Title Goes Here (Arial 28)

BMA Southern California Chapter:Managing Your Brand as an Asset

ANDREW FLYNN

JULY 18, 2002

Proprietary and ConfidentialBMA Presentation: July 18, 2002 PROPHET2

Agenda

Who is Prophet?

Why is Brand Asset Management Important?

What are the Key Steps to Brand Asset Management?


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

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-of-breed professional services companies

Leading Brand Thinking


About Prophet – What We Do

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

Develop

Manage

Grow

Protect

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

Prophet has four primary services which enable companies to develop, manage, grow, and protect one of their most valuable assets: their brand


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


Agenda

Who is Prophet?




The Top Determinants of Brand Strength

Customer Loyalty 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”

“I Would Travel Further”

“I Would Pay More”

“I Would Wait Longer”


Powerful brands create significant value

Source: Interbrand

12345678910

Rank

72.570.2 53.2 39.0 38.5 38.1 36.4 33.6 27.9 25.5

2000 Interbrand Brand Valuation

(billions $)2000 2001

68.9 65.1 52.8 42.4 35.0 34.7 32.6 30.1 25.3 22.8

2001 Interbrand

Brand Valuation (billions $)


Agenda

Who is Prophet?




Nine ways to manage 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

Managing Your Brand as an AssetManaging Your Brand as an Asset



Resonate

Differentiate

Credibility

Brand Strategy

With Customers

And Employees

Vs. Competitors

Business Strategy Viable business model

Viable profit model

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)

Linkage Between Business and Brand Strategy


Connecting the brand vision to a financial growth gap helps demonstrate the importance of bringing it to life

2006

(3.5%)

5-YearCAGR

2001

$430 million

$630 million

8% $100 million

$100 Million

$70 million

= Current Business = Acquisitions = New Products = Brand Building

Options to fill the brand-driven growth gap:

– Build and leverage your brand more successfully—through strategic line extensions, premium pricing, partnerships, licensing opportunities, etc.

5 Year Growth Gap = $270 million


2. Create an aspirational and relevant Brand Identity

Today FutureTime

BrandAnd

Customer Value

Current perceptions of the brand

Platform to move the brand along its path to its aspirational identity. Demonstrates the unique and beneficial differentiation of the brand; resonates and is credible with customers.

BrandPositioning

BrandPositioning

BrandImage

BrandIdentity

Aspirational goal of the brand;Aspirational associations customers should have after repeated exposure to/experiences with the brand.

Tag

line

Mes

sage

s

BrandPositioning

Tou

ch p

oint

s


Brand Identity provides strategic direction

Brand Identity is… Future-focused,

aspirational and provides a vision for the organization to strive for

The emotional link desired between product and customer

Brand Identity will provide…

Organizational touchstone, both internally and externally

The basis for crafting the strategic roadmap, guiding Brand Positioning, Communications, Brand Extendibility and Metrics

Brand EssenceGuides internal strategy; summary of the Brand Identity

Core Identity Core values, key competencies. Associations that will remain consistent across product, markets and through time.

Extended IdentityElements that provide texture and completeness; personality, organization, product characteristics


Virgin’s Brand Identity

Essence of the Brand

IrreverenceCore Identity Elements

Innovation

Fun & Entertainment

Value

Service Quality

Extended Identity Elements

Underdog

Personality

Richard

Brand Identity


To hereTo here

Teradata’s Brand Identity

From here...From here...

Data warehouse Scalability Big Complex Technical Advanced Wal-mart Expensive Confident Geeky Smart Friendly Team player

Powerful

ExperiencedCommitment to Excellence

Personality

Simplicity

Single view

ActionableInformation

Driving growth

Better, faster decisions

Symbol

Where they were…and where they wanted to go….


