Prophet On Brand Arch

Brand Portfolio Strateg
Managing and Investing in the Righ

Business Results
To view the archive of this presentation

please visit http://www.marketingpower
September 20, 2005

olio Strategy
ting in the Right Brands to Drive
ess Results
of this presentation with voice over,

ww.marketingpower.com/webcast215.php
mber 20, 2005

Presenter
Scott Davis
Davis
PROPHET
“Brands are fiendishly co
elusive, slippery, half rea
things. When CEOs try to
brands their brains h
ndishly complicated,
, half real-half virtual
EOs try to think about
brains hurt.”
- Jeremy Bullmore, WPP
PROPHET
“The way the team plays as a
determines its success. You
the greatest bunch of individ
the world, but if they don’t p
the club won’t be worth a dim
plays as a whole
ess. You may have
of individual stars in
y don’t play together,
orth a dime.”
- Babe Ruth
PROPHET
“You need to change the orie
company so that people thin
as assets. Then you must ma
portfolio of brand as
e the orientation of a
ople think of brands
must manage your
brand assets.”
- David Aaker
PROPHET
Questions You May Hear from Mana
Why do we have two brands serving the s

our portfolio?
How should we use our budget to drive br
We need to consolidate brands. What is y

recommendation?
What is the rationale for how you have all

marketing budget?
How well do our customers understand w

offer?
from Management
serving the same purpose in
et to drive brand growth?
ds. What is your
you have allocated your
nderstand what we have to

Brand Portfolio Strat
The effective creation, deploym

management of brand assets in
simultaneous top- and bottom
olio Strategy
n, deployment and
nd assets in support of
and bottom-line growth
Topics
About Prophet
Brand and brand portfolio strategy
Brand architecture vs. brand portfolio strategy
An approach to brand portfolio strategy
Brand portfolio strategy in the hotel industry

Leading brand portfolio practices for driving grow
Conclusion
TITLE — Slide 7
io strategy
industry
r driving growth
Proprietary and confidential property of Prophet. Do not distribute.

Introduction to Prophet
Consultancy specializing in creating

and implementing integrated business,
brand, and marketing strategies
Thought leaders with a strong track

record of creating quantifiable
impact for global companies
Founded in 1992, with offices in San

Francisco, Houston, Chicago, New
York, London, Hamburg, Zurich, and
Tokyo
TITLE — Slide 8
Prophet’s Brand Portfolio Strategy Experie
TITLE — Slide 9
egy Experience

Topics
About Prophet

Conclusion
TITLE — Slide 10
io strategy
industry
r driving growth

Setting the Context
What is a Brand?
?
Brand
TITLE — Slide 11
?
?
?
Setting the Context
A brand is not just . . .
x An Ad x x
x A Spokesperson
x x A Product
TITLE — Slide 12
A Logox x A Jingle
x x A Symbol
x
A Product x x A Slogan
x x A Name
x
Proprietary and confidential property of Prophet. Do not distrib

of Prophet. Do not distribute.
Setting the Context
A brand is…
… all of the
promisesand
organization wants its market to feel
about its product and servic
A brand is
asset
an
It is a property with a m
value that should be ma
TITLE — Slide 13
perceptions an
ket to feel and believe
and service offerings
asset
y with a measurable
ould be maximized

What is Brand Portfolio Strategy?
Brand portfolio strategy: The effective creatio

management of brand assets in support of sim
Maximum Portfolio Value
Key Access to NewMarketing

Benefits Markets & Investment
Customers Efficiency
TITLE — Slide 14
ctive creation, deployment and
upport of simultaneous top-
tfolio Value
Strengthened Uncovered
Customer Latent Brand
Relationships Potential

Why is Brand Portfolio Strategy Critical to
Brands tie a company to its customers – the b
must inform and be informed by the business
It guides how the company should invest its resources
It directs the critical trade-offs required with each strategic bu
It optimizes your marketing spend and maximizes portfolio va
Brand strategy is business stra
Business
Strategy
Professional
Experience &
Research
Company Portfolio Strategy
Feedback, perceptions, satisfaction, et
TITLE — Slide 15
y Critical to Your Success?
mers – the brand strategy
he business strategy
esources
ach strategic business decision
izes portfolio value
business strategy…
Execution
Brand & Brand
Customer
Experience
rceptions, satisfaction, etc.

