new brand v brand extension the costs and the rewards mike rocha, managing director, brand finance...

New Brand v Brand ExtensionThe Costs And The Rewards

Mike Rocha, Managing Director, Brand Finance plc

FDIN: Brand Innovation – Turning Ideas Into ProfitFDIN: Brand Innovation – Turning Ideas Into ProfitThursday 24Thursday 24thth January 2008 January 2008

About Brand Finance

Brand Transactions

Brand Transactions

Value BasedMarketing

Value BasedMarketing

BrandValuation

BrandValuation

‘What is the value of my intangible assets?’

‘What is the value of my intangible assets?’

‘Is it a good deal?’ ‘Can I leverage my intangibles?’

‘Is it a good deal?’ ‘Can I leverage my intangibles?’

‘How can I increase the value of my brands?’

‘How can I increase the value of my brands?’

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About Brand Finance

Where’s the real value in your brand?

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The relentless demand for growth

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The obsessive desire for more

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The unlimited scope of possibility

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The fundamental questions to ask

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Many companies have creative ideas, act on them and then measure the impact. Few identify the best opportunities first, and then focus creatively on them.

Most innovation is blind, and therefore fails to deliver the best results. Few companies realise the maximum potential of their brands, their most valuable assets.

The demand for innovation

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Brand innovation can take many forms … new markets, new positioning, new audiences, new applications, new identity, new products, new services, new channels, new business models …

The point is to first understand where the value is, in your brand, in your portfolio, in your market (now and in the future). Then focus innovation on unlocking the best value opportunities.

Value innovation has 4 phases

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Concept Zone

Impact Zone

Concept Zone

Creative Zone

Future Zone

Value innovation has 4 phases

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Concept Zone

Impact Zone

Concept Zone

Creative Zone

Future Zone

Where are the best opportunities?

What are the creative possibilities?

Which are thebest innovations?

How much valuewould it create?

Identify markets and and products of most

potential value

Focus creativity where it can have

most impact

More rigorouslyevaluate and connect

the best ideas

Value impactis more measurable

and greater

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Future Zone

Future Zone1

Future Zone: Where are the best opportunities?

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1

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Future Zone: Where are the future opportunities?1

Future Zone: Where are the adjacent markets?1

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Growth

Profit

Analysis could be done for markets, segments, key accounts,brands, categories. products, or channels

Future Zone: Which markets have most potential?

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Hot Spotswhere the newcompetition is

Cool Placeswhere latest

trends emerge

White Spaceswhere nobodyhas ventured

Black Holeswhere oldbrands die

Hot Spotswhere the newcompetition is

Cool Placeswhere latest

trends emerge

White Spaceswhere nobodyhas ventured

Black Holeswhere oldbrands die

Identifying the most profitable opportunities• high growth markets• optimal competitive position• profitable customer segments

1

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Creative Zone

Future Zone

Creative Zone2

Creative Zone: What are all the possibilities?

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2

Creative Zone: Gaining new perspectives

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2

Businessnarrowview

Businessnarrowview

Customerbroader

view

Business Customer

Exploring

Commercialisi

ng

Focusing

Creativity

Openingup

ClosingdownInnovation

Creative Zone: Creatively stretching the possibilities2

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Generate ideasGenerate ideas

O peningup

ConceptInnovation


O peningup

M arketInnovation


O peningup

ConceptInnovation


O peningup

ConceptInnovation


O peningup

ConceptInnovation


O peningup

ProductInnovation


O peningup

ConceptInnovation


O peningup

M arketInnovation


O peningup

ConceptInnovation


O peningup

ConceptInnovation


O peningup

ConceptInnovation


O peningup

ProductInnovation

Creative Zone: What are all the possibilities?2

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Concept Zone

Concept Zone

Creative Zone

Future Zone

Concept Zone3

Concept Zone: Which are the best ideas?

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3

Iconicdesign

iPodBrand

U2Vertigo

iTunes

Podcasting

iPodPhone

SpecialEdition

ExclusiveReleases

MusicStore

LegalisingFilesharing

SuccessStory

Apple

Whitecables

ImitationAnd buzz

AdGraphics

60G

Photo

Video

DesperateHousewives

Mini

Shuffle

Nano

Motorola

(RED)

Steve JobsiMac

Concept Zone: Fusing the best ideas together3

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Concept Zone: Shaping new value propositions

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3

Articulating brands throughcompelling propositions• leveraging brand power for customers• maximising value to each segment• optimising price elasticity

Value ofbenefits

to customer

Perceivedworth

relativeto others

Priced

to offervalue formoney

Returnto investors

Value ofbenefits

to customer

Perceivedworth

relativePricedto offer

money”Return

to investors

Value ofbenefits

to customer

Perceivedworth

relativeto others

Priced

to offervalue formoney

Returnto investors

Value ofbenefits

Perceivedvalue

Price

Return

Reducing uncertaintyFor example by• Strong customer loyalty• Long NPD pipeline• Brand extensions



Value to customer

• Perceived by individuals• Relative to alternatives• Relative to cost




Value of customer

• Price less costs of sale• Plus future purchases• Plus efficiency

Colour

Memory

Price

Size

Support

Availability

etc.

