brand cross-cultural index report dec 2013

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You’ve seen the numbers. Eighty percent of the United States’ population growth during the next five years will come from multicultural segments: Hispanics, Blacks and Asians*. What does this new marketplace mean for brands and how they are valued by consumers and Wall Street? Companies spend billions marketing and advertising to consumers hoping they choose their brand when they enter grocery stores, visit a retail destination or click on a website. Given the population trends, where do brands stand today and how are they positioned to build value over the next five to 15 years?

This was the question we were asking when, through our work at Millward Brown and Ogilvy, we first met in late 2010. We began tossing around hypotheses with the hope of truly understanding brand valuations inclusive of the multicultural customer segments.

We developed a simple hypothesis: A brand that appeals to consumers across ethnic segments increases its brand “Power”, or consumers’ predisposition to choose that brand over another. And we decided that Millward Brown’s BrandZ™, the world’s largest brand equity database, would be the perfect tool to test our hypothesis.

In November 2012 we released an “alpha” version of the Brand Cross-Cultural Index (BCCI), looking at the automotive category.

The findings in this initial study provided enough evidence for us to, with a few minor tweaks in the algorithm, pursue additional categories in 2013: Quick Service Restaurants, Beer and Retail Banking. The analysis allowed us to identify the segments driving brand value and, in many cases, it was not White consumers.

We are pleased to introduce the Brand Cross-Cultural Index (BCCI). This new marketing tool is powered by BrandZ and uses Millward Brown’s Meaningfully Different brand equity framework to: 1) rank brands based on their ability to nurture a meaningful connection with consumers across ethnic segments, and 2) gain an in-depth understanding of brands’ total market equity, or predictive volume share based purely on perception, absent of activation factors (Brand Power).

We believe you’ll find this inaugural report helpful as you think about growing your brand in the new marketplace, and we look forward to sharing additional insights to support your work.

David Burgos Jeffrey L. [email protected]@ogilvy.com

OVERVIEW

* Throughout this report, the terms Whites, Blacks and Asians specifically refer to non-Hispanic consumers that belong to these racial segments.

REFRAMING BRAND VALUE IN THE NEW MARKETPLACE From the AuthorsDavid Burgos, VP Cultural Strategy, Millward BrownJeffrey Bowman, Managing Director, Senior Partner, Ogilvy & Mather

mailto:[email protected]

mailto:[email protected]


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• Room to grow. Brand Power of many brands, including Arby’s, Samuel Adams and PNC Bank, indicates room for growth with Hispanics, Blacks and Asians. Using the Selig Center’s expenditure data, the study estimates that Arby’s, for example, has the opportunity to grow revenue by as much as $334 million if the brand is able to create a meaningful connection with ethnic consumers. Takeaway: It is no longer a choice; brands must win the hearts and wallets of ethnic consumers to stay relevant and grow in the new marketplace.

• Meaningfully different ideas work across cultural boundaries. Despite not doing much ethnically-targeted marketing, equity measures for Panera and Yuengling are at the same level or even stronger among multicultural consumers, placing the brands in third and fifth places respectively in their BCCI rankings. Takeaway: Meaningfully different brand ideals that are founded in core human insights will deliver higher ROIs.

• Balance relevancy and reach. McDonald’s commands market share driven primarily by its strong salience among multicultural segments (Brand Power of 13.4 percent, followed by Subway at 7.4 percent). The Subway brand, though, actually has the most meaningful connection with consumers across most segments, putting it first in the BCCI ranking. Takeaway: It is about both being in the right places and having the right products and messages.

• Cross-cultural marketing works both ways. Not surprisingly, Corona and Modelo, brands of Hispanic origin, have their strongest Brand Power among Latinos (9.8 percent and 3.5 percent respectively). However, these brands enjoy high equities among other segments as well, which propels Corona to number two in the BCCI ranking among beer brands. Takeaway: Leading with ethnic insights can influence many facets of culture and increase brand value.

