brand-management

BMA Southern California Chapter: Managing Your Brand as an Asset ANDREW FLYNN JULY 18, 2002 Agenda  Who is Prophet?  Why is Brand Asset Management Important?  What are the Key Steps to Brand Asset Management? 1 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET About Prophet – Who We Are  Prophet is a strategic professional services firm committed to building and growing great brands and businesses  We work with companies from strategy through execution to better manage their brand as an asset; resulting in increased profitability and a true competitive advantage  Our 80+ consultants bring real-world experience, deep client service expertise and the thought leadership of David Aaker and Scott Davis to engagements Leading Brand Thinking  Prophet has offices in San Francisco, Chicago, New York, London, and Tokyo (6/02) and is also a member of Catenas, a global network of best-ofbreed professional services companies 2 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET About Prophet – What We Do  Prophet has four primary services which enable companies to develop, manage, grow, and protect one of their most valuable assets: their brand Develop Manage Brand Leadership: We work with clients to link brand initiatives to overall business strategy, and to define, differentiate, and position a brand or family of brands Brand Operationalization: Prophet helps organizations bring their brand to life by fostering internal understanding of brand, optimizing the customer experience, and developing marketing programs Brand-Driven Growth: We identify and develop new revenue opportunities for companies to leverage their brands via new markets, products, or customer segments Grow Protect Brand Protection: Prophet leverages our network of brand experts to provide expert testimony to resolve litigious conflicts involving the creation and ownership of brand equity 3 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET About Prophet – Some of Our Clients  Prophet’s clients come from a variety of industries and range from start-ups to well established global brands 4 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET Agenda  Who is Prophet?  Why is Brand Asset Management Important?  What are the Key Steps to Brand Asset Management? 5 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET The Top Determinants of Brand Strength “I Would Travel Further” “I Would Pay More” Customer Loyalty “I Would Wait Longer” Price Premium “An increase in customer loyalty of only 5% can lift lifetime profits per customer by as much as 95%” “In some sectors, an increase of customer loyalty of just 2% is equivalent to a 10% cost reduction” “Over 50% of customers would be willing to pay 20-25% price premium to the brand that they are most loyal to” “A 1% increase in brand equity can result in a 1% increase in stock price” “50% of customers are willing to try a new product from a preferred brand because of the implied endorsement, credibility and trust.” “It takes 7 to 10 times the cost and effort to gain a new customer as it does to keep an existing customer” 6 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET Powerful brands create significant value Rank 2000 2000 Interbrand Brand Valuation (billions $) 2001 2001 Interbrand Brand Valuation (billions $) 1 2 3 4 5 6 7 8 9 10 Source: Interbrand 7 BMA Presentation: July 18, 2002 72.5 70.2 53.2 39.0 38.5 38.1 36.4 33.6 27.9 25.5 Proprietary and Confidential 68.9 65.1 52.8 42.4 35.0 34.7 32.6 30.1 25.3 22.8 PROPHET Agenda  Who is Prophet?  Why is Brand Asset Management Important?  What are the Key Steps to Brand Asset Management? 8 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET Nine ways to manage your brand as an asset Managing Your Brand as an Asset 1. Formally link business and brand strategy 2. Create a unique and relevant Brand Identity 3. Create a clear and distinct Positioning 4. Extend your brand strategically 5. Build a strategic Brand Architecture 6. Evaluate and align touchpoints 7. Consistently deliver on your Brand Contract 8. Practice effective global brand management 9. Set the organization up for success 9 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET 1. Formally link business and brand strategy Linkage Between Business and Brand Strategy Business Strategy  Viable business model  Viable profit model Brand Strategy Resonate Credibility Execution  Planning (e.g.,communications road map, marketing, site plans, etc.)  