best practices in brand portfolio strategy

Propr ietary & Confiden0al

brandgrowthstrategy

BestPracticesinBrandPortfolioStrategyTutorialworkshoppreparedforandfacilitatedonbehalfof:

TheInstitutefortheStudyofBusinessMarkets(ISBM)

MitchDuckler

[email protected]

PROPRIETARYANDCONFIDENTIAL

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CommonQuestionsBackground&Context

BrandDefini4on/Requirements:

§  Whatisthedifferencebetweenabrand,atrademarkandproductname,andwhataretheimplicaEonsforhowtheyshouldbemanaged?

§  WhatkindoffinancialinvestmentisrequiredtolaunchabrandandgrowitoverEme?

BrandPor;olioStrategy:

§  WhatistheopEmalnumberofbrandsformycompany?

§  WhendoesitmakesensetocreateanewbrandversuslaunchanewproductunderanexisEngbrand?

§  How“elasEc”ismybrand?Whatisitsabilitytostretchhorizontally(acrosscategoriesandmarkets),andverEcally(acrosspriceranges)?

BrandArchitecture:

§  ShouldbrandswithinmyporRoliobelinkedtooneanother?

§  Ifyes,whatistheopEmalwaytolinkbrands(e.g.,sub-branding,co-branding,endorsement)?

§  Whendoesitmakesenseformycorporatebrandtoendorsemyproductbrands?


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PollingQuestion#1Background&Context

WhichofthepreviousgroupsofquesEonsaremostpressingand/orposethegreatestchallengesinyourorganizaEon?

A)  BrandDefiniEon/Requirements

B)  BrandPorRolioStrategy

C)  BrandArchitecture

D)  AlloftheAbove

E)  NoneoftheAbove


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§  Perspec4vesonBrand

§  BrandPorRolioStrategy

§  BrandArchitecture

§  Process&Approach

Agenda


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Abrandisnotjust…Perspec4vesonBrand

AJingle

AProductASpokesperson

ASymbolAnAd ALogo

ASlogan AName


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Abrandis…Perspec4vesonBrand

§  Apromise

§  Acompany’smoststrategicasset

§  ThereflecEonofacustomer’senEreexperiencewithacompany

§  BuiltandprotectedbyenEreorganizaEon,notjustthemarkeEngdepartment


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PowerfulbrandscreatesignificanteconomicvaluePerspec4vesonBrand

Source: Forbes

§  1%increaseincustomersaEsfacEonleadstoa3%increaseinmarketcap

§  2%increaseincustomerloyaltyleadstoa10%costreduc4on

§  5%increaseincustomerretenEonincreasescustomerlife4mevalueby25%

§  5%increaseincustomerloyaltycanresultinuptoa95%increaseinprofitability

§  50%ofcustomerswillpay20–25%moreforbrandstheyareloyalto

Sources:Brandkey,BainandMainspring,Marke5ngNews


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§  PerspecEvesonBrand

§  BrandPor;olioStrategy



Agenda


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BrandPortfolioStrategyvs.BrandArchitectureBrandPor;olioStrategy

Por;olioStrategy

§  An ar0cula0on of how a company should define its por;olio to drive profitability

§  Specifies the op0mal number, scope, and role for every brand in the por;olio

Architecture

§  A depic0on of the op0mal rela0onship between any two brands within the por;olio

§  Dictates both whether and how brands should be related to on another


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Fiveindicatorsyoumayhaveaportfolioproblem…oropportunity

BrandPor;olioStrategy

1. Revenuegrowthisslowing

2. ProductsincreasinglyseenascommodiEzed

3. Poorcross-sellorup-sellbetweenbrands

4. M&AacEvityhasresultedinabloatedporRolio

5. Brands’funding/supportmisalignedwithprofitability/potenEal


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PortfolioOrganizingFrameworksBrandPor;olioStrategy

CustomerSegment

Need/Benefit

PriceTier

Industry/Category

Channel/Distribu4on

LoyalEnthusiasts Speed Good Financial

Services Direct

BargainHunters Convenience Beler Consumer

Products Retail

KnowledgeSeekers Simplicity Best Medical&

Healthcare Online

ThoughRulPlanners Performance Luxury Federal

Government Wholesale

One-stopShoppers ProducEvity Value Industrial&

Manufacturing Distributor

Aotudinal&Behavioral Demographic/Firmographic

(MostPowerful) (MostCommon)


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BrandPortfolioSpectrumBrandPor;olioStrategy

BrandedHouse HouseofBrands

CustomerSegmentsFew Many

InvestmentinBrandingLow High

BusinessMake-upHomogenous Heterogeneous

BrandMgmt.CapabilitySimplisEc SophisEcated

CorporateRelevanceHigh Low


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BrandPortfolioStrategyGuidingPrinciplesBrandPor;olioStrategy

