PIRELLI BRAND IN 2015: GLOBAL PREMIUM LEADER
Our Brand will further increase its value
and translate it into tangible business results, ensuring a key contribution
to achieve Pirelli strategic goal for 2015, becoming
GLOBAL LEADER
Making our Brand truly global,
raising its awareness
and image to consistent levels
across all our markets, giving
priority to those which
are key to our 2012-2015 Plan
Further reinforcing our Brand
Premium positioning,
consolidating it as the most
admired and desired in the key
segments of the Premium market
and becoming the industry top
value-generating Brand, based
on Interbrand studies
Growing our Brand ability
to guide and influence the
customer purchase decision
process, by ensuring the
achievement of top Initial
Consideration Set (ICS) scores
across key markets
PREMIUM
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VISION 2015
The history of innovation behind Pirelli
gives its Brand legitimacy, recognition and relevance beyond the
Tyre industry, providing a clear and inspired overarching vision
OUR MANIFESTO
WE CHANGE THE DRIVING EXPERIENCE BY
CONSTANTLY CHALLENGING THE BOUNDARIES
OF TYRE TECHNOLOGY, STYLE AND
SUSTAINABILITY, SETTING TRENDS IN
COMMUNITIES ACROSS THE WORLD
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OUR BRAND MANIFESTO
"Glamourous/Cool" "Sporty" "Prestigious" "Fit for high-end
vehicles/prestigious
"Premium/
High level"
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PIRELLI BRAND VALUE IN 2011: CONSISTENTLY HIGH
SCORES IN PREMIUM POSITIONING ITEM PERCEPTIONS
2011 RESULTS
Source: Interbrand/GFK, Global Primary Research, 2011
PIRELLI
Our Brand plays the highest role among all global players in driving purchase decisions.
Measured through Interbrand’s proprietary Role of Brand Index (ROBI),
Pirelli’s impact on customer choice is on average 15% higher than the nearest competitor’s.
This makes our Brand an engine of growth and profitability in the Replacement channel.
Pirelli Role of Brand Index
(industry highest)
+15%
vs. nearest competitor
Source: Interbrand – October 2011
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PIRELLI BRAND VALUE IN 2011: TOP ROLE
IN DRIVING PURCHASE DECISIONS
“Modern and innovative”
“Unique, inimitable”
“Sporty”
“I would be willing to pay an above
average price for this brand”
0% 20% 40% 60% 80% 100% 120%
“Offers technologically cutting
edge products”
“Involves me/makes me
passionate about it”
“Fitted to the top prestigious car
manufacturers”
“Premium/high level”
“Glamorous/cool”
“Best Brand in its category”
COMPARISON BETWEEN
RESULTS ON:
sample aware of Pirelli’s role as
exclusive F1 supplier but unaware of
other Pirelli brand-building initiatives
sample unaware of all initiatives
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AFTER ONE YEAR, PIRELLI’S F1 COMMITMENT ALREADY
HAS A DECISIVE IMPACT ON PERCEPTION SET ON
“AWARE SAMPLE”…
Source: Interbrand/GFK, Global Primary Research, 2011
+72% INCLUSION OF THE BRAND
IN THE CONSIDERATION SET IN
SAMPLE AWARE OF PIRELLI’S ROLE AS F1 SUPPLIER
BUT UNAWARE OF OTHER
BRAND-BUILDING INITIATIVES
vs.
