ECONOMICALLY-ACTIVE POPULATION
300 millionECONOMICALLY-ACTIVE
India(conservative est.) 60 million
Japan 128 millionGermany 83 millionU.K. 61 millionFrance 60 million
800 millionECONOMICALLY-MARGINAL
JOHN PHILIP JONES
ECONOMICALLY-ACTIVE MEANSBRAND CHOICE:
For All
Repeat-purchase Cars Jewelry
Airline travel Luxury cars
Cultural pursuits Overseas travel
Funds for some
investment
Funds for major
investment
Branded clothing
Financial services
Consumerelectronics
packaged goods
For Some For A Few
A brand is a product that provides
functional benefits plus added values that
some consumers value enough to buy.
To the consumer, a strong brand provides:-
A guarantee of homogeneity and quality;
Ubiquity;
Extra perceived value for a premium price.
To the manufacturer, a strong brand provides:-
Profitability, from a premium price;
Profitability, from the scale economiesof large output;
Long-term staying power.
LINE EXTENSIONS
Searching for pockets of growth in mature categories
Searching for a new group of users, ideally in expanding segments
IN MOST CASES THEY DO NOT ADD NEW USERS - THEY CANNIBALIZE EXISTING BUSINESS
IMPORTANCE OF WOMEN
REPETITION OF PURCHASE
BRAND REPERTOIRE
TYPICAL CONSUMER'S BUYINGPATTERN
BOODGBOCOBGBGABBGBBDBGBCBBGGBBB
Primary brand (B)Secondary brand (G)Tertiary brands (O,C,D,A)
1579
REQUIREMENTS
Getting the important things right does notguarantee success but it reduces the odds of failure
- Functional superiority- Positioning- Name- Price
- Distribution- Trade promotions- Consumer promotions- Consumer advertising
Blind Test Named Test
2615
27
26
47
59
Blind Test
26
27
47
FUNCTIONALITY
. . . . comes from what is in the box
. . . . comes from what is in thethe consumer's mind
ADDED VALUES
SOURCES OF ADDED VALUES
Personal experience of the brand
Type of people who use it
Belief in the brand's effectiveness
The brand's appearance
BRAND BUYING AND AAV
BRAND BUYING
ACCUMULATEDADDED VALUE
BRAND BUYING AND AAV
BRAND BUYING
ACCUMULATEDADDED VALUE
PRICEDISTRIBUTIONDISPLAY
ADVERTISING
SALES PROMOTION
Strong immediate sales boost
BUT . . . . .
Large reduction in receipts
Large increase in direct costs
Substantial reduction in profit
SALES PROMOTION
Shrinks profit
Fuels competition
Reduces brand loyalty
No repeat purchase
Mortgages future sales
Debases image
MAINTAINING A BRAND AS A PROFITABLE ENTITY
Advertising almost invariably incurs a net cost:
This is normally less than 50 cents per dollarinvested, after deducting the Payback fromthe sales directly generated
Advertising is a necessary expenses to sustaina high level of sales, which generates scaleeconomies and which in turn maintain lowprices which underpin a brand's totalmarketing effort
DEVELOPED RETAIL MODEL
MANUFACTURER CONSUMER
Single link but multiple levels of negotiation
Rapid stock turnover
Little spoilage
Large volume per store
Welcoming environment
Pressure on manufacturers
Low prices
INDIAN RETAIL MODEL
MANUFACTURER CONSUMER
Multiple links
Slow stock turnover
Heavy spoilage
Small volume per store
Less-than-attractive environment
Little pressure on manufacturers
Relatively high prices
INDIAN RETAILING
15 million retail outlets
4% of shops reasonable size (46 sq. meters plus)
Spoilage of 35-40% fruit and vegetables
"Organized" retailing 3% of total sector but
growing by one-fifth every year
450 shopping malls in place or under development
Reliance and Wal-Mart both have plans
HOW MUCH ADVERTISING WORKS
Direct($bn.)
Globaladvertising
350 (100%)150
100 110
70
70
(41%)
(14%)
(28%)
Positiveshort-termeffect
Positivemedium-termeffect
Pays its way
General($bn.)
DevelopedCategories
UndevelopedCategories
MotivatingArguments
DiscriminatingArguments
DevelopedCategories
UndevelopedCategories
MotivatingArguments
DiscriminatingArguments
USA
India
RESEARCH BEFORE ADVERTISING EXPOSURE
WhereAre We?
StrategicDirection
GenerateCreative
Ideas
CreativeDirection
CreativeCommunication
Pre-exposureHealthCheck
Why areWe There?
Concealed and indirect:people are not told to "watchthis".
entertainment program.
calculation of average scores.