Why is Brand Portfolio Strategy So Challe
Generally, no single group is reviewing or has

manage the entire portfolio, resulting in man
senior executives…
Overlapping brands in a portfolio offering similar produ
to the same customer
Inefficient allocation of brand-building resources includ

multiple brands across multiple countries
Recent mergers & acquisitions resulting in bloated bra
Lack of clarity on local vs. global brands

No clear brand-driven growth platforms to fuel future g
Internal constructs, politics, and new product developm

strategy vs. customer-insights and strategic growth dr
Lack of portfolio management system
TITLE — Slide 16
y So Challenging?
ewing or has the authority to

ting in many challenges for
ng similar products/services targeted
resources including having to support
g in bloated brand portfolio
s to fuel future growth
roduct development drive portfolio

ategic growth drivers

Topics
About Prophet

Conclusion
TITLE — Slide 17
io strategy
industry
r driving growth

Brand Architecture vs. Brand Portfolio Str
Brand architecture is a critical component of
strategy
Brand Architecture
Addresses how a company can

best structure and communicate
its portfolio of brands
Corp Brand Luxury
Brand E Brand B Premium

Stand
alone,
Brand F unlinked Brand C Mid-
Endorsed by E brands
priced
Brand D
Endorsed
Value
TITLE — Slide 18
ortfolio Strategy
mponent of brand portfolio
Brand Portfolio Matrix
Addresses how a company can

use its brand(s) to achieve top-
Consider
Brand A Expanding
Brand B Brand C Brand D
Brand E
Brand F
Segment 1 Segment 2 Segment 3 Segment 4

Brand Architecture
Many brand architectures are complex, requi

streamlining and attempting to maintain cons
Cafés
Company International US
Owned Licensees LicenseesGrocery
Master
Brand
Subbrand
Co-Brand
Starbucks
Product Barista ® commitment
to origins ™ ™
Service/ “The Way Black Five Star

Experience I See It” Aprons Service
Partner
Ingredient
®®
Venti Tazoberry™
Differentiator
TITLE — Slide 19
mplex, requiring diligence in
aintain consistency
Foodservice Other

Brand Portfolio Strategy
Brand portfolio strategy addresses key strate

and decisions rather than the linkages of bran
architecture
Brand Portfolio Mat
Luxury Develop or
Acquire
Premium
Reposition
Mid-priced
Quality/Price Point
Merge to Gain
Value Better
Investment
Segment 1 Segment 2
Customer Segment
TITLE — Slide 20
s key strategic business issues
ages of brands within the
Milk & Use as Source of

Funds for other Brands
Expand into
New
Segments
Segment 3 Segment 4
Customer Segment

Gap’s new move into women's clothing for th

generation reflects their brand portfolio strate
Brand Architecture
Luxury
Premium
Mid-priced
Value
TITLE — Slide 21
ortfolio Strategy
othing for the baby boomer

rtfolio strategy
Segment 1 Segment 2 Segment 3 Segment 4

Brand architecture provides a more tactical fo

portfolio strategy provides a more strategic fo
BRAND ARCHITECTURE
Sample Question:
What should this brand be called?
Should it be linked to the master
Tactical brand or not? Strategic
Primary Objective:
Achieve clarity and synergy among VS.
brand(s) in the portfolio
Scope of Activities:
Customer research to understand
existing equities of brands
Brand, business, and customer filters
to identify optimal solution
Naming and visual identity system
TITLE — Slide 22
ortfolio Strategy
re tactical focus while brand

e strategic focus
BRAND PORTFOLIO STRATEGY
Sample Question:
Is this not only the right brand, but
the right category in which to grow
revenues by 15%?
Primary Objective:
Maximize portfolio value by
strategically growing, leveraging,
and protecting brands in a portfolio
Scope of Activities:
Comprehensive fact base (customer
and brand data – qual./quant.)
Portfolio mapping
Business case development

