Brand Value Equation

I have before written about what I call the PPQ, the inter-relationship between pricing, packaging and quality that delivers value customers at the point of consumption. During this year's Oregon Wine Symposium, I learned a new and particularly impressive value equation presented by Rob McMillan, Founder of Silicon Valley Bank's Wine Division. McMillan quantifies a brand value as follows:

value = (wine quality x brand experience)/ price

Measuring experience is important for two reasons. First, it underscores that we're essentially in the hospitality business -- every point of contact with a consumer is part of a winery's experience. (Contact points aren't limited to tasting room visits and include e-newsletters, club shipments, phone conversations, off-site events, etc.) Second, experience is an important differentiation tool. Differentiation provides the unique and compelling factors adding special value for consumers and helps prevent trade-offs to other brands.

A winery can differentiate in many ways -- packaging, pricing, winemaking philosophy, story, etc. but the experience can arguably be most memorable. Think about it: How many wines are "made with passion from a great vineyard"? Now how many of those actually deliver a unique and compelling experience --a special one that makes a customer want to return again and again?