BRAND MANAGEMENT
BRAND MANAGEMENT Sessions 1 & 2 BRAND MANAGEMENT & BRAND EQUITY Don O’Sullivan [email protected]
Assessment Syndicate Assignment (50 marks) Each syndicate will have the opportunity to analyse brand management in one publicly listed company.
In this exercise, we are going to engage with the data provided to investors – through corporate web sites to develop a clearer understanding of performance, challenges and prospects for each firm’s brands. Task: Your syndicate will analyse the brands of a specific company – identified at the start of the course. Your task is to review of the company’s recent corporate reports / investor presentations – available on the Investor Relations section of the company’s web site. 1. Summarize the management of the company’s brands to-date 2. Identify current challenges 3. Discuss the key initiatives the firm is implementing to address these challenges 4. Based on 1 and 2 above evaluate the medium term prospects for the brand(s) Deliverable: A presentation to shareholders/potential shareholders (i.e., your peers followed by Q&A) in the final class. Written summary of your presentation (2,000 words max) due prior to final class. 2
Assessment Class Participation: 30 marks This may be broadly interpreted, but mainly involves contributions to class discussions. Individual Assignment: 20 marks An individual submission on a case study. Further briefing on structure and requirements will be provided at class.
3
Top concerns
Growth
Government response to GFC
Regulation
Capital market volatility
4
Constraint On Growth Has Shifted – From Supply To Demand Australian GDP over the last 20 years
5
180o shift in firm value over 30 years Market to Book Value S&P 500 – 1980-2016 100% 90%
20% 20%
80%
45% 45%
70% 60%
85% 85%
50% 40%
75% 75%
80% 84%
95% 100%
80% 80%
30%
55% 55%
20% 10%
15% 15%
0% 1980
1990
2000
Tangible Book Value
25% 25% 2002
20% 16% 2010 2016
Remaining Market Value
5% Facebook
7
8
Most leaders do not like to make choices. They’d rather keep their options open. Choices force their hands, pin them down, and generate an uncomfortable degree of personal risk A.G. Lafley, Former CEO P&G 9
Making Choices: P&G divest, discontinue or consolidate 100 brands
11
12
13
14
15
16
Assets and Competitive Advantage Valuable, Rare, costly to Inimitable, Organized (VRIO)
The assets are…..
Valuable?
No
Competitive disadvantage
Yes
and is the firm….
Rare? Yes
No
Competitive parity
Yes
Costly to imitate?
No
Temporary competitive advantage
Yes
Organized to capture value?
Yes
Sustainable growth model
No Unused competitive advantage
17
180o shift in firm value over 30 years Market to Book Value S&P 500 – 1980-2016 100% 90%
20% 20%
80%
45% 45%
70% 60%
85% 85%
50% 40%
75% 75%
80% 84%
95% 100%
80% 80%
30%
55% 55%
20% 10%
15% 15%
0% 1980
1990
2000
Tangible Book Value
25% 25% 2002
20% 16% 2010 2016
Remaining Market Value
5% Facebook
Current Earnings has Become the Elephant in the Room
Graham/Harvey/Rajgopal: The Economic Implications of Corporate Financial Reporting
19
Brand Value 2015 ($M)
Brand Value 2014 ($M)
128,303
104,680
81,716
78,752
76,683
68,620
67,060
62,783
59,843
53,466
58,820
45,410
56,124
45,147
48,019
52,533
47,916
31,845
46,737
44,779 20
Criteria in Brand Finance Methodology
*
21
a reservoir of cash flow, earned but not yet released to the income statement
Tim Ambler Marketing And The Bottom Line
22
Moët is a unique brand in the sense that is supports (even increases) the happiness (celebrations, victories) of our consumers. Moët is a dealer in hope. Marc Jacheet, Marketing and Communications Director, Moët & Chandon
23
Acquisitions 2004-20015 $10.3 billion $1.75 billion $57 billion
$52 billion $4.1 billion $1.7 billion $1 billion $8.5 billion $7.4 billion $19 billion
24
A.G. Lafley
25
Market Share Revenue Earnings Earnings growth Market Cap P/E ratio S&P 500 average P/E Google on IPO P/E Google current P/E Required 5 yr CAGR Risks to revenue
90% $3.7 billion $1 billion 65% $100 billion 100 15.5 79.3 19 40% ???
26
What are the risks? Retention
Fail to retain existing users
Share of Customer
If our users decrease their level of engagement
Word of Mouth
Improper access to or disclosure of our users’ information, or violation of our terms of service or policies, could harm our reputation and adversely affect our business
Margin
Share of Market
Addressable Market
Growth in use of Facebook through our mobile products, where our ability to monetize is unproven, as a substitute for use on personal computers may negatively affect our revenue and financial results Our business is highly competitive, and competition presents an ongoing threat to the success of our business (grow market share) We may not be successful in our efforts to grow and further monetize the Facebook Platform
27
Key Indicators
1. 2. 3. 4. 5. 6.
Retention – Our customers buying for longer Share of Customer – Our customers buying more from us Referral – Our customers advocating our product/ service Margin – Our customers paying a higher price Share of market / Organic Growth – Winning customers / business from competitors Addressable Market – Expanding the size of the potential market
28
29
The decline in coffeedrinking was due to the fact that most of the coffee people bought was stale and they weren't enjoying it. Once they tasted ours and experienced what we call "the third place".. a gathering place between home and work where they were treated with respect.. they found we were filling a need they didn't know they had. Howard Schultz CEO Starbucks
30
31
Bob Donald
Howard Schultz
32
Where will growth come from? What assets is he looking to utilize? Via – retail product Comp store sales- sales in like-for-like stores over time
33
BRAND MANAGEMENT Sessions 1 & 2 BRAND MANAGEMENT & BRAND EQUITY Don O’Sullivan [email protected]
Assessment Syndicate Assignment (50 marks) Each syndicate will have the opportunity to analyse brand management in one publicly listed company.
