user groups (groups that organize the transmission of best practices).

Strategic Development
In this fifth stage of value creation, brand managers must evaluate the future and the brand’s place in it. As Clayton Christiansen discusses in detail in his book, The Innovator’s Dilemma (Harvard Business School Press, June, 1997), the greater the success a brand achieves, the more blind brand managers may become to shifts in demand and to exploiting potentially disruptive innovations.

Brand managers must now consolidate their gains and reinforce their positioning in the minds of customers. Don’t make the mistake of trying to extend the brand by simply slapping the brand on other products or services—dilution almost always results in disaster. Instead, prune, sharpen, make more definite and distinct the one satisfaction that customers associate with the brand.