SAMPLE UNAWARE OF ALL INITITIATIVES
Source: Interbrand/GFK, Global Primary Research, 2011
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…AND AFTER JUST HALF A SEASON,
PIRELLI’S F1 COMMITMENT ALREADY HAS A DECISIVE
IMPACT ON “INTEREST” AND
“LIKELIHOOD” TO PURCHASE…
~ EUR 200 MLN
CONSERVATIVE ESTIMATE OF IMPACT
OF PIRELLI
F1 INVOLVEMENT
ON PIRELLI BRAND VALUE
The contribution tends to increase given the expected rise
in global awareness of Pirelli role as exclusive supplier of F1
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F1 HELPS THE BRAND HELP THE BUSINESS
(AND THIS IS JUST THE BEGINNING)
Source: Interbrand/GFK, Global Primary Research, 2011
Source: Interbrand, Brand valuation October 2011
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2.27 €/Bln
PIRELLI BRAND VALUE IN 2011:
ECONOMIC VALUE ASSESSED BY INTERBRAND
Source: Interbrand
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+26%
yoy
2010
1.8 €/bln
2011
2.27 €/bln
2008/2009
1.5 €/bln
F1
0.2 €/bln 0.47 €/bln
0.27 €/bln
Other
initiatives
Total 2011
Increase in brand
value
PIRELLI BRAND VALUE IN 2011:
A VALUE GENERATOR FOR THE BUSINESS
(1) Interbrand Brand Valuation Methodology, Oct. 2011
(2) Geographies: Emea + Latam + Nafta + Asia Pacific + Russia. Segments: Moto, Car, Truck. Channels: OE, Replacement
(3) Based on 2011 - 2015 Plan
(4) Net present value + Terminal value
Financial analysis (3) Demand analysis Competitive analysis
Brand Value Calculation Method (1)
Segmentation by Region, segment, channel (2)
Economic Value Added Role of Brand Index Brand Strength Score
Brand Earnings Brand Risk Rate
Brand value: ~ 2,27 bln €
(economic flows from brand) (discount rate)
A B
C
X
=
(4)
ALL METRICS
LINKED TO BRAND VALUATION METHODOLOGY
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LEVERAGING OUR BRAND ASSET:
TRANSLATING BRAND VALUE
INTO BUSINESS PERFORMANCE
AND STRATEGIC ACHIEVEMENTS
PIRELLI BRAND: 2011 – 2015 STRATEGY
BRAND PLAN
Brand value / EBIT
4X vs. global
competitors
average
OUR UNPARALLELED
BRAND VALUE / EBIT
SHOWS THAT THROUGH INCREASED SUPPORT
THE BRAND CAN EXPRESS ITS POTENTIAL,
FURTHER FUELLING PIRELLI GROWTH AND PROFITABILITY
Source: Interbrand
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THE RELATIVE VALUE GENERATED BY OUR BRAND
DRAMATICALLY OUTPERFORMS GLOBAL PEERS,
UNVEILING ITS POTENTIAL…
COMPETITOR 1 COMPETITOR 2 COMPETITOR 3 COMPETITOR 4 PIRELLI
Source: Nielsen based on Carat analysis
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OTHERS
GLOBAL COMPETITORS
PIRELLI
However small its share of voice in terms of media expenditure,
Pirelli scores high on metrics typically associated with high spending:
Sponsorship recall
Logo recall
Touchpoints recall
… WHICH WILL BE UNLOCKED AS WE REBALANCE
OUR SHARE OF VOICE IN KEY MARKETS
…improves
Brand Value
Brand economic value
F1
Pzero
in APAC +50%
in NAFTA +30%
+40%
~400 €/Mln
in Russia +120%
~ 200 €/Mln
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RISE IN MARKETING SPENDING WILL IMPROVE BRAND
VALUE DRIVERS, ENHANCING OVERALL BRAND VALUE
BY 40% IN 2015
Focused Marketing
spending…
Marketing Budget
Media and Advertising
expenditure
2x
2.5x
…with strong impact on
Brand value drivers…
Facebook posts 20 Mln (2015 yearly target)
Brand exposure F1
media equivalent > 300 Mln (yearly basis)
Brand exposure – The Cal +20% (vs. 2011)
Brand exposure – PZero +150% (vs. 2011)
(vs. 2011)
(vs. 2011)
Contribution to Brand value in 2015:
In the 10 key markets:
Top of mind level
Initial Consideration Set
Active Evaluation
+20% (vs. 2011)
Top 3
Top 3
Intention to buy
in Premium segments +150% (vs. 2011)
Brand awareness in RDEs +40% (vs. 2011)
THE CAL FORMULA 1 PZERO FASHION ADVERTISING
GLOBAL PREMIUM LEADER
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SYNERGIC INVESTMENTS TO RAISE OUR SHARE OF VOICE
WILL HELP US REACH OUR STRATEGIC GOALS
BRAND VALUATION APPROACH
Financial performance measures an
organisation’s financial return to its
investors.
