Brand Finance 101

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The more loved a brand, the more powerful the brand and in turn, the more profitable the brand. This will help the brand manager be better at driving profit for their brand.

Published in: Economy & Finance, Business

Brand Finance 101

  1. 1. Workshop to help brand leaders to understand Brand Finance so they can focus their marketing efforts and manage their brands.
  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. Do you want to make your brand team stronger? We can create a brand training workshop that will help make your brand team smarter. We make brands stronger. We make brand leaders smarter.
  5. 5. We make brands better. We make brand leaders better. The role of Brand is to create a unique IDEA that transforms the brand’s SOUL into a brand REPUTATION which is perceived in the minds and hearts of the CONSUMER, consistently delivered by the EXPERIENCE, creating a BOND, POWER and PROFIT, beyond what the product alone could achieve. We believe the more loved a brand is by consumers, the more powerful and profitable that brand can be.
  6. 6. We make brands stronger. We make brand leaders smarter. LOVE IT INDIFFERENT BELOVED LIKE IT We believe that the more LOVED a brand is by consumers, the more POWERFUL and PROFITABLE that brand will be. 1 Brands move along the BRAND LOVE CURVE increasing the bond with consumers 2 Consumers connect with the BIG IDEA re-enforced with 5 touch-points that support the big idea 3 Consumer bond creates POWER that the brand can leverage with all key stakeholders4 From the brand power comes 8 ways to drive PROFIT through price, cost, share and market size. Promise Experience Purchase Moment InnovationStory Big Idea Media Consumers Influencers Channels Competitors Suppliers New Entrants Employees BrandConsumer Power CostPrice Market SizeShare Higher Margin % Higher Volume
  7. 7. We make brands stronger. We make brand leaders smarter. As consumers move along the Brand Love Curve with certain brands, the bond tighten and their behaviors change INDIFFERENT LIKE IT LOVE IT BELOVED No opinion Crave Brand It will do Outspoken fan Consumer
  8. 8. We make brands stronger. We make brand leaders smarter. Porter’s 5 forces model, plus 3 new power forces shows how a beloved brand is more competitively powerful Outspoken fans who think less and feel more Consumers Channels Competitors Suppliers New Entrants Consumers will switch stores before brands Willing to cut costs to be part of the brand. Can’t duplicate emotional connection Struggle to break bond and momentum Employees Proud, fully engaged, motivated, outspoken fans. Strong culture. Key Influencers Media Outspoken fans carry an influence over the purchase All types of media—paid, earned, search, social, home —all favor beloved brands
  9. 9. We make brands stronger. We make brand leaders smarter. The 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
  10. 10. We make brands stronger. We make brand leaders smarter. We believe that the more consumers love a brand, the more powerful and profitable that brand will be. Brand Love Brand Power Brand Profit
  11. 11. 
 Running the P&L
  12. 12. 
 Act Like an Owner Brand Manager has to have a mindset that reflects the CEO, accountable for growth, costs, profit and shareholder wealth.
  13. 13. We make brands stronger. We make brand leaders smarter. Brand Manager has to reflect the mindset of a CEO Two CEO Performance Reviews: Who had the better year? So if the CEO is accountable for growth, costs, profit and shareholder wealth, then why aren’t the people running the brand equally accountable? CEO #1 • New Logo Design that everyone thought was cool. • Award Winning TV Ad that made it on youtube. • Tom Brady Endorsement. He came to the sales meeting. • Brand Mention On the TODAY show and Jimmy Fallon. CEO #2 • 5 year CAGR was double the category growth. • Gain 22 points of Market Share. Competition divested. • Reduced cost of goods by 10% and overhead costs by 15% • Increased profits by 25%, company valuation up by 43%.