Implementation – Internally (e.g. communications, brand behaviors, culture) – Externally (e.g. brand customer relationship) 10 BMA Presentation: July 18, 2002 With Customers And Employees Vs. Competitors Differentiate Proprietary and Confidential PROPHET Connecting the brand vision to a financial growth gap helps demonstrate the importance of bringing it to life 5 Year Growth Gap = $270 million 5-Year CAGR 8% $630 million $100 Million $100 million  Options to fill the branddriven growth gap: – Build and leverage your brand more successfully— through strategic line extensions, premium pricing, partnerships, licensing opportunities, etc. $430 million (3.5%) $70 million 2001 = Current Business 11 BMA Presentation: July 18, 2002 2006 = Acquisitions = New Products = Brand Building PROPHET Proprietary and Confidential 2. Create an aspirational and relevant Brand Identity Aspirational goal of the brand; Aspirational associations customers should have after repeated exposure to/experiences with the brand. Brand And Customer Value Brand Identity Brand Positioning Brand Positioning Brand Positioning Platform to move the brand along its path to its Brand Image Today 12 BMA Presentation: July 18, 2002 Proprietary and Confidential aspirational identity. Demonstrates the unique and beneficial differentiation of the brand; resonates and is credible with customers. Current perceptions of the brand Time Future PROPHET Brand Identity provides strategic direction Brand Essence Guides internal strategy; summary of the Brand Identity  Brand Identity is…  Futurefocused, aspirational and provides a vision for the organization to strive for The emotional link desired between product and customer  Core Identity Core values, key competencies. Associations that will remain consistent across product, markets and through time.  Brand Identity will provide…  Organizational touchstone, both internally and externally The basis for crafting the strategic roadmap, guiding Brand Positioning, Communi cations, Brand Extendibility and Metrics PROPHET Extended Identity Elements that provide texture and completeness; personality, organization, product characteristics 13 BMA Presentation: July 18, 2002 Proprietary and Confidential  Virgin’s Brand Identity Brand Identity Essence of the Brand Richard Value Innovation Core Identity Elements Personality Irreverence Service Quality Fun & Entertainment Underdog Extended Identity Elements 14 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET Teradata’s Brand Identity  Where they were…and where they wanted to go…. To here From here...  Data warehouse Simplicity Symbol  Scalability  Big  Complex Actionable Personality  Technical Information Single view  Advanced Better, faster  Wal-mart Powerful decisions  Expensive  Confident  Geeky Driving growth  Smart Commitment  Friendly to Excellence Experienced  Team player 15 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET 3. Create a clear and distinct Positioning Four Fundamentals Of Brand Positioning 1. Communicates the elements of the identity that resonate and are most credible with customers 2. Differentiates and demonstrates competitive advantage  It is the foundation for all external communications 3. Serves as the platform to move the brand along its path to the aspirational identity 4. Will evolve over time as the brand is able to deliver on elements of the Brand Identity and as customers’ needs change 16 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET Benefits Hierarchy The emotional & selfexpressive benefits customers receive Emotional & Self-Expressive Benefits Most meaningful & most difficult to imitate, but hardest to deliver The functional benefits customers receive Functional Benefits Features or processes that must be demonstrated to customers Attributes Easiest to deliver, but least meaningful & most easily imitated 17 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET Virgin’s Brand Positioning Brand Identity Essence of the Brand –Irreverence Positioning Core Identity Elements –Service Quality –Value –Fun –Innovation Extended Identity Elements –Underdog –Exciting –New Rules A Personal Way to Flexibly Shop for Wines at a Great Value “Wine Buying Like Never Before” 18 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET Case Study: Teradata Inputs Testing & Screening VALUE Valued by customers Recommended Identity & Positioning Brand Implementation Internal Assimilation - Employee Workshops - Internal Communications - Metrics Internal Management Interviews Unique among competitors Customer & Prospect Interviews -Purchase criteria -Brand perceptions -Ideal experience UNIQUENESS Fit with Teradata Brand Statement Future Positioning FIT External Communications Analyst Interviews Partner/Alliance Interviews Industry Research Perceptions of Teradata’s ability to deliver CREDIBILITY 19 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET A global Positioning statement can be tailored to support local needs USA • Sporty and young-at-heart • Patriotic and respectful of American ideals, but not lost in nostalgia or sentimentalism Germany • Worldly, modern, contemporary • Rugged but friendly, outgoing and approachable Japan • Outdoorsy, rugged • Classic cool (e.g. James Dean) Mexico • • • • Cosmopolitan, fashionable Socially active Proud of, but not arrogant Seeking and achieving success GLOBAL Zippo’s Core Global Positioning Statement Zippo’s resilience, ruggedness, and dependability is legendary, and has earned it the continuing respect, confidence, and loyalty of its users. Combined with its classic design, American heritage, and individual sense of style, Zippo has become the quintessential brand for those who demand the perfect flame. 