Brand Analytics Workshop

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We coach Brand Leader on the principles of good analysis, how to assess health and wealth of the brand and turning your analytical thinking into strategic stories, projections and reports. We look at:

1. Principles of Good Analytics Gain more support for your analysis by telling analytical stories through data.
2. Health and Wealth of the Brand Assess brand situation looking category, consumer, channels, brand and competitors
3. Analytical stories get Decision Makers to “what do you think” stage Analysis turns fact into insight and data breaks form the story that sets up strategic choices.
4. Turn analytical thinking into projections Extrapolating data into the future, starts with what you are see in the current.
5. Monthly Brand Report Keep everyone on the team informed, engaged and aware of the strategic thinking

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Brand Analytics Workshop

  1. 1. Workshop to help brand leaders be better at analytical thinking, big data and leading a deep-dive business review The Business Review
  2. 2. We make brands stronger. We make brand leaders smarter. Brand Positioning • Brand Plans • Marketing Execution • Brand Team Training
  3. 3. We make brands stronger. We make brand leaders smarter. Get Smarter about Marketing Visit beloved-brands.com Over 4 million views from marketers getting smarter
  4. 4. We make brands stronger. We make brand leaders smarter. How to think strategically Write smarter Brand Plans Create winning Brand Positioning Statements Write smarter Creative Briefs Be smarter at Brand Analytics Get better Marketing Execution How to build Media Plans How to run your Brand Managing your Marketing career Motivational lunch and learns 1 2 6 4 5 3 7 8 9 10 We coach brand leaders on the principles of good analysis, how to assess health and wealth of the brand and turning your analytical thinking into strategic stories, projections and reports. Beloved Brands training programs are designed to make your team of BRAND LEADERS smarter
  5. 5. We make brands stronger. We make brand leaders smarter. Marketing Process Think Plan Decide Results Execute
  6. 6. We make brands stronger. We make brand leaders smarter. Data Information Knowledge Wisdom Who? What? When? Where? How? Why? Context Understanding Rational for why you should be doing a deep-dive business review to gain a deeper and richer understanding of what’s happening. Think slowly through your analysis to avoid making snap instinctual decisions on one data point without gaining the understanding of the underlying cause.
  7. 7. We make brands stronger. We make brand leaders smarter. “Give me six hours to chop down a tree, and I will spend the first four sharpening the axe” Abraham Lincoln 
 
 We make brands stronger. We make brand leaders smarter.
  8. 8. We make brands stronger. We make brand leaders smarter. 1 2 3 4 5 Analytics workshop agenda GOOD ANALYTICS PRINCIPLES. Tell stories with data to gain more support for your analysis. Building the Deep Dive Business Review Deep dive analysis looking at category, consumers, channels competitors and the brand Analysis turns fact into INSIGHT and data breaks sets up STRATEGIC CHOICES Turn analytical thinking into PROJECTIONS extrapolating data into the future. How to write ANALYTICAL STORIES for management. 6
  9. 9. We make brands stronger. We make brand leaders smarter. 1 Principles of good analytics Gain more support for your analysis by telling analytical stories through data.
  10. 10. We make brands stronger. We make brand leaders smarter. 1 2 3 4 6 7 Eight principles of good analytical thinking for Brand Leaders Use facts to support opinions or else what you say comes across as an empty opinion that leaves a room divided. Analysis should start by posing conclusions that answer “where are we” and “why are we here” Like an old school reporter, two source of data validates the truth of the story. The analytical story comes to life when you see a break in the data. Always find comparisons. Absolute numbers by themselves are useless. Use tools that can help organize and force deep dive actionable thinking.  Facts Comparison Data Breaks Two Sources Hypothesis Summary Tools 5 Map out what do we know, against what do we assume and what do we need to find out, to help focus deep dive. Data Gathering Driver&#1:&Taste&drives&a&high&conversion&of&Trial&to&Purchase& (65%&vs.&norm&of&50%).& 19& •  In#a#blind#taste#test,#Gray’s# performed##equal#to#the#consumer’s# regular#cookie.##When#Consumers# found#out#it#was#a#low#fat,#low#calorie# op?on,#they#said#they#would#make#it# their#regular#cookie.## •  In#the#market,#Gray’s#has#a#very#high& conversion&to&purchase&bea?ng#the# norm#(65%#to#50%)#and#considerably# higher#than#the#other#two#‘healthy’# cookies#(Dad’s#and#Sarah’s)# •  Gray’s#taste#helps#drive#a#high&repeat& %,#bea?ng#norm#40%#to#25%.### 19& Conversion&%&to&Purchase& Repeat&%& 0& 20& 40& 60& 80& Gray's& Norm& Dad's& Sarah's& 65& 50& 38& 33& 0& 10& 20& 30& 40& Gray's& Norm& Dad's& Sarah's& 40& 25& 22& 33& ConMnue&to&look&to&opportuniMes&to&&drive&trial,& because&of&the&high&conversion&to&purchase.& 8 Presentation Turning analysis into story for management
  11. 11. We make brands stronger. We make brand leaders smarter. Use facts to support opinions or else what you say comes across as an empty opinion that leaves a room divided. Gray’s needs better distribution at health food stores (HFS) Gray’s only has 22% distribution at HFS, and Dad’s has 73%. If we got our distribution up to 60%, we’d add $6M in sales It would take 30 reps to get 60% distribution, sales of $6M Cost of 30 reps is $3M to generate a profit margin of $2M/year. Mass is a more efficient channel, with a faster payback. 5 reps at $500K, generate $5.4M in sales, and gross margin of $1.8M Reco going after Mass. It generates strong growth, faster payback, smaller staff against a less expensive option 1st So What 2nd So What 3rd So What 4th So What 5th So What Opinion at the Surface level Deeper fact based reco Principle #1: Back it up with facts Ask yourself 5 times “so what does this mean” and you’ll see the opinion turn into a fact based insight that can align a team and drive action. Build a hypothesis, look for data that supports or challenges the opinion.
  12. 12. We make brands stronger. We make brand leaders smarter. 
 Only when given a relative nature to something important do you find the data break that tells a story. Last Year Other 
 Brands Category vs Norm Plan Or LE Prior Month Data Point What do we usually make comparisons with: • You might want to look at all these things and like an investigator, start to see if there are breaks that start to tell a story. • If no data break, then no need to blindly keep telling the story using that anchor. Principle #2: Comparisons Absolute numbers by themselves are useless. Always find comparisons.
  13. 13. We make brands stronger. We make brand leaders smarter. Comparative indexes and cross tabulations can really bring out the data breaks and gaps that can really tell a story. • Every time you talk about a number, you have to talk about in relative terms—comparing it to something that is grounded: vs last year, vs last month, vs another brand, vs norm or vs England’s share. Is it up down, or flat? • Never give a number without a relative nature—or your listener won’t have a clue Bad Writing Better Writing “tastes great” score is at an amazing score of 83%. “tastes great” score has fallen in the past 2 years from 97% to 83%. Freshmint distribution at C stores is only 44%. Freshmint just launched at C stores and has 44% after only 8 weeks--twice as fast as the Cherry launch from last year. Tests show that Citrus expected to deliver $18MM— which is fantastic. Citrus forecast of $18MM is far below the hurdle rate of $50MM. Principle #3: Finding data breaks The analytical story comes to life when you see a break in the data.
  14. 14. We make brands stronger. We make brand leaders smarter. Like an old school reporter, two source of data help frame the story. • Dig around until you can find a convergence of data that leads to an answer. Look to find 2-3 facts that start to tell a story, and allows you to draw a conclusion. Good pure logic in an argument uses “premise, premise conclusion”. • Three big analytical flaws outlined below: only one data point, jumping to conclusions and a point in time data point that course corrects and diminishes your story. Bad Logic Better Logic Share down among “new moms” • Only one data point. No Story. • Maybe moms aren’t the target. Share down among “new moms” Kellogg's “kids” product up to a 10% share. “New Moms” prefer Post Kids 2-1 vs us. Need to Improve Kids Line. Share down among “new moms” Need to do better with “new moms” • Jumps to a conclusion by making a big assumption. Share down among “new moms” “New Moms” is only 1% of our sales. Continue with our core Teen Target. Share in Dec down among “new moms” Do new ad to “new moms” • Point in time data, may not hold. Share in Dec down among “new moms” Share in Jan for “new moms” back to norm. Keep monitoring to see data trend break. Principle #4: Two sources Avoid taking one piece of data and making it the basis of your entire brand strategy. Make sure it’s a real trend.
  15. 15. We make brands stronger. We make brand leaders smarter. One of the best ways to separate your analysis is to divide things into: 1. What do we know? Fact based and you know it for sure. 2. What do we assume? Your educated/knowledge based conclusion that helps us bridge between fact, and speculation. 3. What we think? Based on facts, and assumptions, you should be able to say what we think will happen. 4. What do we need to find out? There may be unknowns still. 5. What are we going to do? action that comes out of this thinking. It forces you to start grouping your learning, forces you to start drawing conclusions and it enables your reader to separate fact (the back ground information) from opinion (where you are trying to take them) Example: • What do we know: Purchase frequency has decreased. • What do we assume: Consumers are starting to use it less and less. • What do we think: Price is a barrier to regular purchases. • What do we need to find out? Would smaller pack size drive frequency. • What are we going to do? Launch 8 count test market. Thinking time: What do we know? Principle #5: Gathering Info
  16. 16. We make brands stronger. We make brand leaders smarter. Brand Strategy Questions 1. What is your current competitive position? 2. What is the core strength your brand can win on? 3. How tightly connected is your consumer to the brand? 4. What is the current business situation your brand faces? Thinking Time and Asking Questions Summarizing the Plan 1. Where are we? 2. Why are we here? 3. Where could we be? 4. How can we get there? 5. What do we need to do? Principle #6: Make Hypothesis The analysis should answer “where are we” and “why are we here”, but to go deeper, we push you to look at competitive position, core strength, consumer connection and situation.
  17. 17. We make brands stronger. We make brand leaders smarter. Use tools that can help organize and force deep dive thinking in key areas. Principle #7: Summarizing Ideas SWOTs or Force Field type tools help organize your thinking and frame the discussion for others.
 Strengths Weaknesses What are the things you have going for you? Where are you better then the competition? Patents, brand name, reputation, cost advantages, distribution advantages, product advantages. What is your Achilles heal? Where are you exposed. Same issues around lack of patent, reputation etc. Weakness of efficacy, side effects, a sub performance measures or exposure against something we can’t do. Opportunities Threats Areas you could take advantage that would accelerate growth. They are real, or exploratory areas. No pipe dreams. Unfulfilled needs, new technologies, regulation changes, new channels, any removal of trade barriers. They are real, but have not yet happened. If they did, they would be an inhibitor. No laundry lists. Changing consumer needs, threat of substitutes, barriers to trade, customer preference, potential channel actions.