  14. 14. We make brands stronger. We make brand leaders smarter. The brand’s promise and delivery of that promise are a source of power for connecting with consumers. • The brand promise sets up how the external community views your brand whether that’s consumers, customers or key influencers. • The consistency in delivering the promise connects consumers with your brand, both emotionally and rationally, letting it become a part of their lives. • But equally so, brand becomes an internal beacon to help guide behaviour, decisions, action, structure and the formation of a culture. • There’s a connection created between the consumer and the brand that generate a power that can help drive your growth and profitability Most marketers will tell you that branding is just about positioning. We think positioning is a means to driving growth and making money. That makes you a powerful and profitable Brand That makes you a unique Brand
  15. 15. We make brands stronger. We make brand leaders smarter. 7 elements of good strategic thinking Break through point where you see a shift in momentum towards your vision. Proof to everyone this strategy will work maintains focus. Aspirational stretch goal for future, linked to a well-defined purpose. Should scare you a little, but excite you a lot.   Turn the early win into tipping point where you achieve more in return than you put in. Shift in positional power that allows you to achieve your vision. Seize opportunity quickly before others react or it is closes. 1 2 3 4 5 6 7 Vision Early Win Speed An opening in the market, as a potential strategic opening based on change in the market (consumer needs, technology change, new channels) Leverage Gateway Align your limited resources to distinct point you can break through on a path to your vision. Opportunity
  16. 16. 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
  17. 17. 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
  18. 18. We make brands stronger. We make brand leaders smarter. Look at the Wealth of the Brand by knowing how to use the Financial Statements 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   Too many times it becomes about chasing invoices, entering in the right column, doing accruals and making sure that you hit your number. But what do you see when you first look at this P&L? First glance. • Where would you want to start digging in? Or does it look like just one big messy spreadsheet.
  19. 19. 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
  20. 20. 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 Health 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%
  21. 21. 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
  22. 22. 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.
  23. 23. 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
  24. 24. We make brands stronger. We make brand leaders smarter. 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 The 8 ways brand leaders can drive brand profit Brand&Profit&=&(Price&–&Cost&)&x&(Market&Share&x&Market&Size)& 1 2 3 4 5 6 7 8
  25. 25. 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
  26. 26. 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.
  27. 27. 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
  28. 28. We make brands stronger. We make brand leaders smarter. Formulas in Detail – Cost of Goods Sold 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 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
  29. 29. We make brands stronger. We make brand leaders smarter. Formulas in Detail – Gross Margin Sales $ 500 Cost of Goods Sold (COGS) $ 300 Gross Margin $ 200   Gross Margin % 40% Formulas: Gross Margin = Sales - COGS = 500 – 300 = 200 Gross Margin % = (Sales – COGS) / Sales = (500 – 300)/500 = 40% Margin is the most common Calculation for Marketers. Both margin dollars and % are key indicators to the health of a brand.
  30. 30. 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
  31. 31. 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 = (1.6 to the power of 0.2) – 1 = 9.85% Knowing the compound annual growth rate is a crucial volum step to the ROI cacluation. Scared Off By Math, use the online CAGR Calculator at the Investopedia website
  32. 32. 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.
  33. 33. 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
  34. 34. 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
  35. 35. We make brands stronger. We make brand leaders smarter. Formulas in Detail – 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: Contribution Margin = Gross Margin – Total Spend = 200 - 150 = 50 ROI = (Contribution Margin/Total Spend) Option 1: = (Contribution Margin/Total Spend) = 50/150 = 33% Option 2: = (Contribution Margin/COGS + Total Spend) = 50/(150+200) = 11% Companies seem to measure ROI differently. Ask Your Finance Person how they Measure and Calculate ROI
  36. 36. We make brands stronger. We make brand leaders smarter. Common finance terms for you to know • CAGR = Compound Annual Growth Rate • Gross Revenue vs Net Revenue • Gross Profit • Gross Margin % • Gross Profit Contribution • Contribution Income • Opportunity Cost • Return on Investment (ROI) • Production/Plant Efficiency • Marketing Spend Ratio • Incremental Margin Contribution • Incremental Spend • Cost Neutral • Sales Cannibalization (buyer fatigue) • Average Price Per Unit
  37. 37. We make brands stronger. We make brand leaders smarter. As you re-focus a portfolio of brands, look externally to the market to judge investment decisions. • Look at your portfolio of brands and see where your brand fits. Compare market attractiveness versus the brand’s competitive strength. • Brands that are in an attractive market and have a strong share position should be high growth brands (green). Market Attractiveness Brand’s Competitive Strength Brand Portfolio Prioritization External Focus
  38. 38. We make brands stronger. We make brand leaders smarter. Then look Internally with an ROI based on sales growth rates and contribution margin rates • The second way to look at your brand is the projected 5 year growth rate against the brand’s contribution margins. • Brands that high growth and high margin position should be high growth brands (green). Brand Growth Percent Brand Margin Percent Brand Portfolio Prioritization Internal Focus
  39. 39. We make brands stronger. We make brand leaders smarter. Brand Finance: Questions to be Asking • Your CAGR? (Compound Annual Growth Rate) • What are your contribution margins over last 5 years? • What is your budget breakout? Working dollars versus non-working dollars? Media versus production? Consumer versus trade? • Margins broken out by product line? • Pricing Elasticity studies? • How are you performing overall and by line of business? • What are your current brand/business performance measures? • What programs are driving the highest ROI? • What is driving your profit? What are you focusing on right now? • What are your forecasting error rates? Fill rates? • What are the financial pressures you face? Quarterly results?