THE HEADLINE NEWS


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The Brand Cross-Cultural Index (BCCI) provides two main solutions:

• A BCCI Ranking that identifies brands doing the best job at nurturing a meaningful connection with consumers across all racial or ethnic segments of the population, including Whites. The analysis also determines a brand’s Multicultural Opportunity (MCO), which helps identify segments driving the BCCI up or down – multicultural or White consumers.

• Brand Power, a cross-cultural equity analysis that allows brand owners to pinpoint growth opportunities and understand the revenue potential of dialing up various marketing levers within and/or across groups.

A syndicated tool that looks at different industries, the BCCI serves as a valuable benchmark instrument for marketers seeking to grow their brands in today’s diverse and evolving marketplace.

THE BRAND CROSS-CULTURAL INDEX


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With this release, we evaluated and assessed three categories. Using an expanded ethnic sample, the tool assessed 58 brands in three industries: Quick Service Restaurants, or QSR, ($120 billion total value), Beer ($92 billion) and Retail Banking ($165 billion).

EVALUATED THREE CATEGORIES

Quick Service Restaurant BankingBeer


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AT THE CORE OF THE BCCI

Millward Brown’s Meaningfully Different Framework

• Consumers have an impression of brands – ideas, memories and emotions – that exerts an influence on their purchase behavior. Depending on how meaningful, different and salient these brand impressions are, consumers are going to be more or less predisposed to choose a brand over others (Power) and pay more for it (Premium), both now and in the future (Potential).

• Predisposition and in-market activation is what allows us to determine what drives financial performance.

POWER

PREMIUM

POTENTIAL

Millward Brown findings reveal that meaningfully different brands capture five times more volume, command a 13% price premium and are four times more likely to grow value share during the next 12 months, compared to brands lacking meaningful difference. Meaningfully different brands are expected to grow value share an average of 6.9% per year.


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As a first step, the framework determines whether brands are meaningful, different and salient to consumers. It then correlates these metrics to volume and price dependent variables to understand their Power, Premium and Potential.

HOW DOES THE MODEL WORK?

MeaningfulIndicates the extent to which brands build an emotional connection and are seen to deliver against functional needs.

DifferentIndicates the extent to which brands set themselves apart from the category by offering something others don’t intangible or tangible – and by leading the way.

SalientIndicates how quickly and easily the brands come to mind.

PremiumIs the ability of a brand to command a price premium relative to category average, based purely on perceptions. Reported as an index to reflect its relation with in-market Price Index.

PotentialIs the probability that the brand will grow value share based purely on current perceptions.

PowerIs a prediction of a brand’s volume share based purely on perception, absent of activation factors. Reported as percentage share to reflect its relation with Volume Share.

BCCI Ranking

As explained later in the report, the BCCI Ranking is calculated using the Meaningful score only. And while all metrics are available, the cross-cultural equity analysis in this summary report focuses on Brand Power.

In the BCCI

analysis


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The BCCI is powered by Millward Brown’s BrandZ database, the world’s largest brand equity database.

With a focus on the U.S. market, the 2013 BCCI study covered three categories: QSR, Beer and Retail Banking.

Data collection details:

• 560 interviews per category• National coverage, online English survey• Readable sample of four major ethnic segments (Whites, Hispanics*, Blacks and Asians*)• Consumers asked to evaluate brands in a competitive context from a category in which

they actually shop

THE DATASOURCE

Powered by

* Hispanic sample in this pilot skewed to bilingual and English-dominant consumers, who roughly represent 2/3 of the total Latino population. Asian sample was primarily comprised by respondents of Chinese descent.


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THE BCCI RANKING


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The BCCI Ranking identifies brands doing the best job at nurturing a meaningful connection with consumers across all segments of the population, including Whites. The analysis also determines a brand’s Multicultural Opportunity (MCO), which helps identify segments driving the BCCI up or down – multicultural or White consumers.

THE BCCI RANKING

Both the BCCI Ranking and the MCO are calculated using the Meaningful score only, which measures the extent to which brands build an emotional connection with consumers, and are seen to deliver against functional needs.