By strategically building, leveraging, and prot
brands, brand portfolio strategy optimizes the
portfolio
What It Is
The strategic structure for all An organizationa

master brands and related brand
architectures in a company’s A naming archite
portfolio
The corporate or
The external representation of a system of a com
portfolio of brands based on the
Static
end-customer’s point-of-view
The intersection of business
strategy and brand strategy
TITLE — Slide 23
ng, and protecting portfolio
ptimizes the value of the entire
What It Is Not
An organizational structure alone

A naming architecture alone
The corporate or visual identity

system of a company
It is grounded in market
dynamics
It can change dramatically
over time
Topics
About Prophet

Conclusion
TITLE — Slide 24
io strategy
industry
r driving growth

The Quest For Growth
Brand portfolio strategy drives growth by optim
meet marketplace needs while recognizing inte
Capabilities/Value Chain Management
Corporate/Center/Region
BU BU BU
Internal Organization
External Marketplace
CompetitorsCompetitorsCompetitorsCompetitors
Channels
Customer
Customer Segment 2 Customer Customer
Segment 3
Segment 1 Segment 4
TITLE — Slide 25
wth by optimizing brand assets to
ognizing internal challenges
Brand portfolio strategy

rategy connects the internal capabilities
with the marketplace needs
Competitors
Customer
Segment 5

The Quest For Growth
Conventional growth strategies are often insu
shareholders demands
Today’s Challenges Traditional Strategy

Increasingly
savvy/demanding
Customers Operational Cost Cutting
Cycle of innovation and
imitation increasing Operational Efficiencies
Customers bombarded
+
with marketing/offers Footprint Expansion
New luxury and value
creating opportunities Line Extensions
at the top/bottom with a
vacuum in the middle Enhanced Merchandising
Channel partners
becoming competitors Pricing
Etc.
TITLE — Slide 26
re often insufficient to meet
rategy Often Not Sufficient

Top-line Growth
Cutting
nal Efficiencies Revenue
=
t Expansion Time
Bottom-line
Growth
andising
Margins
Time

An Approach to Brand Portfolio Strategy
Take a long-term, holistic approach to manag
brands
Stage 1 Stage 2
Renovation & Identification o

Rationalization Growth Opportunities
Focus and clarify portfolio Expand brand and bus
to ensure efficient allocation frame of reference
of resources
Leverage brand(s) int
Determine scope, roles and markets or customer
relationships of brands in segments
the portfolio (brand

Make strategic brand
architecture)
acquisitions
Ongoing
Management System
Determine appropriate organizational structure to manage brands
Develop metrics system to track brand and business performance
Other operationalization issues, e.g., channel, sales force, pricing?
TITLE — Slide 27
Strategy
ch to managing your portfolio of
Stage 2 Stage 3
dentification of Optimization
Opportunities
Expand brand and business
Maintain brand relevance
rame of reference
Manage portfolio roles to
Leverage brand(s) into new combat market pressures,

markets or customer e.g., consumer bifurcation
Build branded differentiators
Make strategic brand or energizers to maintain
acquisitions brand-built margins

Ongoing
ement System
to manage brands as a portfolio
iness performance across the portfolio
ales force, pricing?

The following questions begin the brand portfol
What is the optimal number of brands in a specific

portfolio?
What is the scope of each brand within the portfol
What are the roles and responsibilities for each brand

within the portfolio?
How do brand linkages affect equity of other brands in

the portfolio? (brand architecture)
How should acquired brands be integrated

into the
portfolio?
What is the strategic roadmap for the portfolio to facilit

future growth?
TITLE — Slide 28
Strategy
brand portfolio strategy process
s in a specific Optimal
Number?
within the portfolio?

