Australian Marketing Institute Managing Your Brand as an Asset

John Gregg

JULY 18, 2013

Agenda

Why is Brand Asset Management Important?

What are the Key Steps to Brand Asset Management?

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”

Agenda

Why is Brand Asset Management Important?

What are the Key Steps to Brand Asset Management?

Eight 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

Managing Your Brand as an Asset

1. Formally link business and brand strategy

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

2010

(3.5%)

5-YearCAGR

2005

$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.

Brand

Positioning

Brand

Positioning

Brand

Image

Brand

Identity

Aspirational goal of the brand;

Aspirational associations customers

should have after repeated exposure

to/experiences with the brand.

Brand

Positioning

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 ElementsUnderdog

Personality

Richard

Brand Identity

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

3. Create a clear and distinct 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

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?

4. Extend your brand strategically

Brand 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 Extensions

Unsuccessful 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

5. Build a strategic Brand Architecture

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

– 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

Build Brand Equity in Master Brand

Maximize synergies among business units

Target unique & separate customer base

Reinforce 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

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 Wheel

Website

Advertising

Collateral

Product/Service

Assortment

Point-of-Purchase

Displays

Sales Force

Customer Service

Billing

Loyalty Programs

Product Quality

Whirlpool’s Touchpoint Wheel

Pre-Purchase

ExperiencePost Purchase

Experience

Purchase

Experience

Influencing

Touchpoints

• 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

Company

Alumni

Vendors/

SuppliersAnalysts

Annual Shareholder

MeetingAnnual Report

Internal

Newsletters

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

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.

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-performersrelative 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?

8. Practice effective global brand management

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

Assign

Responsibility for

Cross-Country

Synergy

Execute Brilliant

Brand-Building

Programs

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 UmbrellaPositionings, & 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

Examples

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 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)

Eight 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

Managing Your Brand as an Asset