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Ppt Presentation on Coca Cola Marketing Mix - PDF

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					PETER
Good Morning and Welcome to the CBI Conference Centre!
The CBI describes itself as the Voice of Business – so it is extremely
appropriate that today we are unveiling a new survey, published
recently in the FT, that speaks in one voice to two vital components of
business
Marketing and Finance




                                                                          1
                                           Andy Farr
                                           Executive Director
                                           Millward Brown Optimor




                  Peter Walshe
                  Global Brands Director
                  Millward Brown




PETER
I am Peter Walshe, Global Brands Director at Millward Brown and on
the podium with me is Andy Farr, Executive Director of our new
company Millward Brown Optimor and the brains behind the World’s
Most Powerful Brands survey.
(‘Hello’ says Andy)




                                                                     2
     Agenda

      •   World’s most valuable brands
      •   How we measured them
      •   What we can learn
      •   Convince CFO on value of Marketing
      •   Coffee
      •   Expert Panel:
              Dr Joanna Seddon
               Mark Ritson - Marketing Columnist
               David Wheldon - Vodafone




PETER
In the next 45 minutes in Part One, Andy and I will introduce you to the World’s
Most Powerful Brands, How we have created a more rigorous and systematic
approach, and the lessons we can draw from successful brands
We see and quantify the massive IMPORTANCE of brands in creating value for
business


We have evidence for Marketing to put itself in the Boardroom and speak in
terms that the CFOs will appreciate.
Money speaks: and making the most of your marketing investment, via brand
building and brand nurturing, now has a powerful voice.


We will then have a short break for Coffee before introducing our Expert Panel,
Dr Joanna Seddon CEO of Millward Brown Optimor, columnist Mark Ritson and
David Wheldon of Vodafone (all of whom will take any question s from you and
are bound to have some trenchant views)
We are aiming to finish by 12 noon.
So, Andy, let’s begin: tell us about the World’s Most Valuable Brands….
(ANDY NEXT)




                                                                                   3
              World’s top 100 brands are worth more than
                           $1.4 trillion dollars




ANDY
The Value of brands on the balance sheet is a much talked about topic. The
Senior executives of major multinationals have been quoted saying that their
brands are worth more than the other assets of the business. So the management
of the intangible brand assets is a vital to future business success. It is a reality
also that without measurement it is difficult to manage. But measuring brand
value has in the past been more an art, maybe even a black art, than science.


We have set out to change that. As Peter said in April the FT published a league
table based on the financial value of the world’s most powerful brands. This
wasn’t based on judgement, but a transparent construct built on financial data and
research inputs. That survey showed that the top 100 brands are worth over 1.4
Trillion Dollars. Today we want to share with you some of the findings about
brand success from that analysis, and explain how we calculated the brand value




                                                                                        4
ANDY
Microsoft is number one, with a value of over 60 billion dollars. This value
reflects its position as the #1 software companies in world. In calculating the
value of Microsoft we excluded the near monopoly business revenues coming
from the Windows Operating system, but did reflect the high level of regard that
the majority of business and consumer buyers hold the company in. The research
data from across the globe is at odds with the negative opinions that some of its
more vocal critics would have us believe.




                                                                                    5
ANDY
Of the business and consumer buyers we talked to 55% had a very high opinion
and with a Nett user recommendation score of over 58% Microsoft was well
above average in user recommendation.




                                                                               6
ANDY
GE is #2 in the brand. GE might not be a company that many of us think of – but
GE is plugged into most of the businesses that are shaping the modern world –
from nuclear reactors and medical imaging systems through to financial services -
all of which carry the GE name.




                                                                                    7
     Brand’s contribution to shareholder value

                   Market Cap                                Brand Value
                   (end 2005)
                     $390bn                                  $56bn



                     $270bn                                  $62bn




ANDY


Whilst the GE brand is used across a broad spectrum of business the brand does
not drive as a high a proportion of value as MicroSoft. GE’s brand value of
$56Bn represents only 14% of its massive $390bn market cap. Compared to
Microsoft at 23% of market cap. This is because in many areas the GE brand is
not a primary decision driver. None the less the consistent use of the brand does
help to build the companies presence and reputation.




                                                                                    8
ANDY


The #3 brand in the ranking is Coca Cola with a value of $41 billion.