Scope?
or each brand Roles /

Responsibilities? (silver Bullet)
Equity
other brands inTransfer?
Acquisitions?
nto the
Strategic
portfolio to facilitate
Roadmap?

Companies use brand portfolio strategy to dr
ways
Rationalize a Portfolio
Growth
Opportunities
Differentiate
TITLE — Slide 29
Strategy
rategy to drive growth in many
Optimize Marketing Spend
unities
Create Platform for Growth

UBS
After acquiring a number of companies, UBS

brand portfolio to best deploy resources and
Union Bank of Switzerland
Two major banksA number of banks Some bank brands were

merged were acquired rationalized and some we
maintained for their equit
TITLE — Slide 30
anies, UBS consolidated its
ources and to drive growth
nk brands were Finally, all properties

zed and some were were integrated
ed for their equity under the UBS brand

FedEx
FDX Corp. aligned its separate and distinct bu
FedEx umbrella to leverage FedEx equities, o
spend, and drive enterprise-wide growth
Disjointed and
Overlapping
TITLE — Slide 31
d distinct businesses under the
x equities, optimize marketing
growth
Cohesive, Clear, and
aligned on vision

Westin
By developing the Heavenly Bed brand, West
the hotel industry by focusing on the in-room
differentiate and gain market share
Developed by leveraging the customer

perspective
Facilitated rate increase and market

share growth
Expanded to differentiate the customer

experience
Source: Prophet,
Brand Portfolio Strategy By: David A. Aaker
TITLE — Slide 32
brand, Westin revolutionized
the in-room experience to

Philips & Nike
Nike and Philips partnered to create a platfor

brand assuming new associations from relatio
Pre-Partnership DNA
Consumer Electronics
Televisions, VCRS
Dutch
Equity Transfer
Time
Change in Core DNA
Post-Partnership DNA
Youth-oriented
High performance
Cutting-edge
TITLE — Slide 33
ate a platform for growth, each
from relationship
ership DNA
Shoes
Phil Knight
Athletic Performance
Core DNA
Creates a new
platform for growth
Innovator and expansion
Tech-savvy

Topics
About Prophet

Conclusion
TITLE — Slide 34
io strategy
industry
r driving growth

Brand Portfolio Strategy in the Hotel Indu
Source: Prophet
TITLE — Slide 35
Hotel Industry

Clarity, Consistency, Breadth
Marriott strategically manages its portfolio acro

and usage occasions
Super-Premium
Premium
High Quality
Price/Value Tiers
Mid-Price
Economy
Extended Stay
Hotel
Usage Occasion
Source: Prophet
TITLE — Slide 36
portfolio across multiple price points
Time Share
Occasion

From Inconsistency to Clarity
Wrong customer focus

Lack of brand and offer definition
Inconsistency
Source: Prophet
TITLE — Slide 37
National Group & Vacation, Surf & Friends & Local Basic
Business Getaway Vacation Deal Family Business Deal
$$$$$$
$$$$$
$$$$
$$$
$$
$$
Clarifying Radisson positioning

and improving consistency of the
experience
Refocusing the value brands

around distinct targets/occasions
Topics
About Prophet

Conclusion
TITLE — Slide 38
io strategy
industry
r driving growth

Leading Brand Portfolio Practices for Drivi
1 Optimize portfolio to increase share of pu
2 Develop branded differentiators to defend
3 Select where and where NOT to reach for

3a 3b
4 Extend into new products and profitable g
TITLE — Slide 39
es for Driving Growth
se share of purchases
ators to defend against commoditization
OT to reach for operating synergies
nd profitable growth opportunities

