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Brand Cross-Cultural Index report dec 2013

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Another advertising industry first, The Brand Cross-Cultural Index (BCCI), Powered by BrandZ™ is an innovation brought to market by Ogilvy & Mather and Millward. The first equity assessment tool of …

Another advertising industry first, The Brand Cross-Cultural Index (BCCI), Powered by BrandZ™ is an innovation brought to market by Ogilvy & Mather and Millward. The first equity assessment tool of its kind, powered by the world’s largest brand equity database, it assesses and ranks brands based on their appeal to non-Hispanic White, Hispanic, Black and Asian consumers.

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  • 1. CLICK TO EDIT MASTER TITLE STYLE
  • 2. OVERVIEW CLICK TO EDIT MASTER TITLE STYLE REFRAMING BRAND VALUE IN THE NEW MARKETPLACE From the Authors David Burgos, VP Cultural Strategy, Millward Brown Jeffrey Bowman, Managing Director, Senior Partner, Ogilvy & Mather You’ve seen the numbers. Eighty percent of the United States’ population growth during the next five years will come from multicultural segments: Hispanics, Blacks and Asians*. What does this new marketplace mean for brands and how they are valued by consumers and Wall Street? Companies spend billions marketing and advertising to consumers hoping they choose their brand when they enter grocery stores, visit a retail destination or click on a website. Given the population trends, where do brands stand today and how are they positioned to build value over the next five to 15 years? This was the question we were asking when, through our work at Millward Brown and Ogilvy, we first met in late 2010. We began tossing around hypotheses with the hope of truly understanding brand valuations inclusive of the multicultural customer segments. We developed a simple hypothesis: A brand that appeals to consumers across ethnic segments increases its brand “Power”, or consumers’ predisposition to choose that brand over another. And we decided that Millward Brown’s BrandZ™, the world’s largest brand equity database, would be the perfect tool to test our hypothesis. The findings in this initial study provided enough evidence for us to, with a few minor tweaks in the algorithm, pursue additional categories in 2013: Quick Service Restaurants, Beer and Retail Banking. The analysis allowed us to identify the segments driving brand value and, in many cases, it was not White consumers. We are pleased to introduce the Brand Cross-Cultural Index (BCCI). This new marketing tool is powered by BrandZ and uses Millward Brown’s Meaningfully Different brand equity framework to: 1) rank brands based on their ability to nurture a meaningful connection with consumers across ethnic segments, and 2) gain an in-depth understanding of brands’ total market equity, or predictive volume share based purely on perception, absent of activation factors (Brand Power). We believe you’ll find this inaugural report helpful as you think about growing your brand in the new marketplace, and we look forward to sharing additional insights to support your work. David Burgos david.burgos@millwardbrown.com In November 2012 we released an “alpha” version of the Brand CrossCultural Index (BCCI), looking at the automotive category. 2 * Throughout this report, the terms Whites, Blacks and Asians specifically refer to non-Hispanic consumers that belong to these racial segments. Jeffrey L. Bowman jeffrey.bowman@ogilvy.com
  • 3. THE HEADLINE NEWS CLICK TO EDIT MASTER TITLE STYLE • Room to grow. Brand Power of many brands, including Arby’s, Samuel Adams and PNC Bank, indicates room for growth with Hispanics, Blacks and Asians. Using the Selig Center’s expenditure data, the study estimates that Arby’s, for example, has the opportunity to grow revenue by as much as $334 million if the brand is able to create a meaningful connection with ethnic consumers. Takeaway: It is no longer a choice; brands must win the hearts and wallets of ethnic consumers to stay relevant and grow in the new marketplace. • Meaningfully different ideas work across cultural boundaries. Despite not doing much ethnically-targeted marketing, equity measures for Panera and Yuengling are at the same level or even stronger among multicultural consumers, placing the brands in third and fifth places respectively in their BCCI rankings. Takeaway: Meaningfully different brand ideals that are founded in core human insights will deliver higher ROIs. 3 • Balance relevancy and reach. McDonald’s commands market share driven primarily by its strong salience among multicultural segments (Brand Power of 13.4 percent, followed by Subway at 7.4 percent). The Subway brand, though, actually has the most meaningful connection with consumers across most segments, putting it first in the BCCI ranking. Takeaway: It is about both being in the right places and having the right products and messages. • Cross-cultural marketing works both ways. Not surprisingly, Corona and Modelo, brands of Hispanic origin, have their strongest Brand Power among Latinos (9.8 percent and 3.5 percent respectively). However, these brands enjoy high equities among other segments as well, which propels Corona to number two in the BCCI ranking among beer brands. Takeaway: Leading with ethnic insights can influence many facets of culture and increase brand value.