One of the distinctions between the valuation approach we used and used in some
other rankings is that we have valued the market facing brand – that means that in
the case of Coca Cola this value is not a measure of the whole house of brands
that the Coca Cola company owns …but instead just reflects the value of Cola
brands – “red” and Diet.


If we had included the value of all of the company’s portfolio of brands, fanta,
sprite etc, in the value then this would have increased to some $64bn




                                                                                     9
     Brand’s contribution to shareholder value

                   Market Cap                             Brand Value
                   (end 2005)
                    $390bn                                $62bn



                    $270bn                                $56bn




                    $100bn                                $41bn




ANDY
In other words the branded entities would account for some 64% of the Coca
Cola companies total value – a much higher percentage than Microsoft.


Peter why are these brands so valuable?
(PETER NEXT)




                                                                             10
    What is a brand?

     Close your eyes

     DO NOT think of an elephant




PETER
Value may reside in the intangible, but that does not mean that we
can’t describe what a brand is and help you feel what it does.
I’d like you to take part in a brief EXPERIMENT with me. It won’t
hurt!
(CLICK)
Please close your eyes.
Now…
(CLICK)
Do NOT think of an Elephant
I said, do NOT think of an Elephant!
You may open your eyes again.
That’s what a brand does. Once you have been prompted or reminded
or you actually come across something it, it is completely out of your
control to banish it from your mind!
Such memories, once created, are involuntary.




                                                                         11
    Not in the Boardroom…




PETER
And this is exactly where brands live, in the brains of consumers.
Our No 3 brand Coca Cola is not just a good set of numbers sitting in
the Boardroom.
(CLICK)
 It is a culmination of memories packed into the untidy cupboard that
is the mind.
Experiences, feelings, emotions that have become indelibly linked
with this thing called Coca Cola.


It is a whole branded experience…




                                                                        12
    Not in the Boardroom…




PETER
(VIDEO)




                            13
    People are prepared to pay more
    for the real thing




         Coke 6 cans                 Sainsbury’s Classic 6 cans
         £2.29                       £1.19


         Coke 2 litre                Sainsbury’s Classic 2 litre
         £1.20                       £0.69




PETER
And these memories are why strong brands can command a premium.
People pay more for good experiences, trust, uniqueness…




                                                                   14
    Our lives are complex
        brands make decision making easier




PETER
Life is busy, stressful enough as it is, and having to choose what is
best and whether we made the right decision, is what a brand lets you
opt out of. Less to worry about.




                                                                        15
                                             Chanel        Gucci




        “I love Chanel - it’s
        hot!… I love Gucci -
        my friends all notice”




                        Lin 9 years old
                     Guangzhou, China




PETER
And then there is Badge Value.
In our BRANDchild study we asked kids to draw pictures of their
favourite brands. Here’s a typical drawing – Chanel (Number 75 in
our ranking) is hot, and all her friends NOTICE her Gucci! (number
98). And that’s the whole point with these kids – the fact that their
friends notice creates an identity for the kids. Because of the brand.




                                                                         16
        “Nike makes me
        popular among all
        my friends…”




               Branzizalo 10 years old
                 Rio de Janeiro, Brazil




PETER
Here’s another one. The power of Nike (number 51 in our Top 100).
‘Makes me popular…’




                                                                    17
              Brand


                                    ?               $$




PETER
Marketing has always known these things, but the challenge we have
taken up is to connect the consumer attitudes, and customer metrics,
to the financial value that these contribute to the business…ANDY
how did we go about it?
(ANDY NEXT)




                                                                       18
     How the financial brand value was measured




ANDY


To measure the value of a brand we start with the earnings, in other words
“profits” that the company is currently making from the branded lines of
business. Then we need to understand what scope there is for future growth in
profits – are the markets and categories the brand operates in growing or
declining? Is the brand well positioned to gain share in the future?


With growing comes risk – so they we need to understand how risky the future
earnings projections are. And finally we need to understand to what degree the
brand itself contributes to these earnings relative to other assets such as particular
production expertise, patents, distribution networks etc.




                                                                                         19
     How the financial brand value was measured




ANDY


The answers to some of these questions come from the financial data. Because
the BRANDZ top 100 was a public ranking we relied solely on published
information from the account and reports for the earnings information, measures
of risk and consensus growth forecasts from analysts. When we work directly
with clients we do of course have more detailed information on specific lines of
business and growth forecast.