1. Optimize Portfolio to Increase Share of
Williams-Sonoma leverages customer insight ac
channels to successfully manage the roles of its
Understand channel options
Understand the role of each brand in the

portfolio structure
Build and leverage synergies across the

portfolio
Source: Prophet
TITLE — Slide 40
e Share of Purchases
mer insight across brands and
he roles of its brands
in the
ss the

2. Develop Branded Differentiator in a Co
Chevron changed the game by branding its gas
achieving market leadership in 9 western states
Develop a new brand to best

communicate a real benefit
Develop appropriate visual

treatment
Support the brand with consistent

brand building efforts
Source: Brand Portfolio Strategy, Dave A. Aaker, chevron.com

TITLE — Slide 41
ator in a Commoditized Market
nding its gasoline additive,
estern states
sistent

3a. Select Where to Reach for Operating S
Estee Lauder achieves the right relationship be
taking advantage of operational and marketing
Estee Lauder has effectively separated each

brand in its portfolio in customers’ eyes
While separating brands externally, Estee

Lauder effectively integrates certain activities to
drive operational cost and knowledge synergies
Estee Lauder has taken these cost advantages
and reinvested them into the brands
They have effectively established the right
balance between integration and
decentralization
Source: Prophet, Estee Lauder Annual Report 2003

TITLE — Slide 42
Operating Synergies
ationship between brands while
d marketing efficiencies
Art
vities to
nergies
tages
Science
Note: List is not exhaustive

3b. Select Where NOT to Reach for Opera
Vanguard, which purchased both National and A
undoing the merger of the customer experience
In 2001, merged their operations under a co-

brand badge to cut costs
Consequences were very damaging to
perceptions, particularly for National
A consistent brand experience is essential
Source: Prophet, Brand Portfolio Strategy By: David A. Aaker

TITLE — Slide 43
h for Operating Synergies
ational and Alamo Rental Car, is
er experience of the two brands
Target: Business/Corporate
travelers, high rental frequency
Speed, efficiency, quality
Target: Price sensitive leisure and

small business travelers, infrequent
renters
Quality rentals at the right price

4. Extend Into New Products and Growth
Apple took advantage of their powerful brand a
capabilities to move into the emerging digital m
Establish credibility to extend
Leverage operational capabilities
Innovate around an emerging opportunity
Source: Prophet, www.brandchannel.com

TITLE — Slide 44
nd Growth Opportunities
erful brand and abundant
ging digital music market

Topics
About Prophet

Conclusion
TITLE — Slide 45
io strategy
industry
r driving growth

Brand Portfolio Strategy Pitfalls
Top 5 Brand Portfolio Strategy Pitfalls
1. Brand
Letting
proliferation
internal biases,
– constructs, and
new product development drive brand portfolio
2. Missed
Under-leveraging
opportunitiesbrands
– in a
portfolio, and missed potential marketing effici
failing to create clarity, synergy and leverage a
portfolio
3. Disconnect
Not linking
to business
brand portfolio
– strategy
to business goals and objectives, and failing to
with specific metrics
4. Stopping
Assuming
at logo
brand
and naming guideline
portfolio strategy is complete when logo treatm
naming conventions are determined
5. Assuming
Assuming
executive
organizational
alignment –
buy-in to the strategy at both the corporate an
level
TITLE — Slide 46 Proprietary and confidential property of Prophet. Do not distrib

gy Pitfalls
constructs, and
e brand portfolio decisions
marketing efficiencies, by
y and leverage across the
olio strategy
es, and failing to track success
when logo treatments and
he corporate and business unit
of Prophet. Do not distribute.