1 Build&LeverageaStrongCorporateBrand

2 DefineStrategicObjec4vesforBrands

5 MaximizetheExtendibilityofBrands

4 BuildRelevanceAcrossValueTiers

3 EmploySimple&ClearBrandArchitecture

§  Strategicfinancialasset§  Primarypointofreference

§  LeveragedacrossporRolio

§  Strategicroles§  FinancialobjecEves§  ClearposiEoning

§  RelaEvelyflathierarchy§  EasynavigaEon§  Consistentnomenclature

§  Maximizecustomerreach

§  AvoidpremiumdiluEon

§  AvoidvaluecannibalizaEon

§  Acrossmarkets&regions

§  Acrosscategories&segments

§  Acrossofferdimensions

OverarchingGoal:Fewer,strongerglobalbrands


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ComponentsofaBrandPortfolioStrategyBrandPor;olioStrategy

StrategicRole/BusinessObjec4ves

Price/ValueRela4onship

BrandPosi4oning/Iden4ty

BrandRela4onshiptoMasterBrandPosi4oning

BrandArchitecture/Linkage

BrandExtendibility/Elas4city

WhatspecificallyisthebrandchargedwithdoingfortheCompany?WhatobjecEvesshouldbesetforthebrandfromavolumeandfinancialperspecEve?Whatroledoes/shouldthebrandservefromachannelperspecEve?

WhataretheopEmalpricingstructuresandpricepointsforthebrand?WhatsortofpricedifferenEalshouldexistbetweenitanditsmostdirectcompeEtors?WhatsortofpromoEonalsupportshouldthebrandreceive?

HowshouldthebrandbeposiEonedtotheconsumer,takingintoconsideraEonitsstrategicrolewithintheporRolio,consumerwants/needs,anditscurrentequiEes?Whatis(orshouldbe)itsuniquepointofdifference?

Whatisthebrand’scontribuEontotheMasterBrandproposiEon?TowhatextentdoesithelptheCompanydeliveronitsbrandpromises?DoesthebrandhelptheCompanyreinforcedesirableequiEes?

WhatistheopEmalrelaEonshipbetweenthebrandandtheCompanybrand?ShouldtherebeanexplicitrelaEonshipbetweenitandotherbrandswithinthebrandporRolio?Ifyes,whatisthebestwaytoestablishthislinkage?

Whatisthebrand’s“boundsofextendibility?”FromacategoryperspecEve,wherecanthebrandcrediblygotoday,orinthenearorintermediatefuture?Whatshouldbeconsideredoff-limitsforthebrand?

Brand2 Brand3 Brand4 Brand5 Brand6Brand1


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Agenda


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Fiveindicatorsyoumayhaveanarchitectureproblem…oropportunity

BrandArchitecture

1. Brandsarecluleredandconfusingtobothcustomersandemployees2. Thereisnointernalsystemformanaginghownewbrandsaredeveloped3. Notgeongenoughleveragefromkeybrandssuchasthecorporatebrand4. Brandarchitectureisnotalignedwithbusinessstrategy5. NoplanforintegraEngrecentlyacquiredbrandsintoexisEngarchitecture


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AcommonB2BbrandarchitecturehierarchyBrandArchitecture

BusinessUnitLevel

CorporateLevel

Group/Solu4onLevel

Product/OfferingLevel

Thenameofthecompany;oqenbutnotalwaysthelegalenEty

ThenameofaBU/subsidiary.MayormaynotbeaderivaEveofcorporatebrand

ThenameofagroupofproductlinesthatshareacommonbenefitorsoluEon

Thelowestlevelinthehierarchy–maynotwarrant“branding”(i.e.,nameonly)

(Johnson&Johnson)

WorkCentre™


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PollingQuestion#3BrandArchitecture

Atwhichlevelofthehierarchywouldyousaythemajorityofbrandequityresideswithinyourcompany’sporRolio?

A)  CorporateLevel

B)  BusinessUnitLevel

C)  Group/SoluEonLevel

D)  Product/OfferingLevel

E)  NoneoftheAbove


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BrandEquityFlowConsiderationsBrandArchitecture

Direc4on

CorporateBrand

?

Division/ProductBrands

Deskjet

Intensity


CorporateBrand

Polarity

CorporateBrand


(-/+)


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BrandLinkageOptionsBrandArchitecture

BrandType Defini4on Illustra4veExamples

Master Abrandthatservesastheprimaryframeofreference,oqencarryingthecorporatename

Co- Anequityovertlylinkedtothemasterbrand,receivingequalemphasisvis-à-visthemaster(i.e.logolock)

Endorsed Anequitythatisendorsedbythemasterbrand,derivingbenefitfromitbyvirtueoftheassociaEon

Descrip4ve AnequitythatispurelyfuncEonal/descripEveinnature,withalogolocktothemasterbrand.

Stand-aloneAbrandthatstandsindependentfromthemasterbrandwithnoovertorimplicitlinktothemaster

Un-branded Abrandthatstandsindependentfromthemasterbrandwithnoovertorimplicitlinktothemaster StrategicOutsourcing

IBMSoqware

MasterBrand

Co-brandEndorsedBrand DescripEve

Brand Un-brandedEquity

Stand-aloneBrand

NetezzabyIBM

IBM SmarterRetail

EmphasisonMasterBrand

Emphasison‘Other’Brand


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BrandArchitectureDecisionTreeBrandArchitecture

1.Revenue

Doestheequityhavedirectrevenue-generaEngresponsibility?

