Chapter 6. Building Brand Boundaries

In defining your value proposition, begin by identifying where your firm falls on your industry's value chain. To understand the changing dynamics of the value chain concept, observe what's happened to the music business. Consumers are still spending roughly the same amount of money on music, but the money isn't going to the record companies and music stores; it's going to iTunes. The money in the music business value chain is still there—it just moved.

The same is happening in other rapidly evolving industries. Companies are spending, but they're spending in new and different areas of the value chain. Instead of trying to squeeze the last bit of value from traditional sources of revenue, professional firms should be focused on finding a different spot on the chain.

Defining a value proposition capable of producing the most profit means selecting a place on the value chain where the offerings are still scarce and underdeveloped. For example, in the world of advertising agencies, the underdeveloped side of the value chain includes such services as social media and analytics. Conversely, an advertising agency with a value proposition based around the idea of "efficient production and distribution of advertising" would be selecting a spot too far down on the value chain to have any real or perceived value in the marketplace (See Figure 6.1).

The Value Chain

Figure 6.1. The ...

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