The assumption behind the analysis is that more cross-cultural brands are able to establish a meaningful connection with consumers in all/most ethnic segments – including Whites – while less cross-cultural brands appeal to just a few of them.

* Questions used to calculate Meaningful score are asked only to consumers who know that brand, therefore results are comparable regardless of whether brands have a national or regional presence.


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• The BCCI, is the average “Meaningful” score across all four major ethnic segments

• Brands with higher BCCI have been able to establish a meaningful connection with consumers in all or most ethnic segments (including Whites)

• Brands with lower BCCI have room to further strengthen their relationship with some groups

TOP 3 BRANDS IN THE BCCI RANKING

1 2 3

BCCI: 139 BCCI: 130 BCCI: 125



QSR

BANKING

BEER


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• The Multicultural Opportunity, or MCO, is a comparison between the “Meaningful” score of ethnic versus White consumers.

• Using the White segment as benchmark, a brand with a MCO score below 100% has room to strengthen its connection with at least one of the three minority segments evaluated. A score over 100% means that the connection the brand has with all/most minorities is more meaningful than with Whites.

Brands whose BCCI is driven up by multicultural* (highest MCO)

Brands whose BCCI is driven up by Whites (lowest MCO)

WHO IS DRIVING THE BCCI UP OR DOWN (MCO)

QSR

MCO: 126% MCO: 120% MCO: 117%

Beer

MCO: 126% MCO: 115% MCO:113%

Banking

MCO: 126% MCO: 109% MCO: 108%

QSR

MCO: 85% MCO: 90% MCO: 90%

Beer

MCO: 67% MCO: 83% MCO: 90%

Banking

MCO: 69% MCO: 73% MCO: 77%

* Brand performance is not necessarily consistent across all three minority segments. Therefore it is important to understand what specific multicultural group(s) is driving up or down a brand’s BCCI, information that is also provided within our BCCI tool.


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BCCI RANKING & MCO PER CATEGORY

QSR

Rk Brand BCCI MCO

1 Subway 139 90%

2 McDonald's 130 103%

3 Panera 125 94%

4 Chipotle 122 126%

5 Chick Fil-A 119 107%

6 Wendy's 109 91%

7 Burger King 106 92%

8 Taco Bell 101 96%

9 KFC 99 98%

10 Pizza Hut 96 110%

11 Popeyes 94 120%

12 Starbucks 93 108%

13 Dairy Queen 88 90%

14 Arby's 88 85%

15 Jack in the Box 86 117%

16 Sonic 86 93%

17 Papa John's 85 105%

18 Dunkin' Donuts 83 93%

19 Domino's Pizza 82 104%

20 Carl's Jr. 82 98%

21 Hardee's 80 97%

Beer

Rk Brand BCCI MCO

1 Heineken 120 126%

2 Corona 118 115%

3 Bud Light 116 96%

4 Coors Light 115 90%

5 Yuengling 114 102%

6 Samuel Adams 108 67%

7 Blue Moon 107 99%

8 Budweiser 105 110%

9 Stella Artois 102 113%

10 Dos Equis 101 103%

11 Guinness 99 98%

12 Miller Lite 95 83%

13 Modelo 93 106%

14 Michelob 91 96%

15 MGD 90 111%

16 Miller High Life 87 109%

17 Keystone Light 83 98%

18 Busch 81 100%

19 Natural Light 79 95%

20Pabst Blue Ribbon

78 90%

Banking

Rk Brand BCCI MCO

1 Chase 123 108%

2 Wells Fargo 115 97%

3 Bank of America 115 126%

4 US Bank 100 94%

5 Ally Bank 99 97%

6 BB&T 98 105%

7 Capital One 96 109%

8 PNC Bank 96 73%

9 TD Bank 95 93%

10 Regions 94 77%

11 Key Bank 94 95%

12 M&T Bank 91 69%

13 Citibank 89 108%

14 SunTrust 88 100%

15 Fifth Third 87 90%

16 HSBC 86 104%

17 Citizens Bank 84 93%


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UNDERSTANDINGTOTAL MARKET BRAND POWER


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Brand Power is a predictive model of a brand’s volume share based purely on perception, absent of activation factors. It is reported as a percentage to reflect the relationship it has with Volume Share.