2.MarketNeed

DoestheequityofferadifferenEatedPOVinthemarketplace?

3.Compe44ve

DoestheequityholdcompeEEveprecedencethatestablishesindependence?

4.EquityFlow

IstheequitychargedwithinfusinguniqueequityintotheMasterBrand?

5.Risk

DoesassociaEonwiththeequityplacepotenEalriskontheMasterBrand?

Determination

Stand-aloneBrand

Co-brandBrand

Un-brandedEquity

YES START

NO

YES

NO

YES

NO

YES

NO

YES

NO

EndorsedBrand

DescripEveBrand


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Agenda


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High-levelApproachProcess&Approach

Step1:CurrentStateAssessment

Step3:Por;olioScenarios&BusinessCase Step4:Por;olioMigra4onRoadMap

Step2:CustomerInsights&BrandProfiling

Need State 2Segment 2

Segment 6Segment 3

Segment 1

Need State 5

Need State 3

Segment 4Segment 5

Need State 1

Need State 4

Brand 11

Brand 2

Brand 10

Brand 6

Brand 7Brand 12MGM Grand

Brand 8Brand 9Brand 13

Brand 15)Brand 3Brand 14)Trump (All)Brand 17)Brand 1

Brand 5) Brand 4Non-GamingAmeni4es(-)

Gaming/Comps(-)

Non-GamingAmeni4es(+)

Gaming/Comps(+)

Need State 2Segment 2

Segment 6Segment 3

Segment 1

Need State 5

Need State 3

Segment 4Segment 5

Need State 1

Need State 4

MGM Grand

Trump (All)Non-GamingAmeni4es(-)

Gaming/Comps(-)

Non-GamingAmeni4es(+)

Gaming/Comps(+)

5% 10%

Loca4on•  MostproperEesbenefitfromexcellentlocaEons…

PhysicalFeatures•  Highlyvariable-décortendstobegeneric…

Ambiance•  Disconnectedexperience•  Lowestcommondenominatorapproach

ObservedCustomer•  Thetypicalcustomerisolder(>45),workingclass…

Offer•  Focusesprimarilyongaming,parEcularlyslots…

Service/Staff•  StaffappearstobefriendlyandenthusiasEc…

Propertyanomalieswithinproper4es

•  NewOrleansdécorhasuniquelayoutanddesignfeaturingbrandedslotcourts

•  TahoeoffersamoresophisEcated

•  ThecustomerexperienceneedstobelermatchbrandposiEoningbyprioriEzingkeytouchpointsthatwill…•  St.LouisandAtlanEcCitymaybebestpracEceexamplesforpropertystandardstohandlevariabilityinquality

AtlanEcCity NewOrleans

LakeTahoe St.Louis

Joliet

LasVegas

L

V

C

P

HP

1 23

4

56

7

8

9

10

11

12

13


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ResearchTechniquesProcess&Approach

Segment1 Segment2 Segment3 Segment4

BrandC

BrandE

BrandF

BrandB BrandD

BrandA

Por;olioA

Por;olioB

BrandG

Por;olioC

DiscreteChoiceModelingPor;olioConceptTes4ng

DeterminestheimpactofdifferentbrandporRolioandarchitectureopEonsoncustomerpurchaseintent

HelpsdeterminetheextenttowhichvariousbrandporRolioopEonshelpcreateclarityandpreference


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BusinessCaseAssessmentProcess&Approach

0

13

28.834 34.7

2005 2006 2007 2008 2009

14.820.3 22.2

-37.8

-2.52005 2006 2007 2008 20090.0

24.8

57.5

71.4 72.3

2005 2006 2007 2008 2009

Revenue Impact$Millions

EBITDA Impact$Millions

Cash flow Impact$Millions

Incremental IRR 18%

Whatisit:FinancialanalysisofvaluecreaEonopportuniEeswhichallowstheteamtotestbrandporRoliomovesandinformfinalrecommendaEons(feasibility),valuecreaEonesEmates,andhigh-levelimplementaEonplan


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BrandPortfolioMigrationProcess&Approach

Strengthen,manage(BAM),&promote

2011 2012 2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4

FirstTest SecondTest

(pertestresults)Strengthen&Manage(BAM)

Promote&beginendorsingdivisionbrandsasBrandJbrandstrength/equityisincreased

(pertestresults)Noimmediatebrandac5onRaEonalizebrandEndorsew/BrandJ

(pertestresults)Noimmediatebrandac5onRaEonalizebrandEndorsew/BrandJ

(pertestresults)Noimmediatebrandac5onRaEonalizeBrandEndorseBrandCw/BrandJ

Strengthen,manage(BAM)BrandCBrB

BrA

BrC

BrD

BrE

BrF

CurrentState

12 3

4

FutureState


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best practices in brand portfolio strategy

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