  40. 40. We make brands stronger. We make brand leaders smarter. Brand Vision To be the first ‘healthy cookie’ to generate the craving, popularity and sales of a mainstream cookie. Make Gray’s a $100 Million brand by 2020. 2016 Goals Goals 2015 2016 Comments Sales $27.5M $30.38M 11% growth rate Share 0.8% 1.2% New triple chocolate 0.5% share Distribution 62% 72% Increase coming mainly from fixing specialty. Awareness 33% 42% Below norm, 80% among niche, < 20% overall Purchase 10% 12% Brand promise & sampling helps drive trial. Repeat 4% 5% High quality Taste converts high repeat Vision and Goals How to lay out your finances into your Brand Plan
  41. 41. We make brands stronger. We make brand leaders smarter. How to lay out your finances into your Brand Plan 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 Wal-Mart listing 340 New food listing C store Listing 200 Based on success of last year's test New Innovation 1,500 Two new flavours 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.
  42. 42. We make brands stronger. We make brand leaders smarter. 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% How to lay out your finances into your Brand Plan
  43. 43. We make brands stronger. We make brand leaders smarter. 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. How to lay out your finances into your Brand Plan
  44. 44. We make brands stronger. We make brand leaders smarter. Summary of Learning on Brand Finance • We believe that the more consumers love a brand, the more powerful and profitable that brand will be. • WEALTH measures what you can easily see. HEALTH are those measures you can’t easily see. Looking deeper uncovers new questions. • Beloved brands use their bond and power to increase price, lower costs, gain share and enter new markets. • From a Brand Leader point of view, how you can drive profit is either through Higher Margin %, which are driven by premium pricing, trading up or down, lower cost of goods and efficient marketing, as well as Higher Volumes, which are driven by stealing share, higher usage, entering new markets and finding new uses.
  45. 45. We make brands stronger. We make brand leaders smarter.
  46. 46. We make brands stronger. We make brand leaders smarter. We will make your team of BRAND LEADERS smarter, so they produce smarter work that drives stronger brand results. We can customize training programs to the needs of your team with a strong menu of interactive brand leadership workshops 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 “Graham makes Brand Leaders. His boot camp style instruction is perfect for the development of anyone in brand management. He challenges you to be better, makes you question your decisions with rigor and provides the right level of coaching to bring you to the next level.” Program Participant
  47. 47. We make brands stronger. We make brand leaders smarter. Strategic thinkers see “what if” questions before seeing solutions, mapping out a range of decision trees that intersect and connect by imagining how events will play out. • At Beloved Brands, we believe that strategic thinking is one of the foundations from which all marketing is built upon. We start with the seven elements of good strategic thinking: vision, opportunity, focus, speed, early wins, leverage and a gateway to gain bigger results. • We use four areas to help frame your brand’s strategy, looking at your competitive position, what is your brand’s core strength, how tightly connected is your brand with your consumer and what is the internal situation your brand faces. • We look at the role of brand strategy in creating a bond, power and profit. • We will lead you through a hands-on workshops that lets you try out concepts on your own brands with hands-on coaching to help you improve. How to think strategically Turning focus into bigger gains for your business Workshop 1: Strategic Thinking
