“State of the Brand” · 9. The Power of Brands A strong brand is a promise to customers and a means to set expectations and reduce risk The power of a brand resides in the minds

“State of the Brand”in 2018 & Beyond

Kevin Lane Keller

Tuck School of Business

Dartmouth College

CII Brand Conclave 2018Kolkata, India

My Academic Experience

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My Industry Experience

My Textbooks

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Both are market leaders translated and taught around the world

Program Agenda

◼ “State of the Brand” in 2018 & Beyond

◼ Building Competitive Strengths

◼ Creating Digital Advantages

◼ Seeking Growth Opportunities

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Session Topics

◼ Understanding the Role of Brands in a Digital Era

◼ Appreciating Important Trends in Branding

◼ Defining Global Best Practices in Branding

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Understanding Branding Today

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New Branding Challenges

◼ Because of the uncertainty and complexity of modern day life, brands may be as important as ever

◼ Customer need for simplification

◼ Customer need for risk reduction

◼ Because of the many changes in the marketing world, building and managing brands may be as difficult as ever

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The Power of Brands

◼ A strong brand is a promise to customers and a means to set expectations and reduce risk

◼ The power of a brand resides in the minds and hearts of its customers

◼ Strong brands are born out of opportunity and satisfy unmet consumer needs

◼ Strong brands are relentlessly focused on superior delivery of desired benefits

◼ At the heart of a strong brand are great products & services, but every brand contact matters

◼ A strong brand improves marketing effectiveness & efficiency

◼ A strong brand motivates and engages employees

◼ A strong brand provides a buffer & cushion in the court of public opinion

◼ A strong brand is one of a firm’s most valuable intangible assets

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There Are Many Marketplace Benefits for a Strong Brand

◼ Transforms product experience

◼ Enjoy greater brand loyalty & less vulnerability to competitors

◼ Command higher margins

◼ Receive greater supplier & partner support

◼ Enjoy increased marketing communication effects

◼ Support new products or services as brand extensions

Brand Value as a Percentage of Market Capitalization (2018)

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Brand

Brand

Value

(millions)

Market Cap.

(millions)

Brand as

Percentage of

Market Cap.

Apple $182,800 $926,900 20%

Google $132,100 $766,400 17%

Microsoft $104,900 $750,600 14%

Facebook $94,800 $541,500 13%

Amazon $70,900 $777,800 9%

Coca-Cola $57,300 $179,300 32%

Samsung $47,600 $325,900 15%

Disney $47,500 $85,700 55%

Toyota $44,700 $200,700 22%

AT&T $41,900 $132,300 32%

Note:

[1] Brand and brand values taken from the Top 10 brands in the 2018 Forbes list

[2] Market capitalization taken from Forbes as of June 6, 2018

What’s a Brand Really Worth?

◼ It’s worth what you can do with it …

◼ Consider Snapple

◼ Quaker buys Snapple for $1.7 billion in 1994

◼ Sold to Triarc for $300 million in 1997

◼ Sold to Cadbury-Schweppes (with Mistic, Royal Crown, etc.) for $1.45 billion in 2000

◼ Snapple value estimated at $1 billion

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Top Ten Challenges (and Opportunities) of Branding

1. Rapid technological developments

2. Greater customer empowerment

3. Fragmentation of traditional media

4. Growth of digital marketing options

5. Channel transformation & disintermediation

6. Increased competition & industry convergence

7. Globalization & growth of developing markets

8. Cultural & racial diversity

9. Community, political and social concerns

10. Sustainability and environmental concerns

Technology, Globalization & Social Responsibility

Digital Trends Impacting Brands and Brand Management

◼ Changes in consumer decision journey

◼ Sharp increase in buying via online and mobile retail channels

◼ Shift in advertising and promotion expenditures towards digital channels and social media

◼ The rise of many-to-many communications

◼ Dramatic increase in consumer touchpoints

◼ Tremendous increase in data availability

◼ The use of digital personalization

◼ A loss of control over brand message and co-creation of brand meaning

◼ The role of user experiences and the rise of AI/AR

◼ The growth of brands as cultural symbols14

One-Time Market Leaders

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Successful Challengers

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New Disruptors

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Brands Still Matter!