  • 4. THE BRAND CROSS-CULTURAL INDEX CLICK TO EDIT MASTER TITLE STYLE The Brand Cross-Cultural Index (BCCI) provides two main solutions: • A BCCI Ranking that identifies brands doing the best job at nurturing a meaningful connection with consumers across all racial or ethnic segments of the population, including Whites. The analysis also determines a brand’s Multicultural Opportunity (MCO), which helps identify segments driving the BCCI up or down – multicultural or White consumers. • Brand Power, a cross-cultural equity analysis that allows brand owners to pinpoint growth opportunities and understand the revenue potential of dialing up various marketing levers within and/or across groups. A syndicated tool that looks at different industries, the BCCI serves as a valuable benchmark instrument for marketers seeking to grow their brands in today’s diverse and evolving marketplace. 4
  • 5. EVALUATED THREE CATEGORIES CLICK TO EDIT MASTER TITLE STYLE With this release, we evaluated and assessed three categories. Using an expanded ethnic sample, the tool assessed 58 brands in three industries: Quick Service Restaurants, or QSR, ($120 billion total value), Beer ($92 billion) and Retail Banking ($165 billion). Quick Service Restaurant 5 Beer Banking
  • 6. AT THE CORE OF THE BCCI CLICK TO EDIT MASTER TITLE STYLE Millward Brown’s Meaningfully Different Framework • Consumers have an impression of brands – ideas, memories and emotions – that exerts an influence on their purchase behavior. Depending on how meaningful, different and salient these brand impressions are, consumers are going to be more or less predisposed to choose a brand over others (Power) and pay more for it (Premium), both now and in the future (Potential). • Predisposition and in-market activation is what allows us to determine what drives financial performance. POWER PREMIUM POTENTIAL 6 Millward Brown findings reveal that meaningfully different brands capture five times more volume, command a 13% price premium and are four times more likely to grow value share during the next 12 months, compared to brands lacking meaningful difference. Meaningfully different brands are expected to grow value share an average of 6.9% per year.
  • 7. HOW DOES THE MODEL WORK? CLICK TO EDIT MASTER TITLE STYLE As a first step, the framework determines whether brands are meaningful, different and salient to consumers. It then correlates these metrics to volume and price dependent variables to understand their Power, Premium and Potential. BCCI Ranking Meaningful Power Indicates the extent to which brands build an emotional connection and are seen to deliver against functional needs. Different Is the ability of a brand to command a price premium relative to category average, based purely on perceptions. Reported as an index to reflect its relation with in-market Price Index. Salient Potential Indicates how quickly and easily the brands come to mind. 7 Premium Indicates the extent to which brands set themselves apart from the category by offering something others don’t intangible or tangible – and by leading the way. In the BCCI analysis Is a prediction of a brand’s volume share based purely on perception, absent of activation factors. Reported as percentage share to reflect its relation with Volume Share. Is the probability that the brand will grow value share based purely on current perceptions. As explained later in the report, the BCCI Ranking is calculated using the Meaningful score only. And while all metrics are available, the cross-cultural equity analysis in this summary report focuses on Brand Power.
  • 8. THE DATASOURCE CLICK TO EDIT MASTER TITLE STYLE The BCCI is powered by Millward Brown’s BrandZ database, the world’s largest brand equity database. With a focus on the U.S. market, the 2013 BCCI study covered three categories: QSR, Beer and Retail Banking. Data collection details: • • • • 560 interviews per category National coverage, online English survey Readable sample of four major ethnic segments (Whites, Hispanics*, Blacks and Asians*) Consumers asked to evaluate brands in a competitive context from a category in which they actually shop Powered by 8 * Hispanic sample in this pilot skewed to bilingual and English-dominant consumers, who roughly represent 2/3 of the total Latino population. Asian sample was primarily comprised by respondents of Chinese descent.