WHAT IS BRAND POWER?

Drivers of Brand Power for specific brands are illustrated in Millward Brown’s signature Propeller charts:

1. Size of the blades represents how important Meaningful, Different and Salient are in explaining Power within the category, as in a pie chart.

2. Depth of the blades represents how strong the brand performs on each category: Meaningful, Different and Salient. Numbers are indexed against category/segment average.

3. Average circle (100) serves as category benchmark.

4. Red circle at the center indicates the brand’s Power, or its likely share of market based purely on predisposition.

Meaningful Different Salient Power

152

168

95

16.4

Index: 100

* Questions used to calculate Meaningful, Different & Salient scores are asked only to consumers who know that brand, therefore results are comparable regardless of whether brands have a national or regional presence.


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Unlike QSR and beer brands, the highest ranked retail banking brands in the BCCI also hold the strongest Power, or share, based purely on perception, meaning they are doing a consistently better job than smaller competitors at connecting with consumers across segments.

TOTAL MARKET BRAND POWER: TOP 3 BRANDS

Although Heineken and Corona had the top spots in the BCCI ranking, Sam Adams and two ABInBev brands show the strongest Power when segment sizes are factored in, driven by stronger equity among White consumers.

While consumers across most segments view Subway as the most meaningful brand (highest BCCI), McDonald’s Power, or share based purely on perception, is the strongest in the category, primarily driven by its significantly higher saliency.

Power is reported as a percentage to reflect the relationship it has with Volume Share.

1 2 3

QSR

BANKING

BEER

Power: 13.4% Power: 7.4% Power: 6.4%




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TOTAL MARKET BRAND POWER FULL RANKING

Carl's Jr.

Hardee's

Jack in the Box

Dairy Queen

Popeyes

Domino's Pizza

Papa John's

Arby's

Chipotle

Panera

Dunkin' Donuts

Sonic

Pizza Hut

KFC

Taco Bell

Starbucks

Chick Fil-A

Wendy's

Burger King

Subway

McDonald's

0% 5% 10% 15% 20%

2.6%

3.1%

3.3%

3.6%

3.6%

3.7%

3.7%

3.8%

3.9%

3.9%

4.0%

4.2%

4.4%

4.6%

4.8%

4.9%

4.9%

5.6%

6.4%

7.4%

13.4%

Modelo

Keystone Light

Natural Light

Pabst Blue Ribbon

Busch

Yuengling

Miller High Life

Stella Artois

MGD

Michelob

Dos Equis

Blue Moon

Corona

Miller Lite

Coors Light

Guinness

Heineken

Budweiser

Bud Light

Samuel Adams

0% 5% 10% 15% 20%

2.4%

3.0%

3.1%

3.1%

3.2%

3.4%

3.5%

3.8%

4.2%

4.2%

4.4%

5.9%

6.1%

6.1%

6.4%

6.4%

6.8%

6.9%

8.2%

8.9%

M&T Bank

Key Bank

Fifth Third

BB&T

Regions

SunTrust

TD Bank

HSBC

Citizens Bank

Ally Bank

PNC Bank

US Bank

Citibank

Capital One

Bank of America

Wells Fargo

Chase

0% 5% 10% 15% 20%

1.8%

2.2%

2.3%

2.5%

2.7%

3.0%

3.4%

3.4%

4.1%

4.3%

5.1%

6.7%

7.5%

8.6%

13.4%

13.4%

15.6%

QS

R

BE

ER

BA

NK

ING

Power is reported as a percentage to reflect the relationship it has with Volume Share.


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WHAT’S THE TOTAL MARKET VALUE?