◼ Powerful brands are still being created …

◼ But the manner by which they are being created and the values that they represent are changing

◼ “What” vs. “How”

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Hitting the Marketing Sweet Spot in a New Digital World

◼ Not a revolution! But a very dramatic evolution

◼ Marketers must strike a balance between the old and the new … between continuity and change

◼ Must consider what to “stop, start and continue”

◼ In general, approaches for strategieshave changed less than for tactics

◼ Obviously need to excel at both

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What Stays the Same?

◼ For example, marketers still need to think about how to optimally segment, target and position

◼ Segmentation and targeting must reflect different levels of personalization and aggregation

◼ Positioning must reflect how target consumers evaluate brands and make choices

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What Changes?

◼ Obviously marketing in a wired world requires many changes

◼ Data has impacted how marketers communicate and sell in profound ways

◼ Digital communications

◼ Social media and social networks

◼ Mobile communications

◼ Marketing analytics and “Big Data”

◼ Omni-channel shopping

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Summary

◼ Brands are one of a company’s most important intangible assets … because of what they do

◼ Brands differentiate and create meaning with customers

◼ Brands must be managed properly to reap the benefits of strong branding

◼ Smart marketers optimally balance continuity and change in all that they do

Eight Keys toAchieving Branding Excellence

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Eight Keys toAchieving Branding Excellence

◼ Consumer-Centric Brand Vision & Passion

◼ Superior Competitive Brand Positioning

◼ Clearly Defined Brand Architecture

◼ Fully Integrated Marketing Program

◼ Cultivated Brand Relationships

◼ Premium-Driven Pricing Strategies

◼ Relevant Marketing Innovation

◼ Well-Managed Brand Growth Strategies

Lessons From theWorld’s Strongest Brand

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Achieving Branding Excellence

◼ A Consumer-Centered Brand Vision and Passion

◼ Thorough & up-to-date consumer understanding

◼ Find higher-order purpose that is anchored in …

◼ Consumer aspirations

◼ Company capabilities & goals

◼ Transcend physical product category descriptions and boundaries

◼ Example:

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Nike

◼ Brand Mission: To bring inspiration and innovationto every athlete in the world

◼ ”If you have a body, you’re an athlete”

◼ Brand Values

◼ Inspire

◼ Innovate

◼ Focus

◼ Connect

◼ Care

◼ Original Brand Essence or “Mantra”

◼ Authentic Athletic Performance

Nike Innovations: Developing an “Ecosystem of Engagement”

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Nike+ Run Club

NIKEiD

“Being more personal, giving the athletes an experience that is easier, connected, and simple”

“Measurable Personal Improvement through Exercise”

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Achieving Branding Excellence

◼ Superior Competitive Brand Positioning

◼ Develop unique points-of-difference

◼ Desirable to consumer

◼ Deliverable by the company

◼ Differentiated from competition

◼ Establish shared points-of-parity

◼ Negate competitor points-of-difference

◼ Overcome own perceived vulnerabilities

◼ Demonstrate category credentials

◼ Example:

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Visa

◼ Goal: Attack American Express & Marginalize MasterCard

◼ Strategy: Neutralize & Differentiate

◼ Point-of-Difference: Acceptability & Convenience

◼ Point-of-Parity: Status, Prestige, & Cachet

◼ Tactics:

◼ Larger merchant network

◼ Gold and platinum cards and rewards program

◼ “It’s Everywhere You Want to Be” ad campaign

Key Payments Trends

◼ From card to Cloud

◼ Everything as a point-of-sale

◼ Paying in messaging platforms

◼ Transactions without borders

◼ The API Economy

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Visa Brand Promise: A better way to pay and be paid. We enable consumers and

merchants to do business with confidence.