  18. 18. We make brands stronger. We make brand leaders smarter. Driver&#1:&Taste&drives&a&high&conversion&of&Trial&to&Purchase& (65%&vs.&norm&of&50%).& 19& •  In#a#blind#taste#test,#Gray’s# performed##equal#to#the#consumer’s# regular#cookie.##When#Consumers# found#out#it#was#a#low#fat,#low#calorie# op?on,#they#said#they#would#make#it# their#regular#cookie.## •  In#the#market,#Gray’s#has#a#very#high& conversion&to&purchase&bea?ng#the# norm#(65%#to#50%)#and#considerably# higher#than#the#other#two#‘healthy’# cookies#(Dad’s#and#Sarah’s)# •  Gray’s#taste#helps#drive#a#high&repeat& %,#bea?ng#norm#40%#to#25%.### 19& Conversion&%&to&Purchase& Repeat&%& 0& 20& 40& 60& 80& Gray's& Norm& Dad's& Sarah's& 65& 50& 38& 33& 0& 10& 20& 30& 40& Gray's& Norm& Dad's& Sarah's& 40& 25& 22& 33& ConMnue&to&look&to&opportuniMes&to&&drive&trial,& because&of&the&high&conversion&to&purchase.& Best practice for writing an analytical slide AnalysisAnalysis Your analytical conclusion The story in 2-3 key points What you recommend doing as a result of the analysis Supporting visuals to tell the story Principle #8: Presentation
  19. 19. We make brands stronger. We make brand leaders smarter. 2 Building the deep dive Business Review Assess brand situation looking category, consumer, channels, brand and competitors
  20. 20. We make brands stronger. We make brand leaders smarter. 1. Brainstorm what’s going on: For each of the 5 sections, we recommend that you brainstorm a list of things that you think are are driving and getting in the way, potential opportunity areas and risks to avoid. Base these on your knowledge of the brand, what you might be hearing or seeing and what your instincts are telling you. Keep a running list and even use your hypothesis with others on your team to see what they think. 2. Drawing conclusions: Narrow the brainstorm list down to top 3-5 “opinions” that you should list as your “straw-dog conclusion statements”. You need these statements to know where to begin looking. 3. Looking for the right data: For each of the statements, list out the information you need that will either support, alter or refute the straw dog statement. Using the data you find, look for breaks in the data and begin piecing together 2-3 main support points and with your new knowledge, begin to re-write the conclusion statement. 4. Continue to modify the story: Keep modifying both the conclusions and support points as you will keep tightening the story. How to build an Analytical story Building the analytical stories is an iterative process where you build your story based on instincts and facts, so that we can turn our instinct opinions into fact based stories.
  21. 21. We make brands stronger. We make brand leaders smarter. How we build the Business Review Presentation For each of the five sections, you should map out 3-5 key slides, that has a conclusion headline, key visual, 2-3 key points, and the recommendation. A B Each of the 3-5 conclusion statements should move to the summary slide, and from there, draw on big challenge statement for that section. Presentation Process
  22. 22. Business Review Category Review 1. Flattening Cookie sales have created a war among major competitors— lower prices and margins 2. Category growth and Gray’s growth coming from the West, lagging in Southern region. 3. America continually looking at variations of diet—low calorie, low carb, low fat, gluten free—yet consumers remain confused. Gray’s Cookies should continue to grow in the brand’s high growth areas, to establish a strong share position to defend against new entrants from traditional cookie brands. Example of Summary for one of the sections
  23. 23. We make brands stronger. We make brand leaders smarter. How we build the Business Review Presentation For each of the five sections, we take the major brand challenge you created and move those to an overall summary document C D With a conclusion for each of the five sections on the summary page, we then draw a major brand challenge from the review Presentation Process
  24. 24. Key Issues Gray’s Cookies Business Review summary • Consumer: New consumers attracted to Gray’s “guilt free” positioning, but conversion to loyalty is due to the great taste. • Category: As America’s eating habits are changing the cookie category is shrinking, while the good-for-you segment thrives. • Channels: Gray’s has many distribution gaps, but needs to be mindful of choices, to maintain investment in driving consumer demand. • Competitors: Grays has an opportunity to dominate the good for you competitors before traditional brands enter segment. • Brand: Growth has come from product quality, but new “guilt free” position will connect deeper and fuel demand It is time to transition Gray’s from a product-led brand into an idea-led brand by connecting with consumers by owning the idea of “guilt free” snacking, rather than just selling a great tasting cookie. Begin to dominate and lead the “good for you” cookie segment. Themes each section from the review Major Brand Challenge Example of the overall Summary
  25. 25. Business Review Theme of the Business Review It is time to transition Gray’s from a product-led brand into an idea-led brand by connecting with consumers by owning the idea of “guilt free” snacking, rather than just selling a great tasting cookie. Begin to dominate and lead the “good for you” cookie segment. Example of the Major Brand Challenge
  26. 26. We make brands stronger. We make brand leaders smarter. At the end of each section in your teams, we want you to • Brainstorm what you think are are driving and getting in the way, potential opportunity areas and risks to avoid. Base these on your knowledge of the brand, what you might be hearing or seeing and what your instincts are telling you. Keep a running list and even use your hypothesis with others on your team to see what they think. • Narrow the brainstorm list down to top 3-5 “opinions” that you should list as your “straw-dog conclusion statements”. You need these statements to know where to begin looking. • For each of the statements, list out the information you need that will either support, alter or refute the straw dog statement. We will show you a list of questions that might help you in looking for the right data. Building the Business Review At the end of the day, we want to get you to the point where you have enough information that you can build the story.
  27. 27. We make brands stronger. We make brand leaders smarter. 3 Deep dive analysis to assess the health and wealth of the brand Assess brand situation looking category, consumer, channels, brand and competitors
  28. 28. We make brands stronger. We make brand leaders smarter. 1. Category: You should start by looking at the overall category performance to gain a macro view of all major issues. Dig in on the factors impacting category growth, including economic indicators, consumer behavior, technology changes, shopper trends, political regulations or whats happening in other related categories that could impact your own category. 2. Consumer: The review should define your consumer target, knowing the consumer’s underlying beliefs, buying habits, growth trends and key insights. We use a consumer buying system analysis and leaky bucket analysis to uncover how they shop the category and your brand. You need to uncover consumer perceptions through tracking data or market research. 3. Channels: Look at the performance of all potential distribution channels and every major customer in the category. It is important that you understand your channel customer’s strategies, as well as the available tools and programs, so your brand can align your brand with the customer and be more successful in each channel. 4. Competitors: Dissect your closest competitors by looking at their performance indicators, brand positioning, innovation pipeline, pricing strategies, distribution and the perceptions of the consumers. Map out a strategic Brand Plan for all major competitors to help predict what they might do next, and know how you might counter in your own brand plan. 5. Brand: Understand the view of your brand through the lens of consumers, customers and employees. Use brand funnel data, market research, marketing program tracking results, pricing analysis, distribution gaps and financial analysis. We recommend that you look at the internal health and wealth as well as the external health and wealth of the brand. Deep Dive Assessment Agenda for the deep dive Business Review
  29. 29. We make brands stronger. We make brand leaders smarter. 1 Category Category: start off with a macro look First, look at the trend line for both sales dollars and units. Compare growth rates against local economy or other similar categories. In this case we see more dramatic double digit growth rate swings from +19.% to -13.5%. Also compare the growth rates of dollars and units to see if there are any dramatic changes. Then, look at the trend line on price, and compare to inflation rates. In this case, price swings has seem minor swings, but are not as dramatic as volume swings. 2012 2013 2014 2015 Sales Dollars 878 760 791 803 % change +19.1% -13.5% +4.8% -0.7% Units 134.0 117.5 119.5 122.7 % change +28.3% -12.35 +1.7% +2.7% Avg Price $6.55 $6.47 $6.62 $6.54 % change -6.4% -2% +3.1% -1.9% A A B B Once you see the trend line, come up with 3 factors driving category growth and 3 factors holding the category back. Explain within each of the years, major things happening to explain the up/down.
  30. 30. We make brands stronger. We make brand leaders smarter. 1 Category Category: look at the regional breaks The next important dimension is to look at the regional performance. Start by understanding the size of each region and the relative growth rates of those regions. The combined size and growth rate may influence your investment into each region. Then, look at the relative size of each region. Two ways to look at it could be the share of the national business or to use a development index relative to either population or a bigger category that this sub-category plays within. (e.g. cereal relative to grocery food) Your performance within each region. While this is still the macro category, it’s useful to get a read on how your brand is doing at the macro level of the regions. A B Northeast Midwest South West Regional Sales Dollars 350 50 100 302 Regional % change +12% -3% +3% -11% Share of Nat’l Business 44% 6% 12% 38% Development Index to pop 115 75 122 97 Brand Share 22% 9% 27% 23% % brand growth -2.4% +11% +2% -1.9% A B C C
  31. 31. We make brands stronger. We make brand leaders smarter. 1 Category Category: look at macro subsegments or formats • Here are some of different types of macro views you want to look at includes performance of size, format or benefit segments. Look at the channel performance at the category level. You can also look at macro competitive market share trends. • With each chart, you are looking for a break in the data to tell a story on the category. 0" 10" 20" 30" 40" 50" 60" XL" Large"size" Mid"Size" Travel"size" Overall" 2012" 2013" 2014" 2015" Healthy( Whitening( Freshening( Repair( 0" 20" 40" 60" 80" 100" 120" 140" Grocery" Drug" Mass" Club" Overall" 2012" 2013" 2014" 2015" Size Formats Benefit Segment Where sold Allergy Category $ Share 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% 50.00% P E D ec 29 01 P E F eb 23 02 P E A pr20 02 P E June 15 02 P E A ug 10 02 P E O ct05 02 P E N ov 30 02 Jan 25 2003 M ar22 2003 M ay 17 2003 July 12 2003 S ept06 2003 N ov 01 2003 D ec 27 2003 Feb 21 2004 A pr17 2004 June 12 2004 A ug 07 2004 O ct02 2004 N ov 27 2004 Jan 22 2005 M ar20 2005 M ay 14 205 Jul9 2005 S ep 3 2005 O ct29 2005 Reactine Benadryl Claritin Aerius Allegra Chlor-Tripolon C/L Competitive Market Share
  32. 32. We make brands stronger. We make brand leaders smarter. Political Economic Government impact: regulatory, tax changes, trade restrictions, political climate. Could be local or international. Restrictions in how we do business. Growing political trends and hot buttons that could impact your own brand or partner brands. Economic factors, like employment, inflation, exchange rates. The key one for us is PL cost cutting vs our premium priced brands during tough economic periods. Keeping pace with inflation because the trade resists price increases. Social Technology Trends, Age Demographics, change in consumer mindset, or even shifts in what’s important. Use of media impacts marketing, behavioral changes that are underlying the use of your brand. New advancements in the category, new molecules, new formats and deliveries. Also, new media (Facebook), new distribution points (Amazon). PEST: Political, Economical, Social, Technology A good way to dig in on the macro factors that might be impacting the overall category 1 Category
  33. 33. We make brands stronger. We make brand leaders smarter. Questions to understand the category you play in 1. How is the category doing relative to the economy? 2. Look at the last 5 years and explain each of the ups and downs in the category. 3. What is driving category growth? What is holding the category back? What are the big open opportunities to take advantage of? What are the risks to the categories in the next few years? 4. What category segments are growing, declining or emerging? 5. What macro trends are influencing/changing this category? 6. What’s the role of innovation? How fast does it change? What innovations are transforming the category? 7. What are you seeing in terms of regional or geographic trends? 8. Who holds the balance of power in the category: brands, channels or consumers? 9. Look at other issues: Operations, inventory, mergers, technology, innovation. 10. What is the overall value of the category How is the category performing financially? Any price changes? Major cost change? 1 Category
  34. 34. We make brands stronger. We make brand leaders smarter. 2 Consumer Consumers: Define and measure your target • As you figure out where you are playing, defining who you are serving and who you aren’t serving helps provide focus. • Ongoing measurement and adjusting should look at how well you are doing versus your target in terms of share, preference, purchase intention, brand funnel scores and panel data. As well you should track your research against the target and mass population. • In terms of choosing target segments, you can break it out on the following: • Demographics • Behavioral or Psychographic • Geographic • Usage occasion Target Everyone NotNot A good target not only decides who is in your target but who is not in your target.