Parting Thoughts as You Pursue Your Stra
The following represent some key success facto
development and implementation of a “winning
A brand portfolio strategy should logically flow from, a

broader business strategy
As a rule, a portfolio of fewer, bigger and better brand

broader portfolio of regional and niche brands
A brand portfolio strategy must provide clarity on the s

interrelationship for all brands within the portfolio
Brand portfolio strategy should dictate the level and m
communication priorities across the portfolio
It is imperative to have an organizational structure tha
manage the brands and is aligned with the right talent
A measurement system needs to be establish to gauge
the brand portfolio
TITLE — Slide 47
e Your Strategy
success factors regarding the
of a “winning” portfolio strategy
ally flow from, and lend support to, the
nd better brands is preferred over a

brands
e clarity on the scope, role and

he portfolio
the level and mix of investment and
nal structure that is empowered to

h the right talent and processes
stablish to gauge and guide success of

Parting Thoughts as You Pursue Your Stra
Three considerations for driving growth throu
strategy:
1 Set clear customer focus

Understand customer profitability, iden
evaluate how well each brand in the po
A more comprehensive understanding o
enables marketers to better structure t
2 Optimize the brand portfolio

The goal is to drive growth and generat
Decisions often require tough calls and
analysis of customer targets, brand per
business results
3 Organize for success

Most companies fail to optimally manag
Senior executives must institute the org

processes, and metrics that foster long
TITLE — Slide 48
e Your Strategy
rowth through brand portfolio
rofitability, identify customer targets, and

brand in the portfolio meets customers needs
understanding of drivers of customer choice
etter structure the portfolio
wth and generate marketing efficiencies

tough calls and must be guided by detailed
rgets, brand performance and impact on
optimally manage their brand portfolios
institute the organizational structures,

that foster long-term brand-building
Questions?
Building Great Brands and Bu
Scott Davis
Senior Partner
(312) 879-1930
sdavis@prophet.com
www.prophet.com
ions?
ands and Businesses
phet.com
et.com

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Brand Portfolio Strateg

Managing and Investing in the Righ

To view the archive of this presentation

September 20, 2005

of this presentation with voice over,

mber 20, 2005

Why do we have two brands serving the s

How should we use our budget to drive br

We need to consolidate brands. What is y

What is the rationale for how you have all

How well do our customers understand w

serving the same purpose in

et to drive brand growth?

ds. What is your

you have allocated your

nderstand what we have to

The effective creation, deploym

Brand portfolio strategy in the hotel industry

Proprietary and confidential property of Prophet. Do not distribute.

Consultancy specializing in creating

Thought leaders with a strong track

Founded in 1992, with offices in San

Proprietary and confidential property of Prophet. Do not distribute.

Brand portfolio strategy in the hotel industry

Proprietary and confidential property of Prophet. Do not distribute.

A brand is not just . . .

Proprietary and confidential property of Prophet. Do not distrib

Proprietary and confidential property of Prophet. Do not distribute.

Brand portfolio strategy: The effective creatio

Maximum Portfolio Value

Key Access to NewMarketing

Proprietary and confidential property of Prophet. Do not distribute.

It directs the critical trade-offs required with each strategic bu

It optimizes your marketing spend and maximizes portfolio va

Brand strategy is business stra

Feedback, perceptions, satisfaction, et

ach strategic business decision

izes portfolio value

rceptions, satisfaction, etc.

Proprietary and confidential property of Prophet. Do not distribute.

Generally, no single group is reviewing or has

Inefficient allocation of brand-building resources includ

Lack of clarity on local vs. global brands

Internal constructs, politics, and new product developm

ewing or has the authority to

ng similar products/services targeted

resources including having to support

g in bloated brand portfolio

s to fuel future growth

roduct development drive portfolio

Proprietary and confidential property of Prophet. Do not distribute.

Brand portfolio strategy in the hotel industry

Proprietary and confidential property of Prophet. Do not distribute.

Addresses how a company can

Corp Brand Luxury

Brand E Brand B Premium

Brand Portfolio Matrix

Addresses how a company can

Brand B Brand C Brand D

Proprietary and confidential property of Prophet. Do not distribute.

Many brand architectures are complex, requi

Service/ “The Way Black Five Star

Proprietary and confidential property of Prophet. Do not distribute.

Build branded differentiators

2 Develop branded differentiators to defend

3 Select where and where NOT to reach for