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The BCCI allows brand owners to pinpoint growth opportunities by dissecting their brand’s Power by ethnicity.

BRAND POWER BY ETHNICITY

-4

-3

-2

-1

0

1

2

0.5

-1.8

-0.1

-2.1

Tot Market Power: 4.1% / MCO: 93%

-4

-3

-2

-1

0

1

2 1.3

-2.6-3.4

-2.2


-4

-3

-2

-1

0

1

2

0.1

-0.600000000000001

-0.2

-1.2


Whites

Hispanics

Blacks

Asians

• Brand Power scores for Sonic, Sam Adams and Citizens Bank, for example, indicate room for growth with all three minority segments, especially the two fastest growing groups: Hispanics and Asians.

• McDonald’s, on the other hand, seems to have an opportunity to become more meaningful and be more top of mind among White consumers. -4

-3

-2

-1

0

1

2

-0.700000000000001

0.600000000000001

0.700000000000001

0.600000000000001


Charts show deviation from brand’s total market Power by ethnicity


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Using the Selig Center’s expenditure data, we estimate that Sonic, for example, has the opportunity to grow revenue today by as much as $248M, if the brand is able to create a meaningful connection with ethnic consumers.

REVENUE IMPLICATIONS

Whites Hispanics Blacks Asians

4.3%

3.6%4.0%

2.9%

$248M

Sonic’s Power within each ethnic segment

Total Market Power: 4.2%

2013 2020 20501.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

3.3% 3.3%3.6%

4.2% 4.1%4.0%

Up 8.3%, +328M

Down 3.8%, -186M

A sense of urgency: If all things remain equal, Sonic’s share and revenue will likely decline just as a result of demographic population changes – Census: 98% of growth coming from ethnic consumers, especially Hispanics and Asians. Conversely, Jack in the Box is expected to benefit from this shift.

Power shift over time


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Hispanics

Blacks AsiansWhites

76

98

86 Power 2.9

85

125

87Power

494

92

78Power

3.6

Index : 100 Index : 100 Index : 100

90

106

91 Power 4.3

Index : 100

Increased Meaningful by 8% among Hispanics, from 78 to 84

Power goes up to 4.3%, and revenue increases by $179MM

Increased Salient by 20% among Asians, from 76 to 91

Power goes up to 4.3%, and revenue increases by $63MM

The BCCI analysis and custom modeling tool help marketers understand the revenue potential of dialing up various marketing levers within and/or across groups.

SCENARIO PLANNING – A CASE STUDY

-4

-3

-2

-1

0

1

2

0.1

-0.600000000000001

-0.2

-1.2

Total Market Power: 4.2%MCO: 93%

What if Sonic…

Revenue estimate based on the Selig Center’s data on consumer expenditure by ethnicity.


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• The Brand Cross-Cultural Index is a unique tool to help brands grow in today’s increasingly multicultural marketplace

• The BCCI Ranking and Brand Power Score rank brands based on how they are doing in nurturing a meaningful connection with consumers across all segments of the population, including Whites

• Given the growth of the multicultural segments in the U.S., it is now imperative for brands to understand where they rank amongst their peers and quantify the brand value they are leaving on the table

IN SUMMARY


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David Burgos

VP of Cultural StrategyMillward Brown

[email protected]@DavidBurgosatMB+1 (630) 955-8933

Jeffrey Bowman

Sr. Partner, Managing DirectorOgilvy & Mather

[email protected]@jeffreylbowman+1 (512) 466-6592

For additional information about the Brand Cross-Cultural Index (BCCI), visit www.millwardbrown.com or www.ogilvy.com.

Contact David and Jeffrey with questions or to schedule a one-on-one conversation.

CONTACT US

http://www.millwardbrown.com/

http://www.ogilvy.com/

brand cross-cultural index report dec 2013

Marketing

brand valuations inclusive

ethnic consumers

brand crosscultural

ethnic segments

consumers predisposition

white consumers

multicultural segments

racial segments