  35. 35. We make brands stronger. We make brand leaders smarter. Consumer Target Profile Target Consumer Target Name Pro-Active Preventers Demographic Description • Suburban working women, 35-40, who are willing to do whatever it takes to stay healthy. They run, workout and eat right. For many, Food can be a bit of a stress-reliever and escape. Their needs • Great tasting food, satisfy craving, healthy choices, maintain weight. Their enemy • Guilt, failure, out of control diet, temptation. Insights that tell their story • “I have tremendous will-power. I work out 3x a week, watch what I eat to maintain my figure. But we all have weaknesses and cookies are mine. I just wish they were less bad for you” • “I read labels of everything I eat. I stick to 1500 calories per day, and will find my own ways to achieve that balance.” What do they think now? • I have only recently heard of Gray’s Cookies. I’ve tried them a few times and did like them. I wouldn’t say I use them all the time. How are they buying? • Most have been influenced by friends who have tried. Those who are buying, still do so less frequently than their normal favorite cookies. The household has yet to adopt the product. The mom uses it when she’s trying to diet. We want them to think/feel/do • Think: Gray’s might be a healthy alternative to my favorite cookies. • Do: We want them to try Grays to see if they like the great taste. • Feel: We want them to feel more in control, with less guilt. 2 Consumer
  36. 36. We make brands stronger. We make brand leaders smarter. Use consumer tracking to understand consumers and relationship to brand Panel or Scan Data • Measures what’s going on in the marketplace and will match up to what’s happening at the store level. • It can be used to track performance against: Penetration rates, Buying Rate, Purchase Frequency and Purchase Size in either dollars or units. • Best to look at it on an annual or quarterly basis year over year. • You can use it to measure and adjust your strategy or even help to re-assure your sales forecast. • Caution: There are some accuracy issues to it due to sample sizes in certain markets or segments. Brand Funnel Tracking • Measures what’s going on in the consumers brain and will match up to what’s happening at in your consumer buying system. • It measures awareness, consideration, search, purchase, repeat and loyalty. • Every Funnel should look different and it is best used to find gaps versus prior year or versus competitors. • Best to look at it on an annual basis unless measuring a dramatic change in your strategy or programs. • If costs are an issue, a Trial and Repeat study can also help the tracking. 2 Consumer
  37. 37. We make brands stronger. We make brand leaders smarter. Use consumer tracking to set up your strategies Penetration: % of households who purchased a product, shopped in a certain channel or retailer at least once during the measured period. Buying rate or sales per buyer: Total amount of product purchased by the average buying household over an entire analysis period, expressed in dollars, units or EQ volume. Purchase frequency or trips per buyer: number of times the average buying household purchases your product over a whole time period (usually a year). Purchase Frequency remains the same regardless of which sales measure is used (dollars, units or EQ volume) Purchase size or sales per trip: Average amount of product purchased on a single shopping trip by your average buyer. Like the buying rate, purchase size can be calculated in terms of dollars, units or EQ volume. How many HH’s are buying my brand? (Penetration) How much is each HH buying? (Buying Rate) How much do they buy each time? (Sales per trip) How often does each HH buy? (Frequency) What’s driving the sales of my brand? Sales = (Total Number of HH x Penetration) x Buying Rate A DC B A D C B 2 Consumer
  38. 38. We make brands stronger. We make brand leaders smarter. Strategic flaw of most brand plans is trying to drive penetration & usage frequency at the same time. Penetration Strategy gets someone with very little experience with your brand to likely consider dropping their current brand to try you once and see if they like it. Usage Frequency Strategy gets someone who knows your brand to change their behavior in relationship to your brand, either changing their current life routine or substituting your brand into a higher share of the occasions.
  39. 39. We make brands stronger. We make brand leaders smarter. Tracking consumer results through panel data • Penetration vs. Frequency is not only a great comparison to track but great strategic choices to make. • Brand leaders have mistakenly convinced themselves that they can drive both PENETRATION and FREQUENCY at the same time. Make the choice because you just dilute your resources by trying to do both. • It might feel like we can move both numbers, but they are different: ➢ Penetration is about pushing your product to a group of new consumers, many times unaware, or resistant to your brand in the past ➢ Frequency is about taking consumers who have already bought in and change their behavior, or build a routine. Penetration vs. Frequency A very tough question we fail to answer: Do you want to get more people to eat, or do you want to get those that are already eating to eat more? 0" 10" 20" Penetra+on" Frequency" 2010" 2011" 2012" 2 Consumer
  40. 40. We make brands stronger. We make brand leaders smarter. • Regardless of the measure, you can track it over time, against competitors or even in comparison against key target segments. The idea is to look at each way until you start to see a data gap that tells a story. Tracking consumer results through panel data Usage Frequency Frequency among Loyalists 0" 2" 4" 6" 8" Gray's" Norm" Dad's" 2.2" 7.3" 6.8" Gray's' Norm' 5" 18" 45" 32" weekly" monthly" 4x"per"year" 1x"per"year" 2 Consumer
  41. 41. We make brands stronger. We make brand leaders smarter. Measuring the brand love, to determine the love, power and profit progress of the brand • Brand funnels becomes thicker as the brand becomes more loved. It’s not just about driving particular numbers but about moving them from one stage to the next. • To drive TRIAL you need to gain CONSIDERATION first (the brain) and then you need to move the consumer towards purchase and through the experience. To drive LOYALTY (the heart) you need to create experiences that deliver the promise and use tools to create an emotional bond with the consumer. • AWARENESS is never enough, anyone can get that. But consideration is the point you start to see that your brand idea starts to connect and move the consumer. Use the brand funnel to measure health Awareness Familiar Consider Purchase Repeat Loyal 2 Consumer
  42. 42. We make brands stronger. We make brand leaders smarter. Use brand funnels to look beneath the surface and see the health of the brand B A Ratio Scores • First take a look at the absolute brand runnel scores, compare them to last year, compare to competitors and versus the category norms. • Then you want to look the brand funnel ratios, finding the percent conversion from one stage to the next. To create the ratios, divide the absolute number by the number above it on the funnel. A B 93% 87% 82% 63% 16% 2% Awareness Familiar Consider Purchase Repeat Loyal 91% 94% 77% 25% 12% Absolute Scores Analytical Process 2 Consumer
  43. 43. We make brands stronger. We make brand leaders smarter. What’s most useful is to compare the ratios of your Brand to the ratios of your nearest competitor. In this second part of the analysis, the ratio becomes the focus. Compare the ratios, finding the gap at each of the stages. You will start to see where your ratio will either be stronger or weaker than the comparison brand. Analyzing the difference between the 2 brands finds the biggest gaps and tells a strategic story for the gap.   C D E Use brand funnels to look beneath the surface and see the health of the brand Aware Familiar Consider Purchase Repeat Loyal Your Brand 95 87 82 63 16 2 Brand x 98 96 85 73 35 20 91% 94% 12%25%77% 98% 88% 63%48%86% Gap -7% + 6% -9% -23% -51% C Ratio Scores D Ratio Gaps E Analyzing the biggest gaps 2 Consumer
  44. 44. We make brands stronger. We make brand leaders smarter. Using the brand funnel in your analytics You can track the funnel versus separate target segments break outs to isolate gaps. Brand Funnel Scores Preventers vs. Overall Conversion % to Purchase You can also track the funnel versus separate target segments to isolate gaps. 0" 10" 20" 30" 40" 50" 60" 70" 80" Awareness( Familiar( Consider( Purchase( Repeat( Loyal( 80( 70( 50( 40( 15( 7( 33( 20( 15( 10( 2( 0.5( 60( 48( 40( 20( 5( 2( Preventers( Overall( Norm( 0" 50" 100" Gray's" Norm" Dad's" Sarah's" 65" 50" 38" 33" 0" 20" 40" Gray's" Norm" Dad's" Sarah's" 40" 25" 22" 33" Repeat % 2 Consumer
  45. 45. We make brands stronger. We make brand leaders smarter. Questions to help understand consumers 1. Who are your possible target market consumer segments? Are they growing? How are you measuring them? 2. Who are the most motivated consumers by what you have to offer? 3. Who is your current target? How have you determined demographics, behavioral or psychographic, geographic and usage occasion? Generational trends? 4. How is your brand performing against the target segment? Share, sales, panel data, funnel data, tracking scores? By channel or geography? 5. What drives consumer choice? What are the main need states? How so these needs line up to your brand assets? 6. Map out the buying system and assess your brand’s performance in moving through each stage. Are consumers changing at stages? Are you failing at stages? 7. What are the emerging consumer trends? How does your brand match up, to potentially exploit? Where would your competitors win? 8. What is the ideal brand experience and unmet needs we can attach the brand to? 9. What are the emotional and functional benefits? How is the brand performing against them? How are you doing in tracking studies to meet these benefits? 10.What are consumers’ perceptions of your brand and your competitors? 2 Consumer
  46. 46. We make brands stronger. We make brand leaders smarter. 0" 20" 40" 60" 80" 100" Food" Drug" Mass" Specialty" Overall"" 90" 72" 70" 16" 62"60" 72" 44" 72" 62" Gray's' Dad's' 0" 50" 100" Gray's' Dad's' Category' 73' 40' 38' Channels: Start with the major data breaks • A great simple chart for highlighting your differences in channel strength and gaps is to look at your distribution by channel. • Compare your brand to a competitor or versus the category. Distribution % By Channel Share of Business from Food • Share of business by each channel either in comparison to other channels or within one specific channel can help isolate data 3 Channels
  47. 47. We make brands stronger. We make brand leaders smarter. Channels: Mapping out the opportunity • For each channel, chart the key insights and main issues they are facing, then brainstorm opportunities for your brand as well as the risks. • From there, you can start to think about the Impact on your brand. 3 Channels Drug Channel Insights/Issues Opportunity/Risks Where you can impact • Insight: consumers see food at Drug as a convenient option. It’s not real groceries but good for items you forget. • Issues: How does Drug use Cookies to drive more volume into their same store sales? • Opportunities: first mover advantage to use high volume cookies to drive traffic into the food aisles. High volume promotions. • Risks: ROI on promo offers at drug may not pay out as fast as Grocery. Don’t start price war. • Gain added distribution strength, using drug to compliment our grocery strength. • Ability to capture “healthy” consumers with a “healthy” message. • Drug channel more efficient than specialty health stores.