  48. 48. We make brands stronger. We make brand leaders smarter. Before you dive into strategy, you have to dive into the brand’s performance metrics and look at every part of the business—category, consumers, competitors, channels and brand. • At Beloved Brands, we show how to turn data into strategic stories, that help brand leaders express opinions backed by fact.   • We start with good analytical principles and show how to assess category, consumer, channels, brand, competitors to tell health & wealth of Brand • We use the analysis to turn fact into insight and data breaks sets up strategic choices. • We show you how to turn analytical thinking into projections extrapolating data into the future, starts with what you are see in the current. • We summarize how to write analytical stories for management, with a hands-on workshops to develop a Business Review presentation using your own brands. How to do brand analytics Turning data into analytical story telling Workshop 2: Analytical Thinking Specialty" Overall"" 16" 62" 72" 62" Gray's' Dad's' %"By"Channel" 0' 20' 40' 60' 80' Gray's" Dad's" Category" 73" 40" 38" Share"of"Business"from"Food"
  49. 49. We make brands stronger. We make brand leaders smarter. A good Brand Plan provides a road map for everyone in the organization to follow: sales, R&D, agencies, senior leaders, even the Brand Leader who writes the plan. • At Beloved Brands, we explain and then show Brand Leaders how to write each element of their Brand Plans, looking at brand vision, purpose, values, goals, key Issues, strategies and tactics. • We’ll show how your strategic options get executed in terms of media, R&D or the brand experience the culture creates behind the promise. • With each key term, we’ll take it on a test run using your brand for the example, giving feedback on the spot. We’ll use a hands-on workshop to put the Brand Plan into a presentation for management and a very tight one page Brand Plan summary document for all to follow. How to write a brand plan Creating a brand plan that everyone can follow Workshop 3: Brand Plans
  50. 50. We make brands stronger. We make brand leaders smarter. How to write Positioning Statements The promise the brand makes to the consumer The brand positioning statement sets up the brand’s promise to the consumer, impacting both external communication (advertising, PR or in-store) as well as internally with employees who deliver that promise At Beloved Brands, we explain and show brand leaders how to write classic brand positioning statements with the target market, key benefits and reason to believe (RTBs). • We start with the consumer and build a customer value proposition. We’ll teach how to define the target market and build insights to bring their story to life. • We show you the difference between features and benefits, looking at rational benefits (what do I get?) and emotional benefits (how does it make me feel?) • We will show how to turn positioning into a brand concept that can be ready for research testing. • Our hands-on workshop helps you write your brand’s positioning statement with live coaching. Workshop 4: Brand Positioning Target and insights! What do consumers want?! Brand features! What does your brand do?! Rational benefits! What do consumers get?! Emotional benefits! How does that make them feel?! Target All Buyers Not Not
  51. 51. We make brands stronger. We make brand leaders smarter. The brief helps focus the strategy so that all agencies can take key elements of the brand plan positioning to and express the brand promise through communication. At Beloved Brands, we help the brand leaders take the elements of strategy (from the Brand Plan) and positioning (from the Brand Positioning Statement) to distill it down to a very succinct 1-page Creative Brief. • We start with the role of advertising in changing consumer behavior to drive drive the brand’s bond, power and profit. • Before the brief, we show you how to do your homework with an advertising strategy that combines positioning and brand plan. We then turn the Brand Communications Strategy into a creative brief to produce great communications of the brand story • The hands-on workshop is a great tool for developing creative briefs on your brand, looking at objectives, target, consumer insights, stimulus and response. How to write Creative Briefs  Translating the strategy for agencies Workshop 5: Creative Briefs CREATIVE(BRIEF(( 1.""Why(Are(We(Adver3sing( Drive&trial&of&the&new&Grays&Cookies&as&“The&Healthy&Choice&to&Snacking”&brand&posi>oning.