20 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET 4. Extend your brand strategically Brand Extendibility: Critical Questions to Ask  Is the extension consistent with your longer term brand vision and strategy?  Does the extension actually add value to your brand?  Will you be able to deliver on the branded customer experience?  Is the benefit consistent with your Positioning?  If this extension fails, will it be a major or minor setback for your brand?  Does the extension make sense for all regions? 21 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET Stronger brands allow for more differentiated product line extensions Level of Brand Meaning Beliefs and Values Example: Benefits Pioneering Innovative Technologies & Products Attributes High Industrial (e.g. Abrasives) 22 BMA Presentation: July 18, 2002 Degree of Product Differentiation Office (e.g., Scotch Tape) Transportation Safety (e.g., Reflective Coatings) Low Health Care (e.g., Surgical Supplies) PROPHET Proprietary and Confidential Brands with lower brand meaning cannot support much extension Level of Brand Meaning Beliefs and Values Example: Benefits Pure Water Attributes High Bottled Water Degree of Product Differentiation Low ?? Proprietary and Confidential PROPHET 23 BMA Presentation: July 18, 2002 Knowing when to extend your brand… Successful Extensions Sainsbury’s Bank Faster Chips The Blue Card Consulting X Box 24 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET …and knowing when not to is a key driver of brand success Unsuccessful Extensions Mercedes C-Class Coke Clothes Wine Coolers Mouthwash 25 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET Brand extension ideas should be evaluated for fit in all regions Pocket Flashlight Sunglasses Camp Stove Lighter Wand USA Germany GLOBAL Japan Mexico USA Germany GLOBAL Japan USA Mexico Germany GLOBAL Japan USA Mexico Germany GLOBAL Japan Mexico Purchase Interest High 26 BMA Presentation: July 18, 2002 Medium Low PROPHET Proprietary and Confidential 5. Build a strategic Brand Architecture Brand Architecture is the organizing structure of a brand portfolio – David A. Aaker, Brand Leadership  The logical, strategic and relational structure for all of the brands in the organization’s brand portfolio  The objective is to maximize clarity, synergy and leverage to maximize customer value and internal efficiencies  Should clarify what role each of your brands and products play in different markets, and may result in a brand rationalization Master brand Subbrands Product brands 27 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET The Brand Architecture spectrum A House of Brands consists of independent stand-alone brands, each maximizing its impact on the market with little connection to its parent. A Branded House uses a single Master Brand to span a set of offerings that operate only with descriptive offerings. Branded House House of Brands Sub-Brands Key Issues Driving The Spectrum: Reinforce comprehensive solution focus Significant investment in multiple Brands Build Brand Equity in Master Brand Stand-Alone Target unique & separate customer base Maximize synergies among business units 28 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET A flexible architecture can be used to address local differences  The Sony brand system uses the Sony brand in a variety of ways, in different markets, to target specific customers with unique value propositions Endorser brands usually represent organizations, rather than products, and provide credibility to the offering. Since the Sony brand is somewhat insulated from the product brand, poor performance of Metreon is unlikely to affect the Sony brand A driver brand has the primary responsibility for a purchase decision and owns the customer’s brand experience. Sony uses their master brand with a descriptive, ―Pictures,‖ to drive the film division The ProAudio brand augments the Sony brand by communicating cutting edge technology across multiple Sony Electronics product lines Endorser Driver Ingredient Sony chooses a flexible architecture and leverages their corporate brand in several different Corporate ways Stand-Alone Play Station and Columbia TriStar are not visibly connected to Sony, but many consumers know about the link. This shadow endorsement provides positive associations, but allows the strong brands to stand on their own 29 