In this exercise, we are going to engage with the data provided to investors – through corporate web sites to develop a clearer understanding of performance, challenges and prospects for each firm’s brands. Task: Your syndicate will analyse the brands of a specific company – identified at the start of the course. Your task is to review of the company’s recent corporate reports / investor presentations – available on the Investor Relations section of the company’s web site. 1. Summarize the management of the company’s brands to-date 2. Identify current challenges 3. Discuss the key initiatives the firm is implementing to address these challenges 4. Based on 1 and 2 above evaluate the medium term prospects for the brand(s) Deliverable: A presentation to shareholders/potential shareholders (i.e., your peers followed by Q&A) in the final class. Written summary of your presentation (2,000 words max) due prior to final class. 2
Assessment Class Participation: 30 marks This may be broadly interpreted, but mainly involves contributions to class discussions. Individual Assignment: 20 marks An individual submission on a case study. Further briefing on structure and requirements will be provided at class.
3
Top concerns
Growth
Government response to GFC
Regulation
Capital market volatility
4
Constraint On Growth Has Shifted – From Supply To Demand Australian GDP over the last 20 years
5
180o shift in firm value over 30 years Market to Book Value S&P 500 – 1980-2016 100% 90%
20% 20%
80%
45% 45%
70% 60%
85% 85%
50% 40%
75% 75%
80% 84%
95% 100%
80% 80%
30%
55% 55%
20% 10%
15% 15%
0% 1980
1990
2000
Tangible Book Value
25% 25% 2002
20% 16% 2010 2016
Remaining Market Value
5% Facebook
7
8
Most leaders do not like to make choices. They’d rather keep their options open. Choices force their hands, pin them down, and generate an uncomfortable degree of personal risk A.G. Lafley, Former CEO P&G 9
Making Choices: P&G divest, discontinue or consolidate 100 brands
11
12
13
14
15
16
Assets and Competitive Advantage Valuable, Rare, costly to Inimitable, Organized (VRIO)
The assets are…..
Valuable?
No
Competitive disadvantage
Yes
and is the firm….
Rare? Yes
No
Competitive parity
Yes
Costly to imitate?
No
Temporary competitive advantage
Yes
Organized to capture value?
Yes
Sustainable growth model
No Unused competitive advantage
17
180o shift in firm value over 30 years Market to Book Value S&P 500 – 1980-2016 100% 90%
20% 20%
80%
45% 45%
70% 60%
85% 85%
50% 40%
75% 75%
80% 84%
95% 100%
80% 80%
30%
55% 55%
20% 10%
15% 15%
0% 1980
1990
2000
Tangible Book Value
25% 25% 2002
20% 16% 2010 2016
Remaining Market Value
5% Facebook
Current Earnings has Become the Elephant in the Room
Graham/Harvey/Rajgopal: The Economic Implications of Corporate Financial Reporting
19
Brand Value 2015 ($M)
Brand Value 2014 ($M)
128,303
104,680
81,716
78,752
76,683
68,620
67,060
62,783
59,843
53,466
58,820
45,410
56,124
45,147
48,019
52,533
47,916
31,845
46,737
44,779 20
Criteria in Brand Finance Methodology
*
21
a reservoir of cash flow, earned but not yet released to the income statement
Tim Ambler Marketing And The Bottom Line
22
Moët is a unique brand in the sense that is supports (even increases) the happiness (celebrations, victories) of our consumers. Moët is a dealer in hope. Marc Jacheet, Marketing and Communications Director, Moët & Chandon
23
Acquisitions 2004-20015 $10.3 billion $1.75 billion $57 billion
$52 billion $4.1 billion $1.7 billion $1 billion $8.5 billion $7.4 billion $19 billion
24
A.G. Lafley
25
Market Share Revenue Earnings Earnings growth Market Cap P/E ratio S&P 500 average P/E Google on IPO P/E Google current P/E Required 5 yr CAGR Risks to revenue
90% $3.7 billion $1 billion 65% $100 billion 100 15.5 79.3 19 40% ???
26
What are the risks? Retention
Fail to retain existing users
Share of Customer
If our users decrease their level of engagement
Word of Mouth
Improper access to or disclosure of our users’ information, or violation of our terms of service or policies, could harm our reputation and adversely affect our business
Margin
Share of Market
Addressable Market
Growth in use of Facebook through our mobile products, where our ability to monetize is unproven, as a substitute for use on personal computers may negatively affect our revenue and financial results Our business is highly competitive, and competition presents an ongoing threat to the success of our business (grow market share) We may not be successful in our efforts to grow and further monetize the Facebook Platform
27
Key Indicators
1. 2. 3. 4. 5. 6.
Retention – Our customers buying for longer Share of Customer – Our customers buying more from us Referral – Our customers advocating our product/ service Margin – Our customers paying a higher price Share of market / Organic Growth – Winning customers / business from competitors Addressable Market – Expanding the size of the potential market
28
29
The decline in coffeedrinking was due to the fact that most of the coffee people bought was stale and they weren't enjoying it. Once they tasted ours and experienced what we call "the third place".. a gathering place between home and work where they were treated with respect.. they found we were filling a need they didn't know they had. Howard Schultz CEO Starbucks
30
31
Bob Donald
Howard Schultz
32
Where will growth come from? What assets is he looking to utilize? Via – retail product Comp store sales- sales in like-for-like stores over time
33
BRAND MANAGEMENT Sessions 1 & 2 BRAND MANAGEMENT & BRAND EQUITY Don O’Sullivan [email protected]