When it comes to understanding the role of brand this is perhaps the most
difficult step. The financial data provides measures of the intangible value of the
business, but this represents a mix of all the components that are not physical in
nature. Patents, trademarks, copyrights, business methodologies and “goodwill”.
But it does not provide a means for detirmining how much of this relates to the
brand versus other factors.


As Peter pointed out earlier – the value of a brand lies in the buyer and potential
buyers head – which is why we need …..




                                                                                      20
     How the financial brand value was measured




ANDY


… research. The problem has always been connecting “softer” consumer and
customer measures of attitude and opinion with the hard measures of finance.


We needed a systematic framework of research measures that spanned categories
and countries. Fortunately ☺ we had one BRANDZ…


(PETER NEXT)




                                                                                21
    Needed a systematic means of measuring
    these impacts




                The A to Z of brands




PETER
BRANDZ.
• Brand equity measurement tool that uses MB proprietary
BrandDynamics framework to measure consumer and customer brand
relationships and loyalty
•Based on interviews with category buyers or users (eg new car
owners) asked about brands within their competitive scenario
•We measure the customer facing brand rather than the corporation (ie
Mercedes rather than Daimler Chrysler Group, or Chevrolet rather
than General Motors)
•Currently database contains data from 650,000+ consumers across 31
countries and allows us to compare over 30,000 brands.
•BRANDZ data was incorporated into our analysis so that we could
factor in consumer data alongside financial data when calculating the
valuations that led to our ranking




                                                                        22
    Brand relationship pyramid




PETER
Different brands have very different relationships and power amongst
consumers.
We measure the relationship that each person has with each brand and
tend to illustrate it with a Brand Pyramid – where the higher up you
are,
(CLICK)
the more loyal you are.
The Pyramid filters those from the bottom who at least know
something about the brand (Presence), then losing some who don’t
find the brand relevant for their needs, more who fall out because the
brand fails to deliver satisfactory Performance, or have any
Advantage over competitor brands, until we are left with those who
are Bonded because they believe the brand is different or popular or
unique in some way.
People at Bonding are typically 20 or more times likely to chose that
brand rather than one that they simply are aware of at Presence. So
knowing how many people you manage to get up to Bonding is a
crucial ingredient of the valuation as Andy will describe in a minute.




                                                                         23
    Better conversion contributes to momentum




PETER
Getting as many people Bonded to your brand means you will have
more loyalists.
What we also see is that if you CONVERT people up this Pyramid
more efficiently than the competitors
(CLICK)
your brand will have a edge and be likely to grow its market share.
This important Voltage metric is validated against in-market
performance and is a tangible expression of the forward movement of
the brand.


Let me show you how Voltage relates to brand success.




                                                                      24
                      +
                              Little Tigers        Classic/ Olympic
                Voltage




                              Clean Slates         Fading Stars


                          -
                              low                              high
                                              Presence




PETER
We can look at how well known a brand is compared to its
competitors – the relative ‘Presence’ along the bottom of the map –
more so on the right
And cross it with the Voltage of the brand, Up the map with stronger
brands at the top, we create four quadrants where brands perform very
differently:
(CLICK) top right, stronger very well know brands which we call
Classics or Olympics typically Microsoft, Coca Cola, Colgate,
Gillette and Nike, Brands which dominate and lead
Then, bottom right, the well known but weak brands (CLICK) the
Fading Stars such as Heinz, Chevrolet and Xerox.
(CLICK) Clean Slates, unknown, unestablished, weak. No examples
here because you won’t have heard of them! But there are some that
escape – in 1998 First Direct was a Clean Slate which has gone on to
good things, as is Pret A Manger both of which today sit in the next
quadrant…
(CLICK) The Little Tigers alongside Starbucks, Four Seasons and
Yahoo. Challenging, delivering something different, exciting, special




                                                                        25
      Positive voltage equals positive growth

                                 Market share change
                       +
                               Little Tigers        Classic/ Olympic

                                     +5%                  +3%
                 Voltage




                               Clean Slates         Fading Stars

                                     -4%                  -1%
                           -
                               low                              high
                                               Presence