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“Everywhere You Want to Be”

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Achieving Branding Excellence

◼ Clearly Defined Brand Architecture

◼ Understand potential of each brand in portfolio

◼ Develop strong power brands with broad market footprints

◼ Maximize market coverage and minimize overlap of all brands

◼ Only introduce sub-brands of a parent brand if they have clear strategic roles

◼ Example:

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BMW

◼ Clever straddle positioning with corporate brand

◼ Points-of-parity and points-of-difference

◼ Luxury and Performance

◼ Clearly defined sub-brand roles

◼ Brand hierarchy: 3, 5, & 7 series

◼ New models and brands to expand the brand footprint

◼ X3, X5, Z4, M3, 6 series, & Mini

3 Series 5 Series 7 Series

BMW"Ultimate Driving Machine"

POP/POD - Luxury

POP/POD - Performance

Relevance

Differentiation

How Is BMW Addressing A Changing Marketing World?

◼ Autonomous innovation

◼ Owned or shared

◼ Alternative energy; electric

◼ Business of mobility

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Achieving Branding Excellence

◼ Fully Integrated Marketing Program

◼ Blend consumer-directed “pull” marketing with channel-directed “push” marketing

◼ Combine sales-generation and brand-building across all channels and communications

◼ Create a 360° degree “mix” and “match” marketing program with all online and offline marketing activities

◼ Example:

Red Bull Equity Drivers

◼ Brand elements◼ Name – Red Bull

◼ Logo – Oriental-themed depiction of strength

◼ Slogan – “Gives You Wings”

◼ Packaging – 250 ml silver & blue can

◼ Marketing program◼ Product – Iconic functional energy drink

◼ Price – Premium

◼ Channels – Widely available; proprietary placement

◼ Communications – Traditional & non-traditional

◼ Secondary associations◼ Events – Established and proprietary

◼ Athletes – Amateur and professional

Red Bull Events &

Experiences

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Red Bull Media House is an award-winning, globally distributed multi-platform media company on a mission to inspire with ‘beyond the ordinary’ stories - both direct-to-consumer and through partnerships

With a focus on sports, culture and lifestyle content, Red Bull Media House offers a wide range of premium media products across TV, mobile, digital, audio, and print

Red Bull Media House produces and licenses a broad selection of global live broadcast events, compelling and inspirational local storytelling with original short and long-form programming

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Achieving Branding Excellence

◼ Cultivated Brand Relationships

◼ Build brand foundation of identity & meaning

◼ Establish duality in terms of product performance and brand imagery

◼ Elicit positive rational & emotional responses

◼ Create resonance and intense, active relationships

◼ Example:

American Express Brand Promise

◼ The American Express brand promise to its cardmembers is a simple, confident way to make purchases.

◼ Cardmembers can effortlessly buy what they want with the peace of mind and trust that American Express stands behind them.

◼ American Express is able to deliver on this brand promise through its long-standing commitment and investment in customer service and in innovative product and service features

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American Express Brand Promise

◼ Each day, American Express makes it easier, safer and more rewarding for consumers and businesses to purchase the things they need

◼ American Express provides innovative payment, travel and expense management solutions for individuals and businesses of all sizes

◼ We help our customers realize their dreams and aspirations through industry-leading benefits, access to unique experiences, business-building insights, and global customer care

◼ We enable our customers to do more and achieve more

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The Power of Membership

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“Don’t [Live Life] Without It”

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Another new ad campaign featuring Lin-Manuel Miranda shows how American Express backs people in both their lives and the communities they love

With more and more people finding their work and personal lives intertwining, American Express launched a “360-degree” marketing campaign and a new brand platform, “Powerful Backing: Don’t Do Business / Don’t Live Life Without It.”

Campaign celebrates the new reality that life and business are increasingly interconnected, and how American Express supports this “hybrid life”

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Achieving Branding Excellence

◼ Premium-Driven Pricing Strategies

◼ Defy commoditization

◼ Lower costs to create efficiency & effectiveness

◼ Maximize consumer value

◼ Price to capture value premium

◼ Example:

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Starbucks Value Proposition

◼ Starbucks commands a price premium as it offers superior delivery of desired benefits.