Single screening within an
Broad battery of cases;
MAXIMUMANNUALCONTINUITY
OPTIMUMWEEKLY GRPs
MAXIMUMANNUAL REACH
BACK TODRAWINGBOARD
CREATIVEGATE OPEN
CREATIVEGATE CLOSED
THE GATEKEEPER
For any short-term, medium-term or long-term effect, advertising must immediately influence consumer behavior:
In growing categories, to boost salesIn static categories, sometimes to boost salesTo maintain sales against strong competitionWhere brand is losing ground, to decelerate decline
MEDIUM-TERM EFFECT
Year-end is the time for stocktaking and review of the past and future
Evaluate overall change in market shares
Evaluate changes in productivity of advertising investment
Examine continuity of advertising schedule
If possible employ econometric evaluation with payback measurement
BRAND-BUILDING
Long-term effect of advertising is expressedthrough strengthening brands
Positive effect on sales is common but not universal
Protection/reinforcement of existing purchasing patterns always takes place
Long-term growth of profitability is the mostgeneral effect
ADVERTISING EFFECTS
PERIOD PURPOSE DRIVER
Short Gatekeeper Creative
(one week)
Medium Annual sales Creative/budget/
(one year) measurement media
Long Brand building Accumulated
(distant horizon) added values
ANNUAL SALES OF BRANDS XA AND XBIndex (Sales Of XA In 1975 = 100)
125
100
75
50
25
01975 1976 1977 1978 1979
XA
XB
WEEKLY SALES OF BRAND YAIndex (Sales In First Week - 100)
VOLUME
SALES
INDEX
150
125
100
75
50
25
0Weeks
PURE SINGLE-SOURCE RESEARCH
A technique that measures each household'sreception of advertising for specific brands . . .and relates this to the purchasing of thosesame brands by the same household shortlyafter the advertising.
STAS FOR BRAND AL
BRANDAL'S
SHAREOF
PURCHASEOCCASIONS
100
8
6
4
2
0
STIMULATED (4.8)AT LEAST ONE ADVERTISEMENTFOR AL DURING SEVEN DAYSBEFORE PURCHASE
NO ADVERTISEMENTS FOR ALDURING SEVEN DAYS BEFOREPURCHASE
BASELINE (3.0)
{{
RANGE OF STAS EFFECTS236
164
139
121 116108 103
9789
73
RANGE OF MEDIUM-TERM SALES CHANGES
182
121113 109
103
98 94 9084
69
SA
LE
S
SA
LE
S
ADVERTISING ADVERTISING
More Than200 Cases
Fewer Than20 Cases
MEANING OF DIMINISHING RETURNS - CALCULATION
COSTINDEX
One Exposure 100 100
Two Exposures 200 115
Three Exposures 300 125
SALESINDEX
Every week there are some buyers of the brand . . .
Therefore plan weekly media exposure . . .
For as many weeks as the budget will allow.
To cover a substantial proportion of the targetgroup once with minimal duplication . . .
STASDISCONTINUITY
AD-DRIVENSALES
WEEKS
STASCONTINUITY
AD-DRIVENSALES
WEEKS
ECONOMETRIC STUDY OF 800 CASES
Weeks Index of SalesEffect
Low Continuity 9 61Medium Continuity 22 106High Continuity 39 132
"Brands that are planning to increase weight should first consider adding weeks instead of adding weight to existing flights."
LONG-TERM EFFECTS OF ADVERTISING
PenetrationHIGH
Consumer PriceHIGH
Price ElasticityLOW & SLOWLY DECLINING
Purchase FrequencyHIGH & SLOWLY INCREASING
Advertising IntensivenessLOW
Advertising - ElasticityHIGH & SLOWLY INCREASING
SOM / PENETRATION RELATIONSHIP,BRANDS IN 12 CATEGORIES, 1991
300
300
200
200
Pe
ne
tra
tio
n In
de
x
Share of Market Index
100
100
PURCHASE FREQUENCY BY SOM QUINTILES,12 CATEGORIES, 1991
Pu
rch
as
e F
req
ue
nc
y In
de
x
Share of Market Quintiles
Bottom
160
140
120
100
80
60
2 3 4 Top
PRICE ELASTICITY
Price elasticity is the percentage by which sales of a brand will increase immediatelyas a result of a 1 percent reduction in price.
It is essentially a measure of how easily consumers will substitute brands. if the price of A goes down, how much will they reduce their purchasing of B in order tobuy more of A ?
An average elasticity is -1.8.
ELASTIC - HIGH SUBSTITUTION
Price
Large Lossof Sales
Quantity
INELASTIC - LOW SUBSTITUTION
Price
Small Lossof Sales
Quantity
PRICE ELASTICITY
Brands with heavy advertising - 1.0
Brands with light advertising - 1.4
PRICE INDEX COMPARED WITHCATEGORY AVERAGE
All brands 100
Largest 10 brands 114Second-largest 10 brands 110Remaining 58 advertised brands 9964 unadvertised brands 97
Advertising elasticity is the percentage by which sales of a brand will increase immediately as a result of a 1% advertising uplift
An average elasticity is +0.2, although there are many cases in which there appears to be no effect at all
SHARE OF MARKET AND SHARE OF VOICEADVERTISING-INTENSIVENESS CURVE
Share of Voice
Minus
Share of Market
Share of Market (%)
+5
+4
+3
+2
+1
0
-1
-2
-3
-4
-5
1-3 4-6 7-9 10-12 13-15 16-18 19-21 22-24 25-27 28-30
XXXXXXXXXXXXXX
AUTOMOTIVEHOW MUCH SHOULD
(ADVERTISING-UNDERINVESTMENT BAROMETER)
SOV Below SOM
-1
-2
-3
-4
-5
-6
-7
Dangerous
Marginal
Safe
UNDERINVEST?
GOOD COOKS MAKE BIRYANI
GCMB
GatekeeperContinuityMedium-Term EffectBrand-Building
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