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

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

Four Fundamentals Of Brand Positioning



Most meaningful & most difficult to imitate, but hardest to deliver

Easiest to deliver, but least meaningful & most easily imitated

Functional Benefits

Attributes

Emotional & Self-Expressive

Benefits

The emotional & self-expressive benefits customers receive

The functional benefits customers receive

Features or processes that must be demonstrated to customers

Benefits Hierarchy


Extended Identity Elements

Core Identity Elements

Essence of the Brand –Irreverence

–Service Quality–Value–Fun–Innovation

–Underdog–Exciting–New Rules

Virgin’s Brand Positioning

Positioning

A Personal Way to

Flexibly Shop for

Wines at a Great

Value

“Wine Buying Like Never Before”

Brand Identity


Case Study: Teradata

Inputs

Future Positioning

Valued by customers

Fit w

ith Teradata

Brand S

tatement

Perceptions of Teradata’s ability

to deliver

Uni

que

amon

g co

mpe

titor

s

VALUE

CREDIBILITY

FIT

UN

IQU

EN

ES

S

Testing & Screening

RecommendedIdentity &

Positioning

Internal Management Interviews

Customer & Prospect Interviews

-Purchase criteria

-Brand perceptions

-Ideal experience

Analyst Interviews

Industry Research

Partner/Alliance Interviews

Brand Implementation

Internal Assimilation- Employee Workshops

- Internal Communications

- Metrics

External Communications


A global Positioning statement can be tailored to support local needs

USA

Zippo’s Core Global Positioning StatementZippo’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.

GLOBAL Mexico

Japan

Germany

• Sporty and young-at-heart• Patriotic and respectful of American ideals,

but not lost in nostalgia or sentimentalism

• Cosmopolitan, fashionable• Socially active • Proud of, but not arrogant • Seeking and achieving success

• Outdoorsy, rugged• Classic cool (e.g. James Dean)

• Worldly, modern, contemporary • Rugged but friendly, outgoing and approachable


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?

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?


Brand Extendibility: Critical Questions to AskBrand Extendibility: Critical Questions to Ask


Stronger brands allow for more differentiated product line extensions

Office(e.g., Scotch

Tape)

Transportation Safety(e.g., Reflective

Coatings)

Industrial(e.g. Abrasives)

Health Care(e.g., Surgical

Supplies)

Beliefs and Values

Benefits

Attributes

High LowDegree of Product

Differentiation

Level of Brand Meaning

Example:

Pioneering Innovative Technologies &

Products


Brands with lower brand meaning cannot support much extension

??

Beliefs and Values

Benefits

Attributes

High LowDegree of Product

Differentiation

Level of Brand Meaning

Bottled Water

Pure Water

Example:


Sainsbury’s Bank

Faster Chips

The Blue Card

Consulting

X Box

Knowing when to extend your brand…

Successful ExtensionsSuccessful Extensions


Unsuccessful ExtensionsUnsuccessful Extensions

Mercedes C-Class

Coke Clothes

Wine Coolers

Mouthwash

…and knowing when not to is a key driver of brand success


Brand extension ideas should be evaluated for fit in all regions

USA

GLOBAL

Germany

Japan Mexico

GLOBAL

Germany

Japan Mexico

USA

USA

GLOBAL

Germany

Japan Mexico

USA

GLOBAL

Germany

Japan Mexico

Pocket Flashlight Sunglasses Camp Stove Lighter Wand

Purchase Interest

High Medium Low



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

Brand Architecture is the organizing structure of a brand portfolio

Brand Architecture is the organizing structure of a brand portfolio

– David A. Aaker, Brand Leadership

Master brand

Subbrands

Product brands


The Brand Architecture spectrum

A Branded House uses a single Master Brand to span a set of offerings that operate only with descriptive offerings.

A House of Brands consists of independent stand-alone brands, each maximizing its impact on the market with little connection to its parent.

Significant investment in multiple Brands Significant investment in multiple Brands

Build Brand Equity in Master BrandBuild Brand Equity in Master Brand

Maximize synergies among business unitsMaximize synergies among business units

Target unique & separate customer baseTarget unique & separate customer base

Reinforce comprehensive solution focusReinforce comprehensive solution focus

Key Issues Driving The Spectrum:

Branded House

House of Brands

Sub-Brands

Stand-Alone


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

IngredientDriver

Stand-AloneCorporate

Play Station and Columbia Tri-Star 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

The ProAudio brand augments the Sony brand by communicating cutting edge technology across multiple Sony Electronics product lines

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

Sony chooses a flexible architecture and leverages their corporate brand in several different ways