◼ High quality coffee

◼ Wide variety of coffee products & variations

◼ Complete vertical integration

◼ Controlled retail distribution

◼ Motivated & trained employees

◼ Rich sensory retail experience (“3rd place”)

◼ Positive word-of-mouth & publicity

Mobile Strategy

◼ Starbucks has pioneered mobile technology with the Starbucks App to become an industry leader in mobile engagement

◼ The application allows users to locate stores, complete transactions, increasing their loyalty to the brand through a reward system, and pre-order drinks

◼ The Starbucks App has become the most successful mobile payment system in the U.S.

◼ 23.4 million users in U.S.

◼ Accounts for 30% of all transactions

◼ Tied into loyalty program

Mobile Strategy: App Transactions

◼ The Starbucks App allows for users to scan Starbucks Cards to fill their mobile wallets for in-store purchases

◼ Allows for users to pay for orders with their phones◼ Show an in-app QR code to a scanner to complete purchase

◼ Automatic loyalty rewards for making purchases through the mobile application

◼ Mobile Order and Pay

◼ This function allows customers to place orders in advance of their visit and collect their order at their chosen location

◼ Customer selects location, orders their chosen products, and pays, all before entering the store

◼ Products are prepared after the customer pays

◼ User can go to the selected location to pick up the prepared drinks

Mobile Strategy: Loyalty Program

◼ The free to use system, “Starbucks Rewards,” is part of the Starbucks App

◼ Every purchase earns one star◼ With more stars, more rewards

◼ Tiered system of rewards, goes beyond free beverages

◼ “At the Green Level, customers get free refills of brewed coffee or tea, free select syrups and milk when they order a beverage off the menu, a free beverage when they buy whole bean coffee, and free trial offers.”

◼ Builds brand loyalty by rewarding long-term customers

◼ Over 14 million members◼ Allows for Starbucks to gain significant data

on its customers habits that can be

used to shape marketing tactics

Use of Social Media

◼ Starbucks has become an industry leader in utilizing different social media sites to build brand equity

◼ 37.32 million Facebook likes

◼ 11.9 million Twitter followers

◼ 17.3 million Instagram fans

◼ 153K YouTube subscribers

◼ Core social media team manages over 30 accounts

◼ Cultivates loyalty and awareness of information important to the consumer

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Achieving Branding Excellence

◼ Relevant Marketing Innovation

◼ Introduce meaningful and imaginative communications and other marketing activity

◼ Embrace all aspects of a digital world

◼ Establish social currency & significance

◼ Recognize the power of design

◼ Example:

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Samsung Has a Strong Design Philosophy

◼ Simple & Intuitive

◼ Efficient & Long-lasting

◼ Adaptive & Engaging

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Samsung Leading Edge Products

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Achieving Branding Excellence

◼ Well-Managed Brand Growth Strategies

◼ Seamlessly leverage equity into new products and markets

◼ Maximize product development

◼ Maintain product innovation pipeline

◼ Maximize market development

◼ Optimize channel mix (online & offline)

◼ Tap into developed and developing markets

◼ Embrace multicultural marketing

◼ Effective top-down and bottom-up brand management

◼ Example:

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Apple

◼ Strong brand promise

◼ Intrinsics: Performance & design ◼ How a product works, looks, & feels

◼ Extrinsics: Personality & character◼ “Think Different”

◼ Sustained product innovation

◼ Macintosh personal computers

◼ PowerBook laptops

◼ iPod portable music player

◼ iTunes music download website

◼ iPhone mobile phone & apps

◼ iPad tablet computer

Feed-

back

Further

Expan-

sion

Growth

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Branding Toolkit

◼ Rate your organization as to how well it does for each branding competency (1 = Poor, …, 10 = Excellent).

1. ___ Consumer-Centric Brand Vision & Passion

2. ___ Superior Competitive Positioning

3. ___ Clearly Defined Brand Architecture

4. ___ Fully Integrated Marketing Program

5. ___ Cultivated Brand Relationships

6. ___ Premium-Driven Pricing Strategies

7. ___ Relevant Marketing Innovation

8. ___ Well-Managed Growth Strategies

◼ How can you improve in those areas of weakness?

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