PETER
The point about being in one of the quadrants is that your future holds out a
very different promise.
(CLICK)
In the top right Classic/Olympic, consumers know you very well, and move
up to Bonding with greater alacrity than the competitors (ie those brands
have high Voltages) and the average Market Share change year on year is a
healthy plus 3%. Now that may not sound like much – but it is a global
average (with higher changes in growth areas like China and more modest
changes in Europe and so on). And coming off a big base 3% year on year is
not to sniffed at. (CLICK)
It is the Little Tigers that have the greatest growth – nearly double that of the
established strong brands.
(CLICK) Fading Stars on average show a decline of 1%. That is the
average, so by definition not all Fading Star brands are doomed, but the odds
are stacked against you (unless you improve your brand relationship).
Motorola (now number 64 in the World) is one good example. (CLICK)
But the most dangerous territory is that of Clean Slates where the brand is
both unknown and counts for little. As we see for new products (which start
as Clean Slates), there is a high failure rate and so the chances of making
money are poor - -4% growth.




                                                                                    26
     Brands with higher presence have more stable future revenues


                                 Market share volatility
                        +
                                Little Tigers        Classic/ Olympic

                                      1.13                 0.43
                  Voltage




                                Clean Slates         Fading Stars

                                      1.51                 0.61
                            -
                                low                               high
                                                Presence


    Volatility = variation in market share relative to the average




PETER
The final piece we can contribute from the consumer data helps assess
risk. Clean Slates are not only the least productive area of investment,
but there is a huge variation of hit and miss – volatility. 1 would be
average. Clean Slates are one and a half times more risky.
(CLICK)
In fact brands that are less established have to fight for recognition
and so we see even Little Tigers with great potential are in the high
volatility/higher risk arena.
(CLICK)
The better known bigger brands are much more predictable, both
Olympics and Fading Stars. No wonder well known underperforming
and slower growth brands are seen as assets to snap up by many
Venture Capital Groups – their attraction is partly their lower risk.



PETER need to change this intro…


So Andy tell us a bit about how these consumer measures translate
into real money…


(ANDY NEXT)                                                                27
     Analysis based on share price performance since first
     year of BRANDZ research in 1998
     Brands with higher presence have more stable future revenues
                         Value at January 2006 of portfolio based
                           on Market share volatility 1998
                              $1000 investment in January
                         +
                                 Little Tigers        Classic/ Olympic

                                       1.13                 0.43
                   Voltage




                                 Clean Slates         Fading Stars
                                        n/a
                                       1.51                 0.61
                             -
                                 low                               high
                                                 Presence


     Volatility = variation in market share relative to the average




ANDY


As we were developing the BRANDZ based valuation approach we wanted to
check how the metrics we were including in the analysis related to stock price
performance. So we went back to the first year of BRANDZ – 1998 and identified
a group of companies where the brand name and company name were
synonymous – so companies like Starbucks, Nike and Xerox. Then we used the
BRANDZ data to segment these companies into the 4 quadrants of the map.


This gave us 3 meaningful groups of companies – of between 16 and 40
companies, but there were only a handful of clean Slates – so we were unable to
include them in the analysis.


We then created 3 portfolios spread equally across each of the companies in the
group – so for example the little tigers included the companies on the screen but
also 13 others. We then calculated how much $1000 invested in each portfolio
would have yeilded in total share holder return over this period. TSR included
both share price growth and dividends.




                                                                                    28
     Analysis based on share price performance since first
     year of BRANDZ research in 1998
                        Value at January 2006 of portfolio based
                          on $1000 investment in January 1998
                        +
                  Voltage


                                      If invested in the S&P500
                                       would have been $1310
                                        n/a

                            -
                                low                           high
                                              Presence




ANDY
Over the period January 1998 to Jan 2006 an investment of $1000 in the S&P 500
– a broad based measure of stock performance would now be worth $1310. In
contrast a similar investment in the “fading star” group would only be worth
$1210. The investment in the Classic/Olympic group would be worth $1810 –
comfortably beating the index. However the best performing portfolio would
have been one based on the Little Tigers – this would now be worth over 3000
dollars.


Now it is important to stress that in each group there are still successes and
failures. An investment in Wendy’s – deemed to be a fading star would have
produced a very healthy 250% increase, whereas Gateway2000 the computer
manufacturer, deemed to be a little tiger would only be worth 14% of its original
value. And the best investment of all these companies would have been Apple
which was in the classic/olympic quadrant and increased in value 17 fold over
this period.


None the less it was clear that the knowledge derived from the consumer and
customer insight was adding to our understanding of growth and risk.