  48. 48. We make brands stronger. We make brand leaders smarter. Channels: Look at how the tools are being utilized Another good deep dive is to look at each channel and look at your market share in comparison to how well you are doing on co-op ads and display ratings to see if you are getting your fair share. The FSI is your fair share index. (share of activity divided by your market share) See if you under or over-developed against a certain activity. Draw conclusions. Compare how you're doing in each channel and versus other periods. 3 Channels Brands $ Share Share of Co-op Share of Display Co-op FSI Display FSI Gray’s 24.7 21.9 22.9 89 93 Dad’s 21.9 20.7 20.7 94 95 Stan’s 14.8 14.8 13.6 100 92 Devonshire 13.5 16.6 17.8 123 132 A A B B C C
  49. 49. We make brands stronger. We make brand leaders smarter. Channels: Looking at Pricing Differences by Channel First, look at the average price and change versus year ago, for each channel. Match up the data to what the sales colleagues are saying about the different prices for each channel. Depending on channel/brand, you should be looking at the deal pricing, % on deal and coop ad points. Compare each of the channels and compare to prior years. Food Drug Mass Club Avg Price $6.55 $6.47 $6.62 $6.54 % change vya -6.4% -2% +3.1% -1.9% Avg Price on Deal 5.99 6.59 5.29 5.49 % change vya +8.3% -12.3% +1.7% +2.7% % on deal 32% 22% 38% 20% +/- vya +7 pts +1 pt +10 pts -2 pts A A B B Once you see data breaks or major swings, explain the ups/down, validating the information with the sales people or buyers. Can supplement with channel strategy or any examples of executions in the market. 3 Channels
  50. 50. We make brands stronger. We make brand leaders smarter. Channels: Distribution Gap Analysis Tops Kroger CVS Club A&P Safeway 7-11 Gray’s 8 ct Choc Chip Gray’s 16 ct Choc Chip Gray’s 8 ct Mint Chip Gray’s 16 ct Mint Chip Gray’s 8 ct Lemon Gray’s 48 ct Variety 3 Channels
  51. 51. We make brands stronger. We make brand leaders smarter. Channels: Create Customer Scorecards3 Channels Customer A Scores Overall Sales Dollars 39 Share of Category 11% % dollar change +19.1% Your Brand Share 33% % change +3.3 points Share Index 105 Your brand’s avg Price $6.33 % change +3.3% Price Index 125 Share of Co-Op Ads 33% % change +18% Co Op Index 143 Share of Merch 25% % change -2% March Index 111 A A B B First, look at how well the customer is performing, looking at growth rates and share of category. How is your brand performing with the customer? Market share or growth? Then look at pricing, compare to either your average price or the customers average category price. Make sure it matches to your brand’s pricing strategy. Then look at the tools of the customer to see how you are doing on both coop and merchandising indexes to see if they match up to your share index. C C D D
  52. 52. We make brands stronger. We make brand leaders smarter. Questions to help learn about the channels you sell through 1. How are the channels performing? Are there regional differences by channel? Are there any channel shifts happening? 2. Are there new/emerging channels? Are there existing channels not being developed? 3. What are the strengths/weaknesses of each channel? 4. Do you understand the strategies of the channel partners? 5. Do you have the competencies to service the channel partners? 6. Who are your primarily and secondary customers? Have you segmented and prioritized on growth vs opportunity? How large are they? What are their growth rates? 7. How is each channel performing? 8. How are brands doing within each channel? What are the main reasons for each brand’s channel strength/weakness? 9. Who is the category captain within your key accounts and why? 10. Who are the top 5 customers? Main strategies? How do we fit into that strategy? 3 Channels
  53. 53. We make brands stronger. We make brand leaders smarter. 1. Power Players: This is reserved for the leader of the category. These brands have a power over the category and over competitors. They can defend their territory by attacking itself or even attacking back at an aggressive competitor. 2. Challenger Brand: Challenger’s attack on the leader to exploit a weakness or build on your own strength. The best offensive attack is to actually find weakness within the leader’s strengths. One very powerful strategy is to turn a perceived strength of the leader around by making it a weakness. 3. Island Brand: Goes into the unknown areas: An attack in an open area where the Leader is not that well established. Island Brands go to uncontested areas, in the safety where the leader is not competing. 4. Rebel Brand: Goes against the category: Going into an area where it’s too small for the Leaders to take notice or are unable to attack back. Pick a segment small enough that it won’t be noticed and you’ll be able to defend it. What is your current COMPETITIVE position? Cluttered Brands are typically stuck in competitive dog-fights with no defined point of difference, nothing to own, nothing that connects. 4 Competition
  54. 54. We make brands stronger. We make brand leaders smarter. Competitive dissection goes through 
 everything on the other brand The Plan: when in a real competitive battle, map out the competitor’s brand plan as best you can: Vision, Analysis, Strategies, Tactics and even assumed budget levels. 24.9% 27.9%28.5% 24.6% 23.6% 21.3% 24.2% 27.8% 25.7% 24.7% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 • Analysis: Look at their market share over the past 5-10 years and analyze what you think are the top 3 factors driving and inhibiting their success. • Explain the ups and downs whether it was new launches, changes in strategies or impact of a competitor to your competitor. Brand Plan of key competitor 5-10 years of market share 4 Competition
  55. 55. We make brands stronger. We make brand leaders smarter. Competitive Pricing First, look at the average price and change versus year ago, for each competitor. Match up the data to what the sales colleagues are saying about the different prices for each channel. Depending on channel/brand, you should be looking at the deal pricing, % on deal and coop ad points. Compare each of the channels and compare to prior years. Gray’s Dad’s Devon’s Club Avg Price $6.55 $6.47 $6.62 $6.54 % change vya -6.4% -2% +3.1% -1.9% Avg Price on Deal 5.99 6.59 5.29 5.49 % change vya +8.3% -12.3% +1.7% +2.7% % on deal 32% 22% 38% 20% +/- vya +7 pts +1 pt +10 pts -2 pts A A B B 4 Competition Once you see data breaks or major swings, explain the ups/down, validating the information with the sales people or buyers. Can supplement with channel strategy or any examples of executions in the market.