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET Teradata’s Brand Architecture NCR Teradata Teradata A division of NCR Teradata The Teradata brand awareness is not broad enough to stand on its own NCR brand is tied to cash registers and has limited credibility in DW space. Leading with NCR also limits the positive equities of the Teradata brand Teradata as the driving brand with continued endorsement by the NCR brand leverages the positive equities of both brands 30 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET 6. Evaluate and align touchpoints to deliver  Each touchpoint can reinforce or denigrate the brand, therefore the touchpoints must be evaluated and aligned to deliver the brand Positioning, and ultimately reach the desired Brand Identity Touchpoint Wheel Customer Service Website Billing Post-Purchase Experience Loyalty Programs Pre-Purchase Experience Advertising Collateral Product Quality Purchase Experience Sales Force Point-of-Purchase Displays 31 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET Product/Service Assortment Whirlpool’s Touchpoint Wheel Influencing Touchpoints Employees College/ MBA Recruiting Post Purchase Pre-Purchase Experience Experience Internal Newsletters • • • • • • • • Installation Technicians Customer Service Agents Customer Service Reps Service Technicians Inspired Cooking Class Customer Satisfaction Survey Bill Community Work • • • • • • • • • • Print & TV Advertising Coupons or Special Offers Website Viral Marketing Direct Mail New Product Launches Public Relations Consumer Reports Marketing Speeches Sponsorships • Company Alumni Analysts Purchase Experience • • • • Home Builders, Contractors, Architects • Partners like P&G • Whirlpool Customers Vendors/ Suppliers Retail Partners In-Store Displays Sales Force Financing Plans Annual Report Annual Shareholder Meeting 32 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET 7. Consistently deliver on your Brand Contract  A Brand Contract includes all the promises that the brand makes to its customers. Once you have identified and evaluated critical touchpoints, ensure that you have an action plan to deliver on your Brand Contract.  Understand the specifics of the Brand Contract from your customers’ perspective.  Translate the specifics of the brand into product, service and delivery standards that employees can understand and technology can fulfill.  Fulfill the ―positive‖ expectations of the Brand Contract to develop a more lasting, powerful brand. Uncover and address the ―negative‖ expectations of the Brand Contract to improve and transform perceptions of the brand.  Uphold the Brand Contract or risk undermining the brand and losing trust from customers.  Deliver on the Brand Contract consistently through all touch points 33 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET The result of NOT delivering on your Brand Contract What do you expect from a visit at McDonald’s?  What do you experience from a visit at McDonald’s? Wall Street Journal, July 16th - cites a University of Michigan study on customer service that found McDonald’s ranked among the poorest-performers relative to customer satisfaction. ―on any given day, 11% of McDonald’s customers are dissatisfied with their visit‖ Nearly 70% of the dissatisfied customers are further dissatisfied with the way their complaint was handled Over half of all dissatisfied customers reduce their visits to McDonald’s and tell up to 10 others about their unsatisfactory experience. Brand Contract  Consistent, fast, friendly service    Reasonably priced  Fresh, tasty food  Family fun and safe  Enjoyable experience  High value  High quality  The article quantified the financial losses tied to poor customer service as potentially costing McDonald’s $750 million annually. Proprietary and Confidential PROPHET 34 BMA Presentation: July 18, 2002 8. Practice effective global brand management  A company’s primary goal should be global brand leadership, not a global brand Share Insights and Best Practices Across Countries Assign Responsibility for Cross-Country Synergy Effective Global Brand Management Support a Global Brand Planning Process Execute Brilliant Brand-Building Programs 35 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET Companies use different methods for encouraging sharing of best practices and brand insights + Holds a global meeting at its headquarters every quarter to spark internal community spirit, provide education regarding the direction of the company, and rally associates around the brand + Senior management prefaces internal newsletters and status reports with brand vision Employees who demonstrate the company’s core values receive company-wide recognition through reward programs such as the highly acclaimed Chairman’s Award Actively use intranet to share best practices Provides complete ―Brand Book‖ and ―Brand Execution Guidelines‖ Regular conferences Global Brand Director frequently travels to educate, learn, and share Bayer Self Testing Segment has an inconsistent global brand structure Product oriented company; lacks umbrella brand No senior management support; no internal communication Brand does not tie its diabetes offerings together, resonate with consumers, or differentiate from competitors + + + + +     36 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET There are varying degrees of centralization of brand management Options for Global Brand Management Examples 1. Single, Unified Global Brands & Positionings, w/ Regional Variances 2. Regional Brands w/ Common Umbrella Positionings, & Regional Autonomy 3. Distinct Global Brand Postionings, w/ Regional Brand Autonomy 4. Common Global Brand-Building Platforms (products, sales force, marcom), Distinct Brands by Price Point 5. Shared Brand Management Processes, Tools & Knowledge Management 37 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET 9. Set the organization up for success Brand Metrics  Enable analysis and decision making  Track organizational progress Internal Communications  Assimilate the brand strategy within the organization: • Utilize a communications framework to increase support for the change • Select appropriate vehicles for communicating with and educating employees 38 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET Track specific brand metrics ROBI Measurement SM ROBI Metrics Analysis Benchmarking Diagnosing Decision Making Allocating Resources Compensating Employees 39 BMA Presentation: July 18, 2002 Proprietary and Confidential Informing Markets Setting Future Goals PROPHET There is only one kind of valuable brand metric – one that drives to a business action Touchpoint Metrics Metrics that diagnose the brand’s performance across the touchpoints of the brandcustomer relationship. Strategic Metrics (Impact) Metrics that diagnosis the brand’s impact on the business’ performance. Business Action 40 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET The foundation for successful internal brand development is assimilating it into the culture  As employee support for change increases, the intensity and the difficulty of activities intended to drive change also increases Employee Motivation and Morale Passionate Advocacy Cultural Degree of Support for Change Emotional & Utilize & Internalize Personal Emotional & Personalize Personalize Personal Ready to Promote Ready to Promote Ready to DefendReady to Defend Acceptance Conceptual Cultural Experience “Living It” Phase Conceptual Acceptance “Believing It” Phase Understanding Understanding Superficial Awareness Contact Contact Awareness Superficial Time “Hearing It” Phase 41 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET A plan for implementing change enables a company to build a brand-based culture Develop Strategy Build a Foundation Implement Cultural Change Objectives:  Define Scope  Define Company’s Internal Audience Segmentation  Develop Internal Cultural Identity  Develop detailed 18Month Assimilation Road Map  Create Success Metrics  Develop Materials for Workshops  Conduct Workshops and Train the Trainers  Identify Key Vehicles for Implementation  Prioritize and Schedule for Implementation  Assess need for comp system overhauls  Conduct Training/ Workshops with Employees in All Regions  Use Communications to Educate, Motivate and Internalize Brand  Monitor & Measure Effectiveness of Plan  Modify for Adjustment and Improvement 42 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET Nine ways to manage your brand as an asset Managing Your Brand as an Asset 1. Formally link business and brand strategy 2. Create a unique and relevant Brand Identity 3. Create a clear and distinct Positioning 4. Extend your brand strategically 5. Build a strategic Brand Architecture 6. Evaluate and align touchpoints 7. Consistently deliver on your Brand Contract 8. Practice effective global brand management 9. Set the organization up for success 43 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET What Impact Does This Approach Have on Brand Asset Management? Management guidelines Organizational alignment Realized synergies Experience based Focused resources Objectivity through measurement Customer driven Unique and valued brand Stronger relationships 44 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET What Impact Does This Approach Have on Brand Asset Management? Management guidelines Organizational alignment Realized synergies Experience based Focused resources Objectivity through measurement Customer driven Unique and valued brand Stronger relationships 45 BMA Presentation: July 18, 2002 Proprietary and Confidential PROPHET BMA Southern California Chapter: Managing Your Brand as an Asset ANDREW FLYNN JULY 18, 2002