                                                                                    29
   Companies in with positive voltage in 1998 out
   performed the S&P500
                      Value at January 2006 of portfolio based
                        on $1000 investment in January 1998
                      +

                                $3,280           $1,810
                Voltage




                                    n/a          $1,230
                          -
                              low                     high
                                          Presence


   If invested in the S&P500 would have been $1310




ANDY




                                                                 30
     How the financial brand value was measured




ANDY


So within the valuation model developed for the BRANDZ top 100 the Voltage
and Presence metrics are used to supplement the growth and risk measures
derived from the financial analysis.




                                                                             31
     How the financial brand value was measured




ANDY


The final step is then to measure the contribution of the brand to earnings
generation. This is in many ways the most difficult because brand is a gestalt of
tangible experience but as Peter said earlier that tangible experience is colored
and influenced by your expectations and beliefs about the brand. This was the
step where the systematic use of BRANDZ data across categories and countries
was of greatest importance. We need to create a new construct that worked for
Luxury goods and Services and Motor Fuel.




                                                                                    32
     Identifying the contribution of the brand to the
     cash flows




ANDY
We used three inputs. Firstly the strength of the customer and consumers
relationship with the brand as measured by the Brand Pyramid. Here we wanted
to see to what degree the brand was deriving its sales from people who had a
strong relationship with the brand, and the degree to which that relationship was
underpinned by beliefs that were not entirely functionally based. Functional
delivery is vital – but strong brands have emotional and functional bonds with
there buyers.


The second factor was the degree to which the category overall was driven by
brand versus price. The greater the degree to which low price was felt to be the
only driver of choice the more commoditised the category was, and hence the less
value that brands are able to drive.


The third factor was a measure of the “structural” factors creating barriers to
switching. Revenues from lines of business where the buyer has no real choice, or
where the market exhibits high degrees of inertia were excluded from the brand
value. So for example we did not include any revenues from Microsoft operating
system business as Windows is a near monopoly.


Based on this framework we were able to estimate the contribution of the brand
to earnings…




                                                                                    33
     Where brand contributes most




ANDY


This contribution ranged from Luxury goods, where brand is king, down to Motor
Fuel where factors such as price and location drive a high proportion of revenues.


You can see that the second lowest brand contribution on average was from IT
Software…




                                                                                     34
     Asset breakdown




ANDY (change chart colors – all intangibles same hue)


As you can see from this chart brand and other intangibles represent the majority
of the value of both types of business. However for the IT Software companies
most of this intangible value lies in knowledge and expertise rather than the brand
name.


So lets return to the ranking.




                                                                                      35
ANDY


The fourth brand in the ranking might come as something of a surprise – it
certainly did to us! Not many of you will know much about China Mobile – but
when I tell you that it has more than 250 million subscribers – more now
Vodafone – out of a total of nearly 400m Chinese subscribers




                                                                               36
ANDY
In a market that is rapidly growing at 12% a year – this may not seem much – but
equates to over 40m new subscribers per year.


China Mobile is already highly profitable and is starting to look at acquisitions
beyond its borders.


But its not just about growth, in a market where where mobile phones are still
seen as something of a status symbol it held in high regard by its customers.




(PETER NEXT)




                                                                                    37
PETER
This is reflected in its high attraction score at a similar level to
Microsoft.
This is put into context by the score of China Unicom (CLICK) , the
number 2 mobile company in China – much less attractive as a brand.




                                                                       38
PETER


But where China Mobile really scores is amongst its customers. They
are hugely happy (much more so than Microsoft which scores very
well).


The reasons for Bonding to China Mobile are not based on price, but
on genuine admiration and good experience. A powerful force.


Number 5 – Andy…
(ANDY NEXT)




                                                                      39
ANDY


#5 in the ranking was Marlboro. The strength of the iconic Marlboro brand
probably doesn’t surprise – but its size maybe? Those of us with a western mind
set see smoking as a declining category. But this highlights a key aspect of our
approach.
When we calculated the value of the world’s most powerful brands we drew upon
data from the world’s largest economies from the developed world US, Japan,
Germany, UK, France, Spain, Italy and Canada – but also from the 4 “BRIC”
countries – Brazil, Russia.




                                                                                   40
     Projected regional increases and decreases for cigarette
     consumption 2008 compared with 1998 percentages




ANDY


And as you can see from this chart cigarette consumption is projected to grow
everywhere in the world apart from Western Europe – and North America – Latin
American growth means no change for the Americas overall. Marlboro is well
placed to benefit from this growth.