&&& 2.#What’s(the(Consumer(Problem(We(are(Addressing( I’m&always&watching&what&I&eat.&&And&then&BAM,&I&see&a&cookie&and&I’m&done.&&As&much&as&I&look&aHer& myself,&I&s>ll&like&to&sneak&a&cookie&now&and&then.&&" 3.((Who(are(you(talking(to?( “Proac>ve&Preventers”.&Suburban&working&women,&35L40,&&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&stressLreliever&and& escape&even&for&people&who&watch&what&they&eat.&&&&" 4.((Consumer(Insights( L&“I&have&tremendous&willLpower.&&I&work&out&3x&a&week,&watch&what&I&eat&and&maintain&my&figure.&&But& we&all&have&weaknesses&and&cookies&are&mine.&&I&just&wish&they&were&less&bad&for&you”& L&&“I&read&labels&of&everything&I&eat.&&I&s>ck&to&1500&calories&per&day,&and&will&find&my&own&ways&to& achieve&that&balance.&&&If&I&eat&a&400&calorie&cookie,&it&may&mean&giving&something&up.”& 5.(What(does(our(consumer(think(now?( I’ve&never&heard&of&Grays&Cookies.&&But&I’d&likely&need&to&try&it&and&see&if&I&like&it.&&If&it&really&does&taste& that&good,&it’s&something&I&might&consider&as&a&snack.&&& 6.((What(do(you(want(your(consumer(to(think/feel/do?((Desired(Response)( We&want&them&to&try&Grays&and&see&if&they&like&the&great&taste.&&" 7.((What(should(we(tell(them?((S3mulus:((benefit)( With&Grays&Cookies&you&can&s>ll&have&a&great&tas>ng&cookie&without&the&guilt,&so&you&can&stay&in& control&of&your&health.&& 8.((Why(should(they(believe(us?( In&blind&taste&tests,&Grays&Cookies&matched&the&market&leaders&on&taste,&but&only&has&100&calories&and& 2g&of&fat.&&In&a&12&week&study,&consumers&using&Grays&once&a&night&as&a&desert&were&able&to&lose&5lbs.&&& 9.((Brand(Posi3oning(Statement( For&“Proac>ve&Preventers”,&Women&30L45,&Grays&Cookies&are&the&best&tas>ng&yet&guiltLfree&pleasure# so&you&can&stay&in&control&of&your&healthy&lifestyle.&&That’s&because&Grays&combines&the&great&taste&in&a& low&fat&and&calorie&sensible&cookie.&In&blind&taste&tests,&Grays&Cookies&matched&the&market&leaders&on& taste,&but&only&has&100&calories&and&2g&of&fat.&&In&a&12&week&study,&consumers&using&Grays&once&a&night& as&a&desert&were&able&to&lose&5lbs.&&& 10.((Tone(and(Manner( Successful,&Mo>vated,&Reliable,&In&Control,&Natural.& 11.((Media(Op3ons( Main&crea>ve&will&be&in&specialty&health&magazines,&event&OOH&signage&and&inLstore.&&Want&to&carry& the&idea&into&digital,&social&media&and&a&microsite.&&& 12.((Mandatories( The&line:&“best&tas>ng&yet&guiltLfree&pleasure”&is&on&the&packaging.&25%&of&Print&must&carry&the&Whole& Foods&logo&as&part&of&our&lis>ng&agreement&and&include&the&Legal&disclaimer&on&the&taste&test&and&the& 12&week&study.&&&
  52. 52. We make brands stronger. We make brand leaders smarter. Brand Leaders rely on agencies to execute. They need to know to judge the work effectively to ensure they are making the best decisions on how to tell the story of the brand and express the brand’s promise. At Beloved Brands, we provide Brand Leaders with tools and techniques for judging communication concepts from agencies, as well as process for making decisions and providing effective feedback. • We talk about the crucial role of the brand leader in getting amazing Marketing Execution • We teach how to make advertising decisions so you can choose great ads and reject bad ads looking at tools such as Attention (A), Branding (B), Communication (C) and Stickiness (S) • We show how to provide copy direction that inspires and challenges the agency to get great Marketing Execution. • We’ll also talk about how to be a better client so you can motivate and inspire your agency. Get better Marketing Execution Evaluating, deciding and giving direction to agencies Workshop 6: Marketing Execution
  53. 53. We make brands stronger. We make brand leaders smarter. “Brand Boot Camp” We have created two separate 3-day training programs for brand leaders. 1. Strategic Thinking 2. Analytics 3. Brand Planning 1. Positioning and Concepts 2. Creative Briefs 3. Marketing Communications Boot Camp A Strategic Planning Boot Camp B Brand Execution
  54. 54. We make brands stronger. We make brand leaders smarter. We work the way that best meets your needs Team Building Off sites Boardroom via Skype Small Group Brand Leader Training Large Group