For this reason, it is analysed as economic
profit, a concept akin to EVA (Economic
Value Added). To determine economic
profit, taxes are removed from net
operating profit to get to net operating
profit after tax (NOPAT). From NOPAT,
a capital charge is subtracted to account
for the capital used to generate the
demand revenues: this provides the
economic profit
for each analysed year. Financial
performance is studied across each
individual segment.
FINANCIAL PERFORMANCE
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BRAND VALUATION APPROACH
IMPORTANCE OF BRAND
The Role of Brand Index (RBI) measures
how much of the decision to purchase is
attributable to the Brand Power,
regardless of other aspects, like product
price or features. RBI is defined through
an in-depth analysis based on primary
research data. Because the Brand’s role
in driving demand differs depending on
geography, type of tyre and channel, this
analysis is carried out for each individual
segment.
RBI is combined with the economic profit
of the branded products to determine the
amount of branded earnings that
contribute to the total value.
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COMPETITIVE BENCHMARKING
Brand Strength Score (BSS) measures the
ability of the brand to secure the delivery of
future expected earnings. Brand strength is
reported on a 0-100 scale, where 100 is
perfect, based on an evaluation across 10
dimensions of brand activation.
Performance in these dimensions
is judged relative to other brands in the
industry, and is based on quantitative
primary research carried out in 2011.
BSS inversely determines, through a
proprietary algorithm, a discount rate. That
rate is used to discount branded earnings
back to a present value based on how
likely the Brand is to withstand challenges
and deliver the expected earnings.
BRAND VALUATION APPROACH
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BRAND VALUATION APPROACH
BRAND VALUE
Brand value is calculated as the net
present value of future brand earnings,
discounted back to a present value.
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Our Brand is a powerful value creator.
It drives choice, generating margins. It secures demand, mitigating risk.
In doing so, it provides a vital and quantifiable contribution
to our business results.
OUR WAY OF LOOKING AT BRAND VALUE
DEMAND GENERATION DEMAND CONTINUITY
HIGHER EXPECTED RETURNS LOWER RISK
BRAND VALUE
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The value generated by the Pirelli Brand is now also a Key Performance Indicator
(KPI), which will be tracked year on year with advanced techniques for the analysis and
financial valuation of brands.
The valuation is carried out in over 20 segments, combining
business units (Car, Moto, Truck)
channels (Original Equipment and Replacement)
geographies (Regions).
This provides Pirelli with a granular and constantly updated understanding
of the way Brand Value is generated across the business,
increasing marketing effectiveness and efficiency
FROM BRAND MANAGEMENT
TO BRAND VALUE MANAGEMENT
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The first to be ISO-certified, Interbrand’s Brand Valuation methodology
is the most widely accepted approach worldwide.
Consistently with modern corporate valuation approaches, it looks at the ongoing
investment and management of the brand as a business asset.
It takes into account all ways in which a brand benefits the organisation,
from driving demand to attracting and retaining talent.
BRAND VALUATION APPROACH
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Pirelli focus on long-term Brand-building initiatives has
created a Premium Brand with a considerable potential.
The opportunity is now to leverage that potential by
increasing shorter term, purchase driving investments.
Through a rebalanced advertising pressure and F1
unparalleled strength and speed in creating Brand
awareness worldwide, we will pursue top three positions
in ICS scores, directing the purchase process in the
Premium segment across key markets.
WE SHALL FOCUS ON INCREASING
BRAND AWARENESS AND INTEREST AND ON DRIVING
PURCHASE ACROSS ALL KEY MARKETS
FORMULA 1 ADVERTISING
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LEVERAGING BRAND VALUE (Short term / purchase driving)
WE SHALL ENSURE ONGOING INVESTMENT
TO CONSOLIDATE A CONSISTENT PREMIUM
POSITIONING ACROSS ALL MARKETS
THE CAL FORMULA 1 PZERO FASHION
There will be ongoing investment on those initiatives that have proven successful in providing a unique profile to our Brand and setting it apart from the competition.
All efforts will go into ensuring that Pirelli is recognised as a Premium Brand with the same level of perception on a global scale.
The contribution of these investments to Brand Value will be constantly measured with the aim of producing the highest economic value in the industry.
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CREATING BRAND VALUE (Long term / equity building)