                                                                                41
ANDY


#6 in the ranking is the world’s biggest retailer. Wal-Mart is a seemingly
irresistible force, with over 6000 stores – whilst two thirds of these are in the US
it is now the #1 retailer in both Canada and Mexico – and is expanding in both
Asia and Europe.W


Wal-Mart is just one of 10 retailers in the top 100. With Tesco at #3 on the global
retailer list. In contrast there are only 6 packaged goods brands in the top 100.
What does this tell us about the changing nature of shopping?




                                                                                       42
     Brand increasingly important for retailers




ANDY
This is a reflection of the fact that retailer brands are becoming a more important
factor in driving consumers’ shopping behavior. The retail brands are not just in
the top 100 because of their size - in many cases they have higher brand
contributions than the products they sell. And with ranges like “taste the
difference” from Sainsbury and “tesco finest” we are seeing the retrailer being
able to command a significant premium for their own products.
I think what we are seeing is a transference of trust from the manufacturer brand
to the retail brand. Twenty years ago the shopper relied on the manufacturer name
to provide the reassurance of quality - but now the shopper is seeing the retailer
as providing that badge – not just in food but financial services and
telecommunications.




                                                                                      43
ANDY
Which brings me to Google - #7 in the global ranking.


The value of Google is in part a reflection of its earnings, but much so the
projected growth in those earnings. Google has the highest growth rate of any of
the companies in the top 100




                                                                                   44
     Revenue growth 2005 v 2004




ANDY
For example revenues grew byr 90% last year – 10 times the rate of Microsoft.
Some in the city are questioning the ablity of Google to maintain its growth, but
what is clear is that Google is much more than a successful search engine – it has
become part of our lives. And is synonymous with the web. So what did Google
get right?



(PETER NEXT)




                                                                                     45
    Google lessons
      More than just technology




PETER
Google undoubtedly has great search algorithms. But this is not the
only thing that has led to its phenomenal success. If it was just about
search algorithms Altavista or AllTheWeb or any other search engine
would be much bigger competitors.
What Google got right was firstly the search engine experience and
then the ‘ethos’. At a time when every other search engine was trying
to build itself into a portal offering everything from weather forecasts
and stock prices to banner ads, Google stuck to its purpose and
produced a clear uncluttered fast loading search facility. But it did
more than this. It also created a search experience that was in tune
with its users. It provided humour, and a belief that it did not take
itself too seriously.
Our research shows that consumers either like or love Google, it had
few enemies and many friends




                                                                           46
     Google lessons
     Sharing




PETER
I got sent this the other day.
Its typical of the shared culture and inclusiveness of the brand




                                                                   47
PETER




        48
PETER




        49
    Google doodle




PETER
The company uses PR brilliantly as in this lovely example of the
winner of a childrens’ competition to illustrate the brand.
No wonder it has leapt up to Number 7 in the valuation chart.
BUT…
Now a public company with the pressures of reporting more fully.
Will the ethos continue? Can they survive the potential ignominy of
seeming to bow down to Chinese censorship?
It will be fascinating to look again at progress this time next year!
What’s next Andy? (ANDY NEXT)




                                                                        50
ANDY
Number 8 in the global ranking was IBM.


Despite selling off its PC operations to Lenovo IBM remains one of the world’s
top providers of computer products and services – one of the leaders in all the
markets within which it competes.


One of the few companies to have successfully reinvented itself. 20 years ago it
was a hardware manufacturer, now as that space became more price driven due to
the success of Dell, it has become a power in the consulting space.




                                                                                   51
ANDY

Number 9 in the global ranking is the first of the 21 financial brands in the top
100. With more than $1 trillion dollars of assets and profits of 67million dollars
per day in 2005 Citibank is a true colossus of the financial world.




                                                                                     52
     Bonding




ANDY


However what is scarry is that Citi has not yet fully developed its relationship
with its customers - as you can see from this chart – the average level of bonding
is low.




                                                                                     53
ANDY
The final brand in our top 10 is an Automotive brand - but it isn’t GM or Ford
but Toyota.


Peter what is it that Toyota has done right?