Teradata’s Brand Architecture

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

NCRTeradata

Teradata as the driving brand with continued

endorsement by the NCR brand leverages the positive

equities of both brands

Teradata A division of NCR

Teradata

The Teradata brand awareness is not broad enough to stand on its

own


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

Pre-Purchase Experience

Post-Purchase Experience

Purchase Experience

Touchpoint WheelTouchpoint Wheel

WebsiteWebsite

AdvertisingAdvertising

CollateralCollateral

Product/ServiceAssortment

Product/ServiceAssortment

Point-of-Purchase Displays

Point-of-Purchase Displays

Sales ForceSales Force

Customer ServiceCustomer Service

BillingBilling

Loyalty ProgramsLoyalty Programs

Product QualityProduct Quality


Whirlpool’s Touchpoint Wheel

Pre-Purchase Experience

Post Purchase Experience

Purchase Experience

Influencing Touchpoints

Influencing

Touchpoints Influ

enci

ng

Touc

hpoi

nts

• Print & TV Advertising• Coupons or Special Offers• Website• Viral Marketing• Direct Mail• New Product Launches• Public Relations• Consumer Reports• Marketing Speeches• Sponsorships

• Home Builders, Contractors, Architects

• Partners like P&G• Whirlpool Customers

• Retail Partners• In-Store Displays• Sales Force• Financing Plans

• Installation Technicians• Customer Service Agents• Customer Service Reps• Service Technicians• Inspired Cooking Class• Customer Satisfaction

Survey• Bill• Community Work

College/MBA Recruiting

CompanyAlumni

Vendors/SuppliersAnalysts

Annual ShareholderMeeting

Annual Report

InternalNewsletters

Employees


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

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


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.


The result of NOT delivering on your Brand Contract

Brand Contract

Consistent, fast, friendly service

Reasonably priced

Fresh, tasty food

Family fun and safe

Enjoyable experience

High value

High quality

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.

The article quantified the financial losses tied to poor customer service as potentially costing McDonald’s $750 million annually.

What do you expect from a visit at McDonald’s?

What do you experience from a visit at McDonald’s?



A company’s primary goal should be global brand leadership, not a global brand

Effective

Global Brand

Management

Share Insights and Best

Practices Across Countries

Share Insights and Best

Practices Across Countries

Assign Responsibility for

Cross-Country Synergy

Assign Responsibility for

Cross-Country Synergy

Execute Brilliant Brand-Building

Programs

Execute Brilliant Brand-Building

Programs

Support a Global Brand Planning

Process

Support a Global Brand Planning

Process


+ 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

Companies use different methods for encouraging sharing of best practices and brand insights


There are varying degrees of centralization of brand management

Options for Global Brand Management

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

Examples


Brand Metrics

Enable analysis and decision making

Track organizational progress

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

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


Track specific brand metrics

ROBI Metrics

ROBISM Measurement

Analysis

Decision Making

Benchmarking Diagnosing

Allocating Resources

Compensating Employees

Informing Markets

Setting Future Goals


There is only one kind of valuable brand metric – one that drives to a business action

Business ActionBusiness Action

Touchpoint Metrics

Metrics that diagnose the brand’s performance across the touchpoints of the brand-

customer relationship.

Metrics that diagnosis the brand’s impact on the

business’ performance.

Strategic Metrics (Impact)


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

“Believing It” “Believing It”

Contact

Awareness

Understanding

Ready to Defend

Ready to Promote

Cultural

“Hearing It”Phase

Phase

“Living It” Phase

AcceptanceConceptual

Superficial

Emotional & Personal

Personalize

Contact

Awareness

Understanding

Ready to Defend

Ready to Promote

Utilize & Internalize

Cultural Experience

Deg

ree

of

Su

pp

ort

fo

r C

han

ge

Time

“Hearing It”Phase

Phase

“Living It”

Employee Motivation and Morale

Acceptance Conceptual

Superficial

Emotional & PersonalPersonalize

Passionate Advocacy


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 18-Month 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


Nine ways to manage your brand as an asset


2. Create a unique and relevant Brand Identity




6. Evaluate and align touchpoints




Managing Your Brand as an Asset


Management guidelines

Organizational alignment

Realized synergies

Experience based

Focused resources

Objectivity through measurement

Customer driven

Unique and valued brand

Stronger relationships

What Impact Does This Approach Have on Brand Asset Management?

BMA Southern California Chapter:Managing Your Brand as an Asset

ANDREW FLYNN

JULY 18, 2002

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