  56. 56. We make brands stronger. We make brand leaders smarter. • You have to realize that speed of attack matters. Surprise attacks, but sustained speed in the market is a competitive advantage. • Be organized and efficient in your management. To operate at a higher degree of speed, ensure that surprise attacks work without flaw, be mobile enough. • Focus all your resources to appear bigger and stronger than you are. Focus on the target most likely to quickly act, focus on the messaging most likely to motivate and focus on areas you can win. • Drawn out dogfights slow down brand growth. Never fight two wars at once. • Use early wins to keep momentum going and gain quick positional power you can maintain and defend counter-attacks. • Execution matters. Quick breakthrough requires creativity in your approach and quality in execution. Expect the unexpected. • Think it through thoroughly. Map out potential responses by competitors. Lessons for Competitive Strategy Focus, speed, smart, self-confidence. 4 Competition
  57. 57. We make brands stronger. We make brand leaders smarter. Questions on the competitors you compete against 1. Who are the main competitors? How are they positioning themselves? 2. What is their communication, new products and go-to-market strategy? How are they effectively executing against it? 3. What are the competitors operating models, culture and organization? What brands are they focused on as a company? 4. What are your competitor’s strengths, weaknesses, opportunities, threats? 5. How are they doing in terms of customer share, market share, P&L, margins, innovation, culture, regulatory advantage 6. Map out the competitors brand plan: vision, goals, strategies and tactics. 7. What is the culture at your competitor and what is the role of the brand in this culture? 8. What is the investment stance and the expected growth trajectory of competitor’s brand? How/where do they invest in their brand What is the marketing and commercial focus? What is their ROI? 9. What is the competitors brand strength/equity? What drivers/attributes do they own? 10. Any public materials about the competitor, including strategy and financial results? 4 Competition
  58. 58. We make brands stronger. We make brand leaders smarter. How does the market see your brand’s core strength PromiseProduct Price Experience Highly Competitive Medium LowFocus on what you are best at. Let go what matters the least. We give 4 chips, forcing one at the high, two at the middle to support the strength, and let go of one at the low. 5 Brand
  59. 59. We make brands stronger. We make brand leaders smarter. Benefit sort research helps to match up your assets to consumer need states • After defining your target market, you can use market research to begin matching up your target market’s need states against your brand assets. • This can be found through market research tools, including need state analysis, U&A, tracking data or even qualitative methods. Brand Assets Consumer Need States Liquid   Format Safe Sugar   Free 24   hours 35  years Tastes   Great Complete   Relief Doctor   Reco Long   Lasting Made  in   USA ADA   approved Zero   Carbs All   Family Popular Dietary Brand History Key Features Functional Benefits Superiority Claims Emotional Benefits Key Indicators Brand Imagery Target Ownership Brand Icons New Uses
 Line Extensions Good Match to Needs Poor Match to Needs Fast   Acting 5 Brand
  60. 60. We make brands stronger. We make brand leaders smarter. Where do consumer needs match up against what you and your competitor does best To ensure options are unique, you want to make sure that you are either better, different or cheaper relative to your competitors. 5 Brand
  61. 61. We make brands stronger. We make brand leaders smarter. Use our ladders model to find the emotional benefits Once you match up the needs to assets, you then want to find the best benefit statement, either rational, emotional or a combination. This is best done through concept testing to find that optimized positioning. 5 Brand
  62. 62. We make brands stronger. We make brand leaders smarter. Brand analytics can help indicate where your brand sits on the Brand Love Curve INDIFFERENT LIKE IT LOVE IT BELOVED Voice of Consumer Market Indicators Strategic Focus No opinion, low interest, low importance. Don’t care, have doubt or anger. Skinny brand funnel, share squeeze, low unaided awareness, shrinking margins. Focus on the MIND, to separate brand, drive consideration & purchase. New positioning or re- positioning. Have basic idea what it stands for, but no connection. See it as ordinary, not different. Low conversion to sales, high % bought on deal, low loyalty, strong private label share. Focus on moving FEET, by create an idea, layered with emotional benefits, to connect and build a following. See it as better, high loyalty and satisfaction and willing to recommend to a friend. Robust brand funnel, healthy tracking scores, share gains, share of requirements. Focus on the HEART, to drive deeper emotional bond, turning the experience into a ritual. Close every brand leak. Outspoken fans who see everything about the brand (product, experience, service) as better. Dominant share, net promoter scores, usage frequency and recommendations Focus on the SOUL, mobilize outspoken loyalists to sell brand. Broaden audience and offering. Attack yourself. 5 Brand
  63. 63. We make brands stronger. We make brand leaders smarter. Program tracking shows how well you are doing behind key marketing activities • Program tracking or testing results can compare how well the program has done against key measures. • You will also be able to get scores that match up to the brand funnel such as Awareness (aided, unaided), purchase scores (share of last 5 purchases) and purchase intention. Tracking Results Gray’s Norm Aided Recall 38 62 Unaided Recall 30 46 Brand Recognition 10 23 Brand Link .33 .50 Main Message 64 60 Uniqueness 38 22 Purchase Intent 10 9 Ad Tracking 5 Brand
  64. 64. We make brands stronger. We make brand leaders smarter. Usage and Attitude studies • Broad view of the who, what, when, where and how overall consumer dynamics of your category or market. • Identify what the consumer may see as your brand’s core strength: product, promise, experience and price. • Identify what are the key drivers of both trial and brand loyalty • Understand how consumer behavior and usage changes by brand • Why consumers buy specific brands and what it is that makes those brands distinctive, outlining the rational and emotional benefits. • Identify any perceived gaps in the consumers mind between the brand promise, consumer expectation and the overall brand performance. • How does the brand match up in the consumers’ mind, relative to the other competitors. • Overall vantage of various consumer segments, looking at lifestyle and demographic dimensions, how they consume media, overall attitudes on key drivers or brand benefits. • Map out the consumer buying system looking at how they become aware, what makes them consider, what type of search they do, factors they use to decide, what influences repeat purchase, how they build products into their routines and what triggers them to become brand fans. 5 Brand
  65. 65. We make brands stronger. We make brand leaders smarter. Use Brand Funnels as your underlying measurement of brand health and leaks that need closing. The brand funnel data helps tell where you are on Brand Love Curve: ◆ Indifferent: Skinny funnels throughout. Fuel awareness to kick start the funnel. ◆ Like It: Funnel narrows at purchase. Close leak by getting message closer to sale. ◆ Love It: Robust funnels, but may have a leak at loyal. Continue to feed the love among loyalists. ◆ Beloved Brands have ideal funnels, but should track and attack any weakness before it is seen by others. Brand Funnels help you analyze where your brand stands, whether looking at absolute scores, ratios, comparisons with competitors or tracking over time. 5 Brand
  66. 66. We make brands stronger. We make brand leaders smarter. Leaky Bucket helps match the brand experience up to the buying system to discover brand problems to address Unaware Noticed Interested Bought Satisfied Repeater Fan Outspoken I have never heard of the brand before. I have heard of brand but do not know much about it I’m impressed and will consider buying in the future. I recently bought the brand. Seems cool. Hope I made the right decision. I like it so far, will likely buy it again. I have had good luck with brand and will keep buying it. I’m a big fan of the brand. I own multiple products and love them all. I love the brand and I’m always telling my friends about it. Your brand is not the one for me. I’ll stick to my current brand. I have heard of the brand but I was uncertain, so I went for my more trusted brand. I bought your brand but I wasn’t satisfied so I won’t buy it again. I was a big fan, but the brand hasn't kept up with technology so I switched my brand. INDIFFERENT Like It Love It Beloved Consumer views Reasons for rejection Establish brand in the consumers mind through high awareness programs. Focus on specific benefits— both rational and emotional. Improve product quality and service innovation to get back lost customers. Focus on improving product technology and build a VIP program for long term users. Plan for closing the leak 5 Brand
  67. 67. We make brands stronger. We make brand leaders smarter. Questions to better understand the brand 1. Where do you play? How do you win? What is your current point of difference? Is it own-able, unique and motivating for consumers? 2. What is your biggest gain versus prior periods? What is your biggest gap? 3. What is your market share? Regionally? By Channel? Where is your strength? Where is your gap? 4. How are you doing on key brand tracking panel data? Penetration? Frequency? Sales per Buyer? Dollars per trip? 5. What are your scores against the brand funnel? 6. How is your program tracking data doing? Where could you improve? 7. How far can you “stretch” your brand into other opportunities? 8. What is your current operating model? 9. What is your culture? To what extent does your culture enable and support your brand and business strategy? Is there an alignment to the brand promise and strategy by employees? 10. What is the new product development process in the organization? What is the innovative capability of the organization? 5 Brand
  68. 68. We make brands stronger. We make brand leaders smarter. 8 ways brand leaders can drive brand profit Brand&Profit&=&(Price&–&Cost&)&x&(Market&Share&x&Market&Size)& Price Market SizeShare Cost 1 Premium Pricing 2 Trading Up 3 Lower cost of goods 4 Efficient Program Spending 5 Stealing Share 6 Get loyal users to use more 7 Enter new markets 8 Find new uses Higher Margin % Higher Volume 5 Finance Brand
  69. 69. We make brands stronger. We make brand leaders smarter. Doing some very simple math shows three potential major problems right away. • Gross Margin is falling each year—dig in to find problem with either price or COGs? • Contribution Margin falling— Gross Margins, Spend Increases. • Spend growing faster than sales. Investment mode? 1 3 2 1 2 3 2008 2009 2010 Net  Sales        21,978      24,616      27,569   Cost  of  Goods  Sold        12,866      14,925      17,313   Gross  Margin            9,482          9,862      10,256   Research  Development                  346                  352                  360   Total  Spend            3,444          4,202            5,127   Ad  Merch                568                858          1,296   TV                        -­‐                          -­‐                    175   On  Line                    28                    70                175   Print                    57                    75                100   PR                    59                    77                100   Sampling                          3                    13                    50   Sponsorship                132                    73                    40   Research                200                100                        5   Packaging                133                100                    75   Display                          4                    29                200   Trade                426                400                376   Other  SG&A          2,172          1,433                989   Contribution  Income            5,763          5,244            4,772   12% 22% Look at the Wealth of the Brand by knowing how to use the Financial Statements 5 Finance Brand
  70. 70. We make brands stronger. We make brand leaders smarter. Look at Gross Margins % by dividing the overall gross margin by the overall sales. • We can see the gross margin is down from 43% to 37%. Either overall pricing has been cut or the costs are up. Dig in deeper. 1 3 2 Quick assessment of Brand Finances 2008 2009 2010 Sales 21978 24616 27569 Gross  Margin 9482 9862 10225 Gross  Margin  % 43% 40% 37% Look at Contribution Margins % by dividing overall contribution income by overall sales. • We can see the % falling from 26% to 17%. Not only is there is there a problem at the top line margin, but gross margin is not covering off the increase in spend. 2008 2009 2010 Sales 21978 24616 27569 ContribuGon  Income 5763 5244 4772 ContribuGon  Margin  % 26% 21% 17% One other quick tool is to compare the sales growth versus the spend growth. • We can see here that sales are growing at a healthy 12%, however total spend is outpacing sales growth with 22% spend increase. We are now seeing two issues with profits: Above the falling gross margin plus the high increases in below the line spend. 2008 2009 2010 Growth  % Sales 21978 24616 27569 12% Total  Spend 3444 4202 5127 22% 5 Finance Brand