  • 9. CLICK TO EDIT MASTER TITLE STYLE THE BCCI RANKING 9
  • 10. THE BCCI RANKING CLICK TO EDIT MASTER TITLE STYLE The BCCI Ranking identifies brands doing the best job at nurturing a meaningful connection with consumers across all segments of the population, including Whites. The analysis also determines a brand’s Multicultural Opportunity (MCO), which helps identify segments driving the BCCI up or down – multicultural or White consumers. Both the BCCI Ranking and the MCO are calculated using the Meaningful score only, which measures the extent to which brands build an emotional connection with consumers, and are seen to deliver against functional needs. The assumption behind the analysis is that more cross-cultural brands are able to establish a meaningful connection with consumers in all/most ethnic segments – including Whites – while less cross-cultural brands appeal to just a few of them. 10 * Questions used to calculate Meaningful score are asked only to consumers who know that brand, therefore results are comparable regardless of whether brands have a national or regional presence.
  • 11. TOP 3 TO EDIT IN THE BCCI RANKING CLICK BRANDS MASTER TITLE STYLE 1 2 3 BCCI: 139 BCCI: 130 BCCI: 125 BEER BCCI: 120 BCCI: 118 BCCI: 116 BANKING BCCI: 123 BCCI: 115 BCCI: 115 • The BCCI, is the average “Meaningful” score across all four major ethnic segments • Brands with higher BCCI have been able to establish a meaningful connection with consumers in all or most ethnic segments (including Whites) • Brands with lower BCCI have room to further strengthen their relationship with some groups 11 QSR
  • 12. WHO IS DRIVING THE BCCI UP OR DOWN (MCO) CLICK TO EDIT MASTER TITLE STYLE Brands whose BCCI is driven up by multicultural* (highest MCO) QSR Brands whose BCCI is driven up by Whites (lowest MCO) QSR MCO: 126% MCO: 120% MCO: 117% Beer MCO: 85% MCO: 90% MCO: 90% MCO: 67% MCO: 83% MCO: 90% MCO: 69% MCO: 73% MCO: 77% Beer MCO: 126% MCO: 115% MCO:113% Banking Banking MCO: 126% MCO: 109% MCO: 108% • The Multicultural Opportunity, or MCO, is a comparison between the “Meaningful” score of ethnic versus White consumers. • Using the White segment as benchmark, a brand with a MCO score below 100% has room to strengthen its connection with at least one of the three minority segments evaluated. A score over 100% means that the connection the brand has with all/most minorities is more meaningful than with Whites. 12 * Brand performance is not necessarily consistent across all three minority segments. Therefore it is important to understand what specific multicultural group(s) is driving up or down a brand’s BCCI, information that is also provided within our BCCI tool.