PETER NEXT




                                                                                 54
     US Automotive




PETER
The Toyota story is best illustrated by a comparison with Chevrolet. Chevrolet is
down at Number 41. Chevrolet has a poorer quality image (lower Performance),
fewer Advantages and much lower Bonding. How has it come to this?
Back in 1924, the then Operating Vice President, Albert Sloan realised that GM
had too many models and too much duplication with most losing money. Sounds
familiar? He reduced the offering to 5 models, separated them by price grades
and emphasised individual brand image. These distinct and strong brands allowed
GM to capture 57% of the US market by 1955. But then to make more profit it
began selling identical vehicles under different model names. Cheaper to produce
but the brands lost their individual painstakingly built personalities. And on top
of this each brand strayed into others territory by having lower and higher priced
versions that overlapped one another. The 1920s all over again with brands that
look alike and are priced alike.
Toyota, on the other hand, pushed one brand in many forms – all their cars
sharing one powerful differentiating idea: reliability.
And when they went into the super-premium category, it became a Lexus with no
hint of any Toyota identity. And now we see the innovation of the Prius, and
soon the wheelchair friendly Porte, aimed at Japan’s elderly population.
Less is more. Brand clarity and consistency.
So let’s begin to pull together these lessons for all brands….




                                                                                     55
PETER
The combination of (CLICK) innovation, great experience, clarity of
values and imagery runs through the Top 100.
The remembered experience and customer endorsement creates brand
clarity which in turn results in leadership.




                                                                      56
PETER
Most strikingly, looking back at the success of the Top 10, these
factors are at the heart of their success: they all started out with a
differentiated proposition and a commitment to a great experience
But what sets them apart now is the sense of Clarity and Leadership
that only comes with size and continued success. This calls for
effective brand management that is truly integrated with the product
and service areas of the company. Brand building cannot be seen as a
separate activity, it needs to be part of what the whole company does.


But what of the future? Which brands have the best chance of
growth?
ANDY..


(ANDY NEXT)




                                                                         57
     Brand momentum




ANDY


As I mentioned earlier there are two inputs to our “brand momentum” - the
projected growth in markets you operate in, and the ability of the brand to
maintain or grow its share.




                                                                              58
ANDY
The brands with the highest momentum are therefore those operating in growing
sectors. So no surprise that the highest momentum brand is Google followed by
Apple – both tech brands. But as you can see from the list its not all about
technology.




                                                                                59
PETER
Analysing the common factors amongst these top momentum brands
(CLICK) shows Google to have all four aces in the pack




                                                                 60
PETER
Apple gets three of them and only falls behind in Leadership (in
which Microsoft somewhat of an edge!)
But these two momentum stories are about Invention and re-invention
Then we get the brands that have or are creating new business
models: (CLICK) Starbucks changing the coffee market and
experience, Amazon bring the shop shelf into your home, eBay a
world car boot sale at the touch of a button and Zara customising
design to a mass market. These brands have not yet maximised their
clarity but ar full of innovation and a terrific experience
(CLICK)
The last group are the Luxury brands. The contribution of the brand to
their values are some of the highest in the World partly because they
have tremendous clarity.
(CLICK)
But what you can see is a common factor – a great experience! All
our data show that attitudes change after experience. You can
communicate your brand promise and the consumer will hear and
register if it is well communicated BUT they won’t change their
opinion of believe it until they have tried or experienced it. These
brands have all lived up to their promise.




                                                                         61
    “ Unaccountable, untouchable, slippery
          and expensive”

                                Malcom McDonald, Cranfield School of Management




PETER
Why then does Marketing attract such vitriol?
A survey showed that Financial Directors did not have a very high
opinion of Marketing… Unaccountable?


We now have the tools to prove return on investment of this
untouchable slippery art!


Andy give us an example…
(ANDY NEXT)




                                                                                  62
     Growth in consumer equity




ANDY


This brand has achieved one of the biggest increases in performance based on the
BRANDZ over the past 2 years. With strong increases in the brand pyramid from
the performance level upwards.




                                                                                   63
     The brand is contributing more value




ANDY


Which means that the strength of its relationship with customers has increased –
but also over the same time period its has contributed to a decrease in over all
category commoditization – buyers now believe that getting the right brand is
more important than it was 2 years ago.




                                                                                   64
     The brand is contributing more value




ANDY


Which means that the strength of its relationship with customers has increased –
but also over the same time period its has contributed to a decrease in over all
category commoditization – buyers now believe that getting the right brand is
more important than it was 2 years ago.