  71. 71. We make brands stronger. We make brand leaders smarter. The economics and accounting of how beloved brands turn power into stronger growth and profit Price& Quan+ty& Supply& Demand' Increased' Demand' $400$ $250$ 10M$ 15M$ Quan%ty( Current'Users' using'more' Find'New' Uses' Penetrate' New'Users' Enter'New' Categories' Market( Share( Expand' Category'Size' Market( Size(Margin' Premium' price' Cost'of' Goods' Over' head' Selling' Price' Trading'' Consumers'Up' Marke;ng' Costs' Selling' Costs' Costs' Driving demand gives your brand the ability to drive the price up, and higher quantities gives better economies of scale. Profitability = Margin x Quantity 5 Finance Brand
  72. 72. We make brands stronger. We make brand leaders smarter. Using LOVE and POWER to drive PROFITS with increased prices, lower costs, share gains and entering new markets Price Costs Share Market Size Premium Price • Perceived quality allows you to command price pricing Trading up/down • Take loyalists up to a better premium-priced version of brand Lower cost of goods • Economies of scale and use your power over suppliers. Efficient marketing • Higher volume helps spend ratios, use the media power. Stealing Share • Use brand momentum to gain tipping point. Higher usage • Get loyal users to use more, building routines/rituals. Enter new markets • Take brand idea to new products, getting loyalists to follow. Find new uses • Increase the ways that your brand can fit into the consumers life. Higher Margins % Higher Volumes 1 2 3 4 5 6 7 8 5 Finance Brand
  73. 73. We make brands stronger. We make brand leaders smarter. Pricing is a weapon a powerful brand can wield to drive more margin • Increases: If the market or brand allows you. Passing along cost increases. Healthy brand, healthy market, power vs competition and channel. • Decreases: Fighting off competitor, sluggish economy, channel pressure. • Trading Up: Can you carve out a meaningful difference that goes beyond your current brand? Does your brand image/ratings allow it? • Trading Down: Risky, but you see un-served market, with minimal damage to image/ reputation of the brand. • Difficult to execute because it has to go through retailers. Understand power relationships. • Competitors will (over) react. So your assumptions you used to go will change right after. • It’s not easy to change back. • Premium skus, can feel orphaned at retail world—missing ads or displays. • Managing two pricing levels can be difficult—what to support, price differences etc. • Don’t lose focus on your core business. Can’t be all things to everyone. • Image risk, especially when trading downward. When to use What to watch out for Price Trading up or down Premium Pricing 1 2 5 Finance Brand
  74. 74. We make brands stronger. We make brand leaders smarter. Formulas in detail – The price increase 10%  price  increase  against  a  10%  volume  decrease Current New Price 2.50 2.75 COGS 1.00 1.00 Margin 1.50 1.75 Margin % 60% 64% Unit Forecast 100,000 90,000 Impact On Revenue $250,000 $247,500 Impact on Profit $150,000 $157,500 Formulas: Impact on Revenue Price x Units Current: 2.5 x 100 = $250k New: 2.75 x 90 = $247.5k Impact on Profit Margin x Units Current: 100 x 1.5 = $150k New: 90 x 1.75 = $157.5k When looking at a price increase it is crucial to make assumptions as to what will happen to the unit volumes and then do the overall resulting revenue and profit for the options. 5 Finance Brand
  75. 75. We make brands stronger. We make brand leaders smarter. Pricing Waterfall analysis StatedPrice InvoicePrice ActualPrice Gross Margin Retailer program discounts Off-Invoice Discounts or Rebates Prom otional Price discounts Cost of Freight Custom Packaging or displays Cost of Programs Package Returns Cost Cost of Goods Sold Service Costs Volum e Discount Transactional and cost to serve the customer Target Price to the customer BasePrice Segm ent Geography/Regions Channel Base value of product sold Marketing Sales Stated Price on the customer’s invoice Actual Price (less discounts and cost to serve) Actual Gross Margin 5 Finance Brand
  76. 76. We make brands stronger. We make brand leaders smarter. Define your Pricing Strategy in alignment with your business strategy and business objectives and based on a deep understanding of your own competitive position, customer insight and cost-to-serve 1. Pricing Strategy Implement Pricing Strategy and Price Determination framework into daily sales activities and transactional processing 3. Price Execution Operationalize Pricing Strategy in marketing activities and generate all required input for Price Execution 2. Price Determination Define pricing capabilities and skill sets, establish pricing organization and assure consideration of legal requirements 4. Governance Enable pricing capability by monitoring and provision of tools, systems and processes related to pricing in an integrated manner 5. Monitoring and System Support Pricing Management System5 Finance Brand
  77. 77. We make brands stronger. We make brand leaders smarter. Pricing Management System • Annual Rates • One-time charge • Cost-plus pricing • Price for Value • Maintenance Charges • Usage rental (by the hour) • Bundled Pricing • Market Price • Value Price • Strategic Price • Life Time Value (LTV) Pricing • Short vs. Long-term Revenue Pricing • Portfolio Pricing (Price Points) • Competitor Responses • Not-in-Kind (NIK) Replacements • Reduce/Increase attractiveness of business • Keep out competition • Setting Visible Market prices • Customer Reaction Product Pricing Cannibalization • Buying Power • Supplier Power • Place in the Value Chain • Price Elasticity • Global vs. Local Supply and Demand • Capacity • Substitute products 1. How do I Price? 2. What Price Should 
 I Charge? 3. What is the Effect 
 of my Price on the Market? 4. What Ability do I have to Control Price? Business Strategy • How does my Pricing Strategy support the overall Business Strategy? 5 Finance Brand
  78. 78. We make brands stronger. We make brand leaders smarter. Pricing Quality Relationships Indifferent Like It Beloved relative perceived valuelow high relative perceived price low high Risk of losing 
 customers and related volume Under-pricing vs potential, loses margins 5 Finance Brand
  79. 79. We make brands stronger. We make brand leaders smarter. • COGs Decreases: power over suppliers, potential raw material change, process improvement, off-shore manufacturing. • COGs Increases: suppliers pass along costs, new technology, investing in brand’s improved image, going after higher end, new benefit or a format change. • Selling Cost Decrease: to counter changes in the P&L (price, volume or cost), short term P&L management, change in go-to-market model, product life cycle • Selling Cost Increase: Investment mode, proven payback in higher sales, defensive move to hold share. • With cuts, make sure the product change is not significantly noticeable. • Understand consumer impact on your brand’s performance and image. • Can the P&L cover these costs, either increased sales or efficiency elsewhere. • Always be in an ROI mindset: Manage your marketing costs as though every DOLLAR has to efficiently drive sales. • Short term cuts can carry longer term impact. • Competitive reaction can influence the impact of investment stance. When to use What to watch out for Cost Marketing Costs Product Costs Cost decreases come from economies of scale and power over suppliers 3 4 5 Finance Brand
  80. 80. We make brands stronger. We make brand leaders smarter. Formulas in Detail – Cost of Goods Sold (COGS) Direct Materials $1.30 Direct Labor cost $0.90 Manufacturing Overhead $0.50   Cost of Goods Sold $2.70 Formulas: Per Unit Cost of Goods = direct materials + direct labor + manufacturing overhead 1.30 + 0.90 + 0.50 = 2.70 Overall Cost of Goods = beginning inventory + manufacturing cost - ending work in process inventory 10,500 + 23,000 - 5,500 = 28,000 Gross Margin = Sales - COGS 500 – 300 = 200 Gross Margin % = (Sales – COGS) / Sales (500 – 300)/500 = 40% Per Unit COGS Beginning Inventory Cost $10,500 Manufacturing Cost for year $23,000 Ending Work in Process Costs $5,500   Cost of Goods Sold $28,000 Inventory COGS 5 Finance Brand Sales $ 500 Cost of Goods Sold (COGS) $ 300 Gross Margin $ 200   Gross Margin % 40% Gross Margin
  81. 81. We make brands stronger. We make brand leaders smarter. Marketers have limited resources… Target Market Brand Positioning Strategic Options Execution Activities Financial Time People Partnerships …to apply against unlimited choices 5 Finance Brand
  82. 82. We make brands stronger. We make brand leaders smarter. When Marketers come to a decision point that requires focus, they try to justify a way to do both. The best brand leaders force themselves to focus by using the word “or” more than they use the word “and” Don’t tell yourself that you are good at making decisions if you come to a decision point and you always choose BOTH. Strategic thinkers never DIVIDE and conquer. They make choices to FOCUS and conquer. 5 Finance Brand
  83. 83. We make brands stronger. We make brand leaders smarter. Focus your marketing activities by prioritizing on return on investment and effort (ROI and ROE) For each strategy, you want to find the “Big Easy” • Put all of the ideas on to post it notes, then map each idea onto the grid as to whether they will have a BIG versus SMALL impact on the business, and whether they are EASY versus DIFFICULT. • The top ideas will be in the BIG EASY top right corner. JUST  DO  IT   Brainstorm  ways  to  make   these  ideas  even  bigger   THE  BIG  EASY   Big  Wins,  Easy  to  do   AVOID   Bad  ROE,  drain  on  resources   MAKE  EASIER   Brainstorm  easier  ways  to  get   it  done Easy Difficult Small  Win Big  Win Implementation Business  Impact Idea Idea Idea Idea Idea Idea Idea Idea Idea Idea Idea Idea Idea 5 Finance Brand
  84. 84. We make brands stronger. We make brand leaders smarter. Formulas in Detail – Program ROI (Return on Investment) Program Incremental Sales Volume $5000 Cost of Goods Sold (COGS) $3000 Gross Margin $2000 Gross Margin % 40%     Total Spend $1500 Contribution Income $500 Formulas: Gross Margin = Revenue - COGS 5000 - 3000 = 2000 Contribution Margin = Gross Margin – Spend 2000 - 1500 = 500 Option 1: Against just the Spend ROI = Contribution Margin/Spend 500/1500 = 33% Option 2: Against the Total Investment ROI = Contribution Margin / (COGS + Investment) 500/(1500+3000) = 11%Companies seem to measure ROI differently. Ask Your Finance Person how they Measure and Calculate ROI Assumes program cost of $1500 generates $5000 in incremental revenue 5 Finance Brand
  85. 85. We make brands stronger. We make brand leaders smarter. • Offensive: Competitive Advantage, Untapped Needs, Opportunistic, first mover advantage on new technology. • Defensive: Hold the fort until you can catch up on technology, maintain profitability, loyal base of followers needs protecting. • When there is an opportunity to turn loyal users into creating a potential routine. Changing behaviors is more difficult than enticing trial. • When getting further trial might be capped out. • Attacking competitors can be difficult. It could just become an spend escalation. After the war, no winners, just losers. • Brand loyalty, trade-offs beyond unsatisfied area or just habit. • Channel could play one competitor against another for their own gain. • There has to be a real benefit connected to using more or it might look hollow/shallow. • Driving routines is a challenge. Even with “life saving” medicines, the biggest issue is compliance. • Find something in their current life to help either ground it or latch onto. (brushing routine) When to use What to watch out for Market Share Get users to use more Steal other users The share and volume game are traditional tools for brand. Either an offensive or a defensive game. 5 6 5 Finance Brand
  86. 86. We make brands stronger. We make brand leaders smarter. Formulas in Detail – Compound Annual Growth Rate Year 1 Year 2 Year 3 Year 4 Year 5 Revenue $500,000 $600,000 $650,000 $700,000 $800,000 Annual Growth   20% 8% 8% 14% Formulas: Average Growth Rate = ((Y5 – Y1)/Y1))/# of years ((800 – 500)/500)/5 = 12% CAGR = ((Y5 / Y 1) to the power of (1/#years)) – 1 (800/500 to the power of 1/5) – 1 = 9.85% Knowing the compound annual growth rate is a crucial volume step to the ROI calculation. Scared Off By Math, use the online CAGR Calculator at the Investopedia website 5 Finance Brand
  87. 87. We make brands stronger. We make brand leaders smarter. 86% 82% 63% 16% 2% 98% 96% 85% 43% 4% LIKE IT BRAND BELOVED BRAND 25% 95% 50% 98% 77% 88% DirectionImplication Aided Awareness Familiarity (Unaided) Consideration Purchase Loyalty 2 1 2 1 12% 9% Leaky Funnel: Consumers falling out at consideration stage. Brand X is a “new” brand. Consumers’ go with trusted usual brand. Focus awareness at first point of consideration. Invest in on-line to keep consumer engaged In-store Switching: Significant drop off at purchase stage means Consumers are moved to other brands as they go in-store. Manage the shopping experience through purchase phase. 1 2 How the Brand Funnel can showcase brand issues. Tracking via Brand Funnel is a great tool to show relative strength of one brand vs another. Highlights leaks. 5 Finance Brand