  55. 55. We make brands stronger. We make brand leaders smarter. LOVE IT INDIFFERENT BELOVED LIKE IT We believe that the more LOVED a brand is by consumers, the more POWERFUL and PROFITABLE that brand will be. 1 Brands move along the BRAND LOVE CURVE increasing the bond with consumers 2 Consumers connect with the BIG IDEA re-enforced with 5 touch-points that support the big idea 3 Consumer bond creates POWER that the brand can leverage with all key stakeholders4 From the brand power comes 8 ways to drive PROFIT through price, cost, share and market size. Promise Experience Purchase Moment InnovationStory Big Idea Media Consumers Influencers Channels Competitors Suppliers New Entrants Employees BrandConsumer Power CostPrice Market SizeShare Higher Margin % Higher Volume
  56. 56. We make brands stronger. We make brand leaders smarter. Our CLIENTS speak out on our behalf “Beloved Brands assisted us in the transformation of our brand positioning and company culture. Graham helped steer people towards finding their own solutions and owning them, as opposed to just giving people the answers.” Keith Gordon, President, NFL Players Inc. “Beloved Brands has been a tremendous asset to Earls. Graham helped us to uncover a new vision, big idea for the Earls brand and strategic business plan. We were so pleased with the results, we used Beloved Brands to develop Earls’ cultural brand service values which were rolled out to all 6000+ employees.” Monique Gomel, VP Marketing, Earls Restaurants “The knowledge base of Beloved Brands is quite vast and practical. They helped to upgrade my strategy team significantly, going through several modules from strategic thinking to creative briefs and overall brand management. Graham is a great developer of people, and I would love to work with him again.” Feyi Olubodun, Head of Planning, Grey Advertising, Nigeria “Beloved Brands delivers exactly on what the promise making brands and brand leaders better. I have worked with Graham twice now, and say confidently his approach and tools truly uncover what’s holding back a brand. His ability to connect complex situations and drive the room to focus, is exceptional. His work led us to uncover a new brand platform that scored 74% Top 2 Box in a robust research project.” Davide Viola, VP Marketing, Melitta Coffee
  57. 57. Graham is one of the voices of the modern Brand Leader. He started Beloved Brands knowing he could make brands stronger and brand leaders smarter. Beloved Brands will challenge you to think strategically so you can create a Brand Positioning, a Brand Concept and a Big Idea for your brand. They will help write Brand Plans that focus everyone who work on the brand and make your team of Brand Leaders smarter so they can produce better work that drives stronger brand results. Graham spent 20 years in Brand Management leading some of the world’s most beloved brands at Johnson and Johnson, Pfizer, General Mills and Coke, rising up to VP Marketing. Graham played a major role in helping win Marketing Magazine’s Marketer of the Year. His public speaking appearances inspire brand leaders to love what they do. Over 4 million marketers have to beloved-brands.com with the desire to become smarter. Graham Robertson at Beloved Brands A NEW WAY to look at Brand Management We make brands stronger. We make brand leaders smarter.
  58. 58. We make brands stronger. We make brand leaders smarter. Work History • Beloved Brands, President, 2010- Present • TD Bank, Head of Advertising, 2009-10 • Johnson and Johnson Consumer, VP Marketing, 2005-08 • Johnson and Johnson Consumer, Group Brand Director, 1999-2005 • Johnson and Johnson Consumer, Senior Brand Manager, 1997-99 • General Mills, Associate Brand Manager, 1994-96 • Coca-Cola, Summer Marketing Intern, 1993 • General Electric, Marketing Training Program, 1989-92 Education • MBA, Ivey School of Business, Western University, 1994 • Bachelor of Commerce, Carleton University, 1989 Graham Robertson at Beloved Brands EXPERIENCE in Brand Management
  59. 59. We would love the opportunity to help you unleash the full potential of your brand and your brand leaders. Graham Robertson • 416 885 3911 • graham@beloved-brands.com

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