                                                                                   65
     The brand is contributing more value

                                          300%
                                         increase




ANDY
This translates into an 300% increase in brand contribution over this time period




                                                                                    66
     Turning this into money

      •   UK share of global brand value             = $260m


      •   If brand had not increased in
                                                     = $80m
          value, would have been worth


      •   Increase in shareholder value              = $180m




ANDY


So how does that translate into money? Well this brand had a value of $9bn in
2005 – of which some 3% was derived from the UK - $260m. Without the
increase in brand strength and the increased category differentiation that value
would only have been about $80. So we can estimate that just through
strengthening the brand the business benefited to the tune of some $180 dollars.


How did they do this?




                                                                                   67
     Motorola success driven by change in
     marketing strategy
                                   Marketing
                                   Strategy




ANDY


Well the brand in question was Motorola. And this improved business
performance is a great example of marketing and R&D working at its best.


Geoffrey Frost’s first act as marketing director was a full brand review to
understand what the brand stood for, but also to understand what it was that
customers wanted. Out of this cam a new way of looking at the global market
segmentation – based not on demographics but interest area – music being one of
the key segments they identified.




                                                                                  68
     Motorola success driven by change in
     marketing strategy
                                    Marketing
                                    Strategy




                                                            Product
                                                            Innovation




ANDY
This insight then fuelled product development (not without some friction) and
lead to iconic new products such as the RAZR and now PEBL.




                                                                                69
     Motorola success driven by change in
     marketing strategy
                                   Marketing
                                   Strategy




                                                          Product
                                                          Innovation




                                    Communications
                                    Innovation




ANDY
Iconic product and content innovation was linked to great communications
activity – this ad brings together many of those strands.




                                                                           70
VIDEO




        71
      Motorola success driven by change in
      marketing strategy
                                     Marketing
    Motorola Net Profit ($m)
                                     Strategy




    Revenue and Profit Growth                                 Product
                                                              Innovation


                       Consumer
                       Desire


                                       Communications
                                       Innovation




ANDY
Creating the consumer desire and driving the growth in market share that
underpins revenue and profit growth.


All in all a true integrated business success story that had marketing strategy and
consumer insight at its heart.


It typifies the 4 key steps that Peter will now summarise..




                                                                                      72
        $uccess

         1. Innovate
         2. Brand positioning
         3. Understand consumers
         4. Connect consumer research to finance




                          Prove $uccess in value creation




PETER
Our study shows:


You need to innovate or re-invent to be successful – new products and services, new
strategies, new ways of meeting consumers needs.
A strong brand positioning helps to ensure the success of innovation – aligned to the
product or service vision
Understanding what motivates the consumer & customer is a vital ingredient that will help
to fuel the product and strategic innovation process.
Brand tracking measures can be fused with financials to prove success in value creation


One of the challenges for businesses is to understand how successful they have been in
creating brand value. In the past, the measurement of brand value has been something of a
dark art. The approach designed by Millward Brown Optimor, calculated using data from
BRANDZ, the brands’ current financial values, and projections of the future value, seeks
to remedy that. By combining hard financial and quantitative research metrics,
management now have a means of measuring brand value creation as a key performance
indicator alongside other financial metrics.
We at Millward Brown and Millward Brown Optimor look forward to talking to you in
future to see how we can help move your brand forward.
THANK YOU!




                                                                                            73
                           Coffee Break
                           (15 mins)




PETER
That brings us to Coffee
In 15 minutes…




                                          74
     Up next…

                               Dr Joanna Seddon   Mark Ritson           David Wheldon
                                                  Marketing Columnist   Vodafone




….we will have our Panel led by Dr Joanna Seddon with expert
comment and opinion from:


            Dr Joanna Seddon
            Mark Ritson and
            David Wheldon


See you then.




                                                                                        75
HOLDING SLIDE BEHIND PANEL




(AT END OF PANEL)


PETER
I’d like to thank our distinguished and delightfully opinionated panel
for their openness, honesty and insights
Truly stimulating
Dr Joanna Seddon
Mark Ritson
And David Wheldon


Please fill in your comments on our feedback form and…




                                                                         76
    Next Event
    Tuesday, 26 September, 2006
    Congress Centre, London

    Meeting the Challenges of a Changing Marketing Climate




(FOLLOWING PANEL)


And don’t forget to put September 26th in your diary.


Today we have been at the CBI and next time it’s the turn of the
workers – we will be appearing at the TUC in Congress House!


Good Afternoon.




                                                                   77

				
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