  88. 88. We make brands stronger. We make brand leaders smarter. Leaky Bucket helps match the brand experience up to the buying system to discover brand problems to address Unaware Noticed Interested Bought Satisfied Repeater Fan Outspoken I have never heard of the brand before. I have heard of brand but do not know much about it I’m impressed and will consider buying in the future. I recently bought the brand. Seems cool. Hope I made the right decision. I like it so far, will likely buy it again. I have had good luck with brand and will keep buying it. I’m a big fan of the brand. I own multiple products and love them all. I love the brand and I’m always telling my friends about it. Your brand is not the one for me. I’ll stick to my current brand. I have heard of the brand but I was uncertain, so I went for my more trusted brand. I bought your brand but I wasn’t satisfied so I won’t buy it again. I was a big fan, but the brand hasn't kept up with technology so I switched my brand. Indifferent Like It Love It Beloved Consumer views Reasons for rejection Establish brand in the consumers mind through high awareness programs. Focus on specific benefits— both rational and emotional. Improve product quality and service innovation to get back lost customers. Focus on improving product technology and build a VIP program for long term users. Plan for closing the leak 5 Finance Brand
  89. 89. We make brands stronger. We make brand leaders smarter. • When there is an untapped or underserved need. • Changing demographic that impacts your base. • You’re able to translate/transfer your reputation to a new user group. • Format Line Extensions that take your experience or name elsewhere . • Able to leverage same benefit in convenient “on the go” offering. • There should be something within your product/brand that helps fuel the brand post trial. • Trial without repeat, means you’ll get the spike but then bust. • Substantial investment required. Don’t let it distract from protecting the base loyal users. • Make sure current brand is in order before you divert attention, funding and focus on expansion area. • Investment needed, could divert from spend on base business. • Legendary stories (Arm and Hammer) don’t come along as much as we hope. When to use What to watch out for Market Size Create new uses Find New Users Game Changers are about finding new users or even new uses for the consumer. 7 8 5 Finance Brand
  90. 90. We make brands stronger. We make brand leaders smarter. Formulas in Detail – New Launch ROI (Return on Investment) Year 1 New Product Sales $500 Cost of Goods Sold (COGS) $300 Gross Margin $200 Gross Margin % 40%     Total Spend $150 Contribution Income $50 Formulas: Gross Margin = Revenue - COGS 500 - 300 = 200 Contribution Margin = Gross Margin – Total Spend 200 - 150 = 50 Option 1: Against just the spend ROI = Contribution Margin/spend 50/150 = 33% Option 2: Against total investment = Contribution Margin / (COGS + Investment) 50/(150+300) = 11% Companies seem to measure ROI differently. Ask Your Finance Person how they Measure and Calculate ROI 5 Finance Brand
  91. 91. We make brands stronger. We make brand leaders smarter. How to dig in on the 8 areas on the P&L to uncover the story for your brand Pricing Price cut? Customer discounts to drive volume? Trading Up/Down Product Mix Changed? More lower margin sales? Product Costs COGs went up due to supplier or materials? Marketing Costs Spend is up? Launching? Stealing share? Stealing Other Users Investing to steal competitive users? Defensive stance? Get Users to Use More Discounts to encourage volume per customer? New Category Investment to Enter into a new category? New Uses Education investment on potential uses? 1 2 3 4 5 6 7 8 The Good News: to simplify your thinking and make it easier on you, these are Eight key Levers of the P&L that you need to focus on. 5 Finance Brand
  92. 92. We make brands stronger. We make brand leaders smarter. As you make investment decisions on your portfolio of brands, first look EXTERNALLY to the market to help judge How strong is your brand’s competitive position in the market? 5 Finance Brand Major Investment to grow brand Invest strengthen the brand Investment to grow category Leverage power of leadership Maintain brand performance Focus on niche you can own Re-focus around niche stance Divest, milk or exit Maintain share, milk brand How attractive is the market? High Medium Low HighMediumLow Invest Maintain Divest
  93. 93. We make brands stronger. We make brand leaders smarter. As you make investment decisions on your portfolio of brands, then look INTERNALLY to the profitability to help judge How healthy are the profit margins? 5 Finance Brand Invest to leverage growth Invest to grow brand Invest to grow brand Maintain share and growth level Maintain, smartly manage costs Increase prices to drive up margins Reduce costs, consider price Milk brand with minimal spend How strong is the brand growth? High Medium Low HighMediumLow Invest Maintain Divest Divest, milk or exit
  94. 94. We make brands stronger. We make brand leaders smarter. Questions to understand the financials of the brand 1. Your CAGR? (Compound Annual Growth Rate) 2. What are your contribution margins over last 5 years? Margins broken out by product line? 3. What is your budget breakout? Working dollars versus non-working dollars? Media versus production? Consumer versus trade? 4. Pricing Elasticity studies? 5. How are you performing overall and by line of business? 6. What are your current brand/business performance measures? 7. What programs are driving the highest ROI? 8. What is driving your profit? What are you focusing on right now? 9. What are your forecasting error rates? Fill rates? 10.What are the financial pressures you face? Quarterly results? 5 Finance Brand
  95. 95. We make brands stronger. We make brand leaders smarter. 4 Building analytical stories to get decision makers to “what do you think” stage Analysis turns fact into insight and data breaks form the story that sets up strategic choices.

  96. 96. We make brands stronger. We make brand leaders smarter. • What’s driving growth? Focus on the top factors of strength, positional power or market inertia that has a proven link to driving growth behind your brand. Your Brand Plan will be built on continuing to fuel these drivers. • What’s inhibiting growth? Focus on the top factors of weakness, unaddressed gaps or market friction that can be proven to be holding back the growth of your brand. Your Brand Plan should focus on reducing or reversing these inhibitors to your growth. • Opportunities for growth: Specific untapped areas in the market that would fuel future growth, based on unfulfilled consumer needs, new technologies on the horizon, regulation changes, new distribution channels or the removal of trade barriers. The plan should take advantage of these opportunities in the future. • Risk to future growth: Changing circumstances including consumer needs, new technologies, competitive activity, distribution changes or potential barriers to trade create potential risk to your growth. Build your Brand Plans to minimize the impact of these risks. Deep Dive Summary Agenda for the deep dive Business Review
  97. 97. Key Issues Summary Analysis Drivers Inhibitors • Taste drives a high conversion of Trial to Purchase (65% vs. norm of 50%). • Strong Listings has driven strong Distribution in Food Channels (95%) • Exceptional brand health scores among Early Adopters (“Proactive Preventers”) making it a highly Beloved Brand among the niche. • Awareness among mainstream target (20%) held back due to weak Advertising scores. Low Attention scores and Brand Link scores. • Low distribution at specialty stores at only 16%. Poor sales coverage. • Low Purchase Frequency (2.2 boxes/yr vs. 7.3 norm) even among most loyal early adopters. Opportunities Threats • R&D has 5 new flavors in development. Could launch Peanut Butter in Q4 of 2013 (top 15% in testing), Chocolate Chunks in Q2 of 2014 (top 50%) • Sales broker could specifically target specialty stores, which are in high growth (+15%/year) • Explore social media to convert strong loyal following into more mainstream mass appeal • Mainstream cookie brands could enter the ‘health’ segment through R&D or Acquisition. Rumors that Pepperidge Farms will launch in Q1 2014, and Nabisco Q3 2014. • De-listing of our 2 weakest skus (Oatmeal and Cranberry) because of POS thresholds, could weaken our in-store presence down to 3 skus. • Legal Challenge to “tastes as good as your favorite cookie”.
  98. 98. We make brands stronger. We make brand leaders smarter. “Where you are” helps to set up what you need to do, to get where you want to go? Continue/Enhance • Stay focused on things going right, accelerate against them. Continuous improvement. Minimize/Reverse • Close the leaks, develop turnaround plans or re-focus the team against the trend. Take Advantage of • Build plans to mobilize the brand to see if the opportunity is a winning space for the brand. Avoid/Contingency • Identify and measure the risk, explore plans to avoid. Fill the gap before a competitor. What’s driving the growth? What are the threats? What are the untapped opportunities? What’s inhibiting the growth?
  99. 99. We make brands stronger. We make brand leaders smarter. To determine “where are we”, we use brand health as a signal of the future brand wealth Brand Health WEALTH measures what you can easily see. HEALTH are those measures you can’t easily see. Looking deeper uncovers new questions. Brand Wealth Sales Market Share ROI Profit Stock Prices Growth Rate Price Premium Share Position Brand Funnel Competitive Advantages Voice of Customer Regulatory Satisfaction Scores New Products Internal Alignment Market Trends
  100. 100. We make brands stronger. We make brand leaders smarter. Internal Health: What is the internal beacon that helps all employees understand and live the brand? How much has been communicated about the strategy? The idea of the brand has to be embedded right into the culture in a consistent manner. They have to realize their impact of the brand on the end customer. Internal Wealth: Everyone focused on Profit and Value. Assets, IP, culture, contracts, ownership. Lining up and delivering the brand promise to a clear set of objectives, helps employees see that they are contributing to and sharing in the brand wealth. Everyone should understand where and how they impact profitability. External Wealth: Healthy win in the marketplace. Beloved Brands can leverage success into power and drive wealth. Beloved Brands are more efficient, higher sales, lower costs, better margins, higher over all profits. External Health: Connecting with consumers is a source of power for brands. Understand the brand funnel and how your consumer sees your brand, going through the brand funnel through awareness, trial, repeat to brand loyalty. Build on your strengths and attack your weaknesses Brand Wealth Brand Health Assess situation, looking at health and wealth of the brand, both internally and externally Internal External
  101. 101. Key Issues Brand Health and Wealth Internal Health: Divided team on whether to go after new users or drive frequency among core users. Advertising programs has not created awareness. Channel strength has not reached beyond Food. Innovation has not been consistent. External Health: Gray’s is a beloved brand among a core niche (“Preventers”) but relatively indifferent and unknown among broader audience. Even among loyalists, frequency is very weak. Gray’s is a special treat rather than a usual brand. Internal Wealth: Gray’s has a unique recipe. With marketing investment, profit margins have fallen from 12% to 9%, without seeing the growth ROI from the programs. Debate on whether Gray’s should focus on channel growth vs. marketing led programs. External Wealth: Gray’s has a strong growth rate at +20% CAGR. Sales of $25Million with a 48% gross margins, above category norm of 42%. Gray’s has achieved a 3.3% share at grocery but only 0.4% in the other channels. Internal Brand Wealth External Brand Health
  102. 102. We make brands stronger. We make brand leaders smarter. Building an argument through story telling: Point, Proof, Discuss, Conclusion • In writing a summary or recommendation report, always start off with a clean statement of your opinion point, which is either something you are trying to sell as a reco or instill as knowledge that can be helpful to your cause. • The proof, is usually the back up facts that help to support and tell the story. Like the cause and effect technique, the proof can help to ground the reader in your story. In a presentation, you can find a key visual or chart. • Once you have your point and proof, it enables you to go through a brief discussion of the options of how to support your point. While the proof shows you have done the reasonable logic check, the discussion enables the reader to see that you have thought out the various options, and how you narrowed down to your final reco. We recommend that you only stick to 2-3 main points of discussion. • The conclusion should be a repeat of your original point but this time draw it to a recommendation.
