Ladies and gentlemen welcome to the session on added value as part of the series on principles of brand management. Added value is all to do with the way that the organization puts a little bit more into its brand but as the result of putting that a little bit more into its brand its able to charge more for its, why? Very simple, it’s a famous expression value is in the eyes of the beholder.

So I added value we start to look at brands and appreciate how those brands have gained their price position in the market place. You look at what's goes on, where you actually break a home down in terms of the component parts. And the cost of it you'll be horrified at the way that you're price that you're home is selling for is higher than the material and the labor parts. Well the reason is one plus one equals three, it’s not the labor, it's not the material but it’s a labor and the material plus the location. These are all giving added value.

So we’re able to start to charge, we’re able to start to charge the price premium because of the way that we’re putting a small element into the package that constitutes the brand but by doing that people then say, “Gosh, this has real value.” I think about William I'm at the watch market, I think about the watch market and we seen that market stores being the added value. You think about brands like Breitling the brand of major upon flight, the brand that almost goes back in time in terms of this aren’t watches, these are chronometers that aided as form of navigation, aviators to able to direct and follow a course. I think about Patek Philippe the watch with the famous strap line “you never own Patek Philippe rather you're just taking care of it for the next generation”.

And we see a brand there where the story, is a story about one person passing it down to another person the memory that is in coming through. Ladies and gentlemen these are fine watches the Breitling that Patek Philippe, the other fine watches out in the market place. But again, look at this picture here of the house in the bricks, it exemplifies the way that you do something small and by doing that something small people then say, “Gosh, there is a real value in terms of what is going on.”

Now, the issue is when we looking at added value it is creativity, it is required to add the value to the brand. Ladies and gentlemen think about the credit card market. I had a research working with me doing up a project using that concept of the value changes working the way through the different parties to try and understand the way that brands come out as being added value entities with a price premium. Took the value chain of American Express few years ago went along and spoke to somebody there one of the directors and said, “Well, you know what if from your perspective the added value of the brand.” So there's many, maybe one thing about the added value of the brand is all to with “Pleasantly surprising consumers with benefits other than the basic product” and that’s the points it’s other than the basic product, that’s we’re about, that’s what we’re really about.

You know this is organization where you lose the card or you have a problem with the card you make one phone call and that one phone call everything then suddenly comes about almost the extent where by night, you know if you’re real. You make one phone call from Amex member and I think start automatically you go through. Look at the car market, again essential thing this pleasant surprises that car about there. I remember one of my colleagues with the brand new car delighted by it. When the car was delivered the salesperson give my friend the car keys, his wife then went out to the car and she said to salesman, “Excuse me you’ve left something here.” “Madam” he said, “With our compliments that something is for you.” That was an incredible bouquet of flowers, now it was lovely the way this carriage have found a little bit not just for the person that was looking at the car but for the person that was then going to enjoy being driven in the car.

Small things but then pleasantly surprised going beyond the core basic form of the product. Look in the way through the value change and spoke to one of the consultancies that was at the time helping and was involve in this and spoke to one of the executives that this company the added value company and in the interviews the recording for it was and able—what is added value particularly we’re talking about? What is this thing called the credit card, the American Express Credit Card. And the reply came back, well added value is all about satisfying consumer needs better than competitors. So what, that’s what markets all about isn’t it? Choice occurs because people say it’s a better.

Aha! Hold on, better than competitors at a cost lower than the price premium at a cost lower than the price premium. In other words ladies and gentlemen what we’re now saying is added value is all about economics, it’s about understanding the way the different organization develop the service, develops the product it gains knowledge and experience. The knowledge experience is learning, the learning means that it keeps on refining the way it is doing things because it’s doing things better, it’s selling more, its unique cost therefore full so let me go back to one the reasons for brand success functional excellent what we then see is, how you can add value to the brand as a result of understanding the call benefit of the brand? Do it really well.

Do it really well therefore means that we’re going to learn more by learning more we continually develop better processes. By developing better processes we sell more people more satisfied because of hat we can then further drive down in our cost. Therefore ladies and gentlemen what were saying really is added value is not just about going for high price points.

Added value is also playing at a price point lower than the competitors with the product or service that is on a particular dimension better and is it’s a classic argument because you’ve now with the larger number of buyers, large number of buyers times more margin still gives me, from economic perspective still gives me a very good, thank you very much a level of sale and also level of return and I'm going to get through from it. And therefore you know one doesn’t and start to decry the low cost carriers and for arguments sake, the airline market.

When this is start to decry the limited line discounters in the grocery retaining sector because these are organizations they really have said what we're going to do is understand what is the key issue of the customer is concerned about and then what we're going to do is we are then going to restructure our delivery system such that we do it better than anybody else we gain learning, through learning we’re doing things better because the better people buying more. Our unit cost then further full and it’s a nice virtuous circle coming through.

Continuing the journey through this value chain is the organization there's a consultancy that worked with the organization was an agency but at time was very much involve with the organization rather they made there. You can't talk to one of the—except he's there. Trying to understand how they will work on the brand so that they were able again to add value to this brand. And what are you doing, how its import about?

And what if replies that came back again which paper inside to creativity? We’re adding value because added values also to with, when consumers feel a brand is think rational about his feel, emotional. When consumers feel the product gives more then it’s competitive whether the feeling is real or perceived.

Ladies and Gentlemen I've got great respect again for two brands of cars in the market place the Toyota MR2 and Porsche Boxster. You again look at the brochures for those cars these fine cars have got remarkably similar performance levels yet, the price premium is significant the differential between the two and part to the reason for it is not just the way you put the different body on but it’s a badge you know Porsche versus Toyota. That is leading to different types of perceptions and as the guide the time we’re saying “whether this feeling is real or it’s perceive”.

So now when we’re starting to see is by doing some of these interview by looking at some of these examples we then starting to see the added value is only constrained by your creativity by the extend to which your not prepared to take off the blinkers. So we need to start to think about how have organizations used their brands as added value devices. How they used their brands as added value devices?