Branding Panel Slides - Milken Instituteassets1c.milkeninstitute.org/assets/Events/Conferences/Global... · information, analysis, and ... IBM 51.2 Microsoft 64.1 Coca Cola 69.6.

BrandingKeeping Your Company On Top

• Convenient, Modern Store Facilities

• High Quality Perishables

• Unique Private Label

• New Departments

• New Services

Convenient, Modern Store Facilities

High Quality Produce

Increased Selection

Improve Merchandising

Add New Departments

Add New Services

Extensive Private Label Offering

Growth of Safeway SELECTNumber of SELECT SKU’s

2002200120001999199819971996199519941993

1400

1200

1000

800

600

400

200

0

Number

147275

352

710770

902

1040

11511256 1265

Safeway The Clear Leader In Service

First Place (0-20% Lead)

Less Than First Place

Commanding Lead(> 20% Lead)

*As Of Third Quarter 2002

DIVISIONA JB C D E F G H I K

Greet

Anticipate

Take

Thank

Sample

Carry Out

Parting

Checkout

OOS

Adjust Pricing

• Lower Regular Retails On Certain Items

• Remain Promotional

• Narrow Gap With Discounters Over Time

“The primary focus of the brand message must be on

how special you are, not how cheap you are.”

-Larry LightExecutive Vice-President ofMcDonald’s Corporation

72% of customers will pay a 20%premium for their brand of choice,

40% will pay a 30% premium.

Over 70% of customers want to use brand to guide their purchase decisions.

More than 50% of customers are willing to try a new product from a preferred brand because

of an implied endorsement.

Scott DavisBrand Asset Management

Why would anyone pay $3.50for a 15 oz. Bottle of juice?

More Powerful Antioxidants (Polyphenols)

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THE BLOOMBERG

BRAND

Survey – “I Currently Avoid U.S. Products and Services”

U.K.Germany

JapanItaly

FranceCanada

RussiaSpain

30

25

20

15

10

5

0

Percent

Using a scale from 1-10 with 10 being “full agreement”, the percentage of people who marked 7-10.

Advertising Icons of the Century

1989The Energizer Bunny

1890

1900

1920

1930

1940

1950

1960

1970

1980

1893Aunt Jemima 1939

Elsie

1921Betty Crocker

1928The Green Giant

1955The Marlboro Man

1965The Pillsbury Doughboy

1963Ronald McDonald

1990

2000

1898The Michelin Man

1951Tony the Tiger

Financialsoundness Social

responsibility

Employee talent

Use of corporate assetsLong-term

investment value

Quality ofproducts/services

Innovation

Quality of management

Key Attributes of Reputation

Brand Values Reflect Society’s ValuesYesterday Today

The Changing Role of the Brand

“Reputation, reputation, reputation! O! I have lost my reputation. I have lost the immortal part of myself and what remains is bestial.”

William Shakespeare

“A good name is better than riches.”Cervantes, Don Quixote

The Changing Role of the Brand

• Why do customers defect?– 1% Death– 3% Move– 5% Influence of friends– 9% Lured away by competition– 14% Dissatisfaction with the product– 68% Turned away by attitude of indifference

on the part of the company employee

The World’s Most Valuable Brands2002

Brand Value $Billions

30.9Intel

41.3GE

51.2IBM

64.1Microsoft

69.6Coca Cola

Fortune’s Most Admired Companies20021985

Hewlett-Packard

3M

Dow Jones

Coca-Cola

IBM

General Electric

Dell Computer

Berkshire Hathaway

Southwest Airlines

Wal-Mart

Goodwill - the Origin of Brand Valuation

Goodwill as % of price paidVendorAcquirer

66%VerkadeUnited Biscuits

75%TreborCadbury Schweppes

88%PillsburyGrand Met

83%RowntreeNestle

Intangible Assets are Increasingly Important

Ratio of Goodwill and Intangibles to

Total Assets

61%Kraft Foods

65%Comcast

78%Viacom

84%Clear Channel Communications

84%AOL Time Warner

The Value of BrandsTotal Return to Shareholders Relative to Industry

130 Companies

Weak Brands

Strong Brands

Diversified Brands

Focused Brands

+0.9%

+5.0%

-3.1%

+1.9%

Brand Leverage

Future Leverage Potential

Historical Leverage

Gap

Schwab Kodak

Nike

Levi’sSprint AT&T

Wal-Mart

IBM

AmericanExpress

GE DisneyIncreasing diversification

Increasing diversification

Increasing Brand Value

+12%Starbucks+12%Dell+13%Harley-Davidson+16%Nivea+30%Samsung

2001 to 2002Change

Decreasing Brand Value

-25%Merrill Lynch-27%Boeing-30%AT&T-32%Ford-49%Ericsson

2001 to 2002Change