  103. 103. We make brands stronger. We make brand leaders smarter. 5 Turn analytical thinking into projections Extrapolating data into the future, starts with what you are see in the current.
  104. 104. Brand Plan Example of how you fill out the Profit Projections 2014 2015 2016 $ g% $ g% $ g% Comments Net Sales 21,978 44% 27,354 24% 30,385 11% With 2 competitors launching, growth will slow to +11% Cost of Goods Sold 10,333 40% 12,606 22% 13,237 5% New plant production has given lower cost of goods. Gross Margin 11,645 49% 14,748 27% 17,148 16% Gross margins continue to make efficiency gains. GM % 53% 54% 56% R&D 346 3% 352 2% 360 2% Holding steady R&D flavor innovation budget. Marketing Budget 5,528 22% 7,962 44% 8,850 11% Spending up in line with the sales forecast. Ad Merchandisers 568 22% 855 51% 850 -1% TV 1200 42% 900 -25% 1200 33% Increased budget as part of defense plan On Line 233 3% 480 106% 900 88% Staying competitive with shift to on line. Print 1355 22% 1050 -86% 1000 -100% Continued use of specialty health magazines PR 59 15% 77 31% 200 160% Sampling 500 4% 1200 140% 1400 17% Sampling is part of the mix to drive trial. Defense Plan. Sponsorship 100 33% 500 400% 0 -100% Research 200 55% 300 50% 500 67% Added tracking of two competitive launches. Packaging 133 66% 100 -25% 50 -50% Display 430 44% 1300 202% 1400 8% Lock up displays during the competitive launches. Trade 750 1200 60% 1350 13% Increased trade spend to stay competitive. Other SG&A 2,000 22% 289 -86% 989 242% Contribution Income 3,771 22% 6,145 63% 6,949 13% Gains coming from production efficiencies. CI % 17% 22% 23%
  105. 105. We make brands stronger. We make brand leaders smarter. What’s involved in the Brand’s annual financial forecast? • Sales: Project the growth rate for the year, and break it out on a quarterly basis, and then depending on the business a monthly sales forecast. • Market Share: This is like showing your work on the math test. It’s important that you map out the category size with related market share movement that helps to back up the sales call. • Product Costs: Roll up of plant manufacturing costs, related to the materials, production, shipping. Brands heavily reliant on materials that fluctuate on costs should flag the risk potential. • Marketing Spend: Mostly incremental spend by activity versus last year. It could be to support new product launch, an awareness building campaign or a defensive spend versus a competitor. Where it’s not incremental, you could do a specific test market with spend or use a comparable brand as a reference point. • Other Forecasts: Overhead, Headcount, Seasonal needs, R&D costs, Partnerships or Royalties and one-time investments that could be capitalized.
  106. 106. Brand Plan Example of the Marketing Budget Breakout Activities 2014 2015 2016 Comments Merchandisers Artwork 68 55 50 Merchandising went up significantly in 2015, we are expecting it to hold through 2016. Signage 200 300 300 Fees 300 500 500 TV Advertising Production 350 0 350 We make a new TV spot every 2 years, needs re-fresh behind new message for 2016 Talent 50 50 50 Media 800 850 800 TV media holding at 800, as we shift some spend to on line. Print Production 155 200 150 Major part of plan. Decline is more that we are shifting to on line version of same magazines. Talent 100 100 100 Media 1100 850 750 On Line Production 50 100 100 Talent 15 20 80 Media 100 260 520 On line continues to grow as we look to online to target Healthy Proactive Preventers Social Media 20 100 200 Using social media to connect to our most loyal users and creating a following for Gray’s. Sampling Sample costs 100 300 350 Supplier 100 100 125 Both events and retailer sampling shown to drive a high conversion of trial to usage and Event Costs 100 400 425 becoming a Loyal user. This will be a major part of our defense plan to tie up sampling events Retailer Costs 200 400 500 In Q1 to thwart the competitive launch. Research Tracking 100 150 250 Significant increase due to tracking of two new competitors plus ensuring Gray’s is healthy. Testing 100 150 250 Other Marketing Packaging 133 100 50 Sponsorship 100 500 0 Sponsorship did not pay out so it was cut to fund increases in sampling and on line. PR costs 59 77 200 Display Artwork 80 150 150 Display up significantly Signage 200 350 400 Fees 150 700 850 Trade Marketing Coop/Display 750 1200 1350 MARKETING BUDGET 5480 7962 8850 Increased in line with sales growth. Contingency defense spend.
  107. 107. We make brands stronger. We make brand leaders smarter. Using the Brand Funnel can help to do the Brand Math. • Leveraging the brand funnel, you can do the math. ➢ Purchase: 2.5 Million x $5 = $12.5 Million ➢ Repeat: 1 Million x $5 $ 5.0 Million ➢ Loyal: 200K x $5 $ 1.0 Million TOTAL $18.5 Million Assumptions 10 Million ppl @$5 per item Awareness 90% 9 million aware of it Familiar 75% 7.5 million familiar Consider 50% Half the people consider it. Purchase 25% 2.5 million buy it at $5 per Repeat 10% 1 million buy it a 2nd time at $5 Loyal 2% 200k buy a 3rd time at $5
  108. 108. We make brands stronger. We make brand leaders smarter. The Stake in the Ground: A Comparison Measure • Find a comparative stake in the ground, which will help you to make comparisons—either above or below that stake in the ground. • Examples could include last year’s sales, a competitive brand, a similar program or contract from the past, or a different geography extrapolated to the size of the market, market research projections The + or – Analysis • Put together a chart that shows how it might be bigger or smaller then the stake in the ground projection. Bigger Impact Lower Impact Examples: We have a relatively bigger share More advertising dollars Consumers like that flavor better It has a unique positioning More doctor support Example: We are last in the market. Pricing is lower. Not as much consumer appeal. Canadians don’t like that flavor. We are 4th in market. Put a stake in the ground: Map reasons why it’s bigger or smaller than the stake.
  109. 109. We make brands stronger. We make brand leaders smarter. Example of Making Projections Brand X is a new molecule in the medical market It is a new brand that brings new hope for doctors and pharmacists Stake in the Ground: Brand X could be as big as Y in Year 1 which was an 8% share and $80 Million in Sales Bigger Impact Lower Impact • Expected to get 25% more A&P support then what Brand Y got • It has 24 hour claim while Brand Y was only 12 hours • Doctor recommendation should add 25% more in sales • A 4% dollar share in month two, ahead of the 2% share Brand Y got. • Market is a lot more crowded than it was in 2005 when Y launched • Launching in March, which means we missed the Q1 sell in • While it’s a new molecule, it really has very little to say (congestion) • Launching at a significant price premium Conclusion: Brand X will be slightly bigger than Brand Y in Year 1. It will be 10% share and $100 Million in Sales
  110. 110. Brand Plan Example of the building blocks that make up a Sales Projection Forecast for 2015 $27,354 Current LE for the year. Forecasted Gains Comments Added Awareness $6,565 New consumers become aware of Grays Higher Trial Rate 2,000 Using awareness and sampling to drive trial Walmart listing 340 New food listing C store Listing 200 Based on success of last year's test New Innovation 1,500 Two new flavors in Q3 Forecasted Declines Two New Launches 4,500 Ipsos predicted impact on Gray's Lost spring displays 630 Cancelled displays to pay for defense plan Discontinued flavors 430 Cutting two worst performers Net Forecast for 2016 $30,385 Expected gain for 2016 will be +11% growth.
  111. 111. We make brands stronger. We make brand leaders smarter. Before you start, gather up all your Information Sources In Market Data • Share Reports • Customer Sales Data • Panel Data (penetration, frequency) • Competitive Activity Brand Tracking Results • Brand Equity • Advertising • U&A Studies • Brand Funnels • Program Scores: testing and tracking Market Research • Concept Studies • Segmentation Studies (demographics, behaviors, buying patterns) • Focus Group feedback Internal Health/Wealth • P&L Analysis • Feedback from senior sales leaders • Customer feedback or interviews • Concept Studies
  112. 112. We make brands stronger. We make brand leaders smarter. To do a Deep Dive, there are 12 Areas to Dig Into 1. Market Share Trends over the last 5 years, last 12 months, last 12 weeks, broken out by segment, size, flavors. 2. Brand Development: Business Development Index & Market Development Index by Region 3. Brand Funnel Data 1. Awareness, Consideration, Search, Trial, Purchase, Usage, Repeat, Loyal 2. Trial and Repeat studies 3. Compare vs prior period, key competitors 4. Consumer Purchase Behavior: Penetration %, Usage Frequency, Share of Requirements. 5. Consumer trends by age, behavioral demographics, age segments, consumer attitudes, influences and projections. 6. Program Tracking (aided, unaided awareness, brand link, link %,. purchase intention %, made the brand seem different) 7. P&L (5 Year CAGR, % discount off Gross Sales, Gross Margins, GM%, COGs$/unit, SG&A trends, SG&A% to sales, Net Margin, ROI) 8. Sales by channels and regions, Sales by S/ M/L customer, and by specific customers. Sales by flavor, size, by quarter, by month. 9. Pricing: price premium vs competitor, vs private label. High/medium/low pricing. Elasticity Studies. 10.Promotion: In store share of coop ads, display, shelf space, % on deal, depth of deals, responsiveness/elasticity of the deal. 11. Competitor share gains and losses. Look at their share by region, channels, 12.Innovation freshness (% of business that’s been launched within the last 24 months) Innovation: Concept testing scores, feedback from focus groups, purchase intent, forecasted sales.
  113. 113. We make brands stronger. We make brand leaders smarter. 6 Monthly Brand Report Keep everyone on the team informed, engaged and aware of the strategic thinking

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