ImportancePerception

CompetitivenessCost

Concept Zone: Evaluating how best to deliver them

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3

Extending brands to reach further,faster and more profitably• leveraging power in adjacent markets• licensing and franchising• maximising new profit streams

Core business

model

Useful extension

strategy

Total businessformat

Brandand relatedservices

Products Formats

Locations

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Concept Zone

Impact Zone

Concept Zone

Creative Zone

Future Zone

Impact Zone4

Impact Zone: What will be the impact?4

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Impact Zone: What will be the impact?

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4

Market• Market scope and dynamics

• Size and profitability

Customers• Segments and profitability

• Needs and perceptions

Channels• Distribution channels

• Reach and profitability

Competitors• Direct and indirect

• Positioning and performance

Financials• Revenue, growth, cost trends

• Economic profitability

BusinessCase

Best allocation of budgetsand resources to deliver

short and long-term returns

Best mix channels andcommunication media

to each audience

Clear and compelling business case outlining• Future trends• Creative options and concepts• Resource allocation• Financial impact (scenarios)

$

Today

Short-term revenue and profitability

Longer-term growth and

shareholder value


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4

SEGMENT 1

SEGMENT 2

SEGMENT 3

SEGMENT 4

SEGMENT 5

SEGMENT 6

TOTAL

BRAND

METRICSBrand

Investment

$X

$

$

$

$

$

$

Brand EquityIndex

x

x

x

x

x

x

MarketShare

%

%

%

%

%

%

BrandValue

$200

$

$

$

$

$

$

Brand Investment

$X

$

$

$

$

$

$

Volumes/Revenues

x

x

x

x

x

x

MarketShare

%

%

%

%

%

%

BrandValue

$200

$

$

$

$

$

$

Brand Investment

?

$

$

$

$

$

$

Brand EquityIndex

x

x

x

x

x

x

MarketShare

Y%

%

%

%

%

%

%

BrandValue

$Z

$

$

$

$

$

$

Brand Investment

?

$

$

$

$

$

$

x

x

x

x

x

x

MarketShare

Y%

%

%

%

%

%

%

BrandValue

$300

$

$

$

$

$

$

Base Case Target Scenario

Target Value CreationTarget Brand Investment

Volumes/Revenues

X%£ ££


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4

OriginalValue

FinalValue

Increased Customers

NewChannels

Additional investment

Synergies

£

Incremental value

NewMarkets


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4

Investor RelationsMarketing becomes keypart of analyst briefingsand annual report

Business PerformanceKey reports produced forCEO and directors, drivingpriorities and investment

Personal PerformanceLinked to manager and team’s objectives, KPIs,reviews and compensation

Market researchLinked into ongoing marketresearch tracking program

Financial analysisLinked into ongoing financialsystems and auto-analysis

Articulating the real value of brands and innovation• to the wider business• to finance and the boardroom• to investors and analysts

Unlocking the real value of brands

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Where are the best opportunities?

What are the creative possibilities?

Which are thebest innovations?

How much valuewould it create?

Identify markets and and products of most

potential value

Focus creativity where it can have

most impact

More rigorouslyevaluate and connect

the best ideas

Value impactis more measurable

and greater

Concept Zone

Impact Zone

Concept Zone

Creative Zone

Future Zone

Some Brand Genius clients

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Brand innovation that delivers extraordinary results

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Innovation is relatively easy. But innovation that has real impact, that drives sustained profitable growth, that creates significant value, is much rarer and harder.

So why not focus your creative energy on where it can have most impact - using the fusion of analysis and creativity to drive innovation with extraordinary results?

A couple of ideas we wouldn’t necessarily recommend

Harley Davidson

cake making kit

Evian Water-Filled Bras

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A partnership between Brand Finance and the Genius Works www.brandfinance.comunlocking the real value of your brand www. brandgenius.com

new brand v brand extension the costs and the rewards mike rocha, managing director, brand finance...

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