  • 13. BCCI RANKING & MCO PER CATEGORY CLICK TO EDIT MASTER TITLE STYLE Rk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 13 QSR Brand Subway McDonald's Panera Chipotle Chick Fil-A Wendy's Burger King Taco Bell KFC Pizza Hut Popeyes Starbucks Dairy Queen Arby's Jack in the Box Sonic Papa John's Dunkin' Donuts Domino's Pizza Carl's Jr. Hardee's BCCI 139 130 125 122 119 109 106 101 99 96 94 93 88 88 86 86 85 83 82 82 80 MCO 90% 103% 94% 126% 107% 91% 92% 96% 98% 110% 120% 108% 90% 85% 117% 93% 105% 93% 104% 98% 97% Rk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Beer Brand Heineken Corona Bud Light Coors Light Yuengling Samuel Adams Blue Moon Budweiser Stella Artois Dos Equis Guinness Miller Lite Modelo Michelob MGD Miller High Life Keystone Light Busch Natural Light Pabst Blue Ribbon BCCI 120 118 116 115 114 108 107 105 102 101 99 95 93 91 90 87 83 81 79 MCO 126% 115% 96% 90% 102% 67% 99% 110% 113% 103% 98% 83% 106% 96% 111% 109% 98% 100% 95% 78 90% Rk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Banking Brand Chase Wells Fargo Bank of America US Bank Ally Bank BB&T Capital One PNC Bank TD Bank Regions Key Bank M&T Bank Citibank SunTrust Fifth Third HSBC Citizens Bank BCCI 123 115 115 100 99 98 96 96 95 94 94 91 89 88 87 86 84 MCO 108% 97% 126% 94% 97% 105% 109% 73% 93% 77% 95% 69% 108% 100% 90% 104% 93%
  • 14. CLICK TO EDIT MASTER TITLE STYLE UNDERSTANDING TOTAL MARKET BRAND POWER 14
  • 15. WHAT TO EDIT MASTER TITLE STYLE CLICK IS BRAND POWER? Brand Power is a predictive model of a brand’s volume share based purely on perception, absent of activation factors. It is reported as a percentage to reflect the relationship it has with Volume Share. Drivers of Brand Power for specific brands are illustrated in Millward Brown’s signature Propeller charts: 1. 2. 3. 4. 15 Size of the blades represents how important Meaningful, Different and Salient are in explaining Power within the category, as in a pie chart. Depth of the blades represents how strong the brand performs on each category: Meaningful, Different and Salient. Numbers are indexed against category/segment average. Average circle (100) serves as category benchmark. Red circle at the center indicates the brand’s Power, or its likely share of market based purely on predisposition. * 168 152 16.4 95 Index: 100 Meaningful Different Questions used to calculate Meaningful, Different & Salient scores are asked only to consumers who know that brand, therefore results are comparable regardless of whether brands have a national or regional presence. Salient Power
  • 16. TOTAL MARKET BRAND TITLE STYLE CLICK TO EDIT MASTERPOWER: TOP 3 BRANDS 1 While consumers across most segments view Subway as the most meaningful brand (highest BCCI), McDonald’s Power, or share based purely on perception, is the strongest in the category, primarily driven by its significantly higher saliency. Although Heineken and Corona had the top spots in the BCCI ranking, Sam Adams and two ABInBev brands show the strongest Power when segment sizes are factored in, driven by stronger equity among White consumers. Unlike QSR and beer brands, the highest ranked retail banking brands in the BCCI also hold the strongest Power, or share, based purely on perception, meaning they are doing a consistently better job than smaller competitors at connecting with consumers across segments. 16 2 3 QSR Power: 13.4% Power: 7.4% Power: 6.4% BEER Power: 8.9% Power: 8.2% Power: 6.9% BANKING Power: 15.6% Power: 13.4% Power: 13.4% Power is reported as a percentage to reflect the relationship it has with Volume Share.
  • 17. 13.4% 7.4% 8.9% Bud Light 8.2% 15.6% Chase 13.4% Wells Fargo 6.4% Budweiser 6.9% 5.6% Heineken 6.8% 4.9% Guinness 6.4% Capital One Coors Light Miller Lite 6.4% Citibank 6.1% US Bank 6.1% PNC Bank 4.9% 4.8% 4.6% Corona Blue Moon Dos Equis 4.4% Michelob 4.2% MGD 3.8% 4.4% 5.9% Bank of… 13.4% 8.6% 7.5% 6.7% 5.1% Ally Bank 4.3% Citizens Bank 4.1% 4.2% HSBC 3.4% Stella Artois 3.8% TD Bank 3.4% 3.7% Miller High Life 3.5% SunTrust 3.0% 3.7% Yuengling 3.4% Regions 2.7% 3.6% Busch 3.2% BB&T 2.5% Fifth Third 2.3% 4.2% 4.0% 3.9% 3.9% 3.6% Pabst Blue… 3.1% 3.3% Natural Light 3.1% 3.1% Keystone Light 3.0% Key Bank 2.2% 2.6% Modelo 2.4% M&T Bank 1.8% 0% 5% 10%15%20% 17 Samuel Adams BANKING McDonald's Subway Burger King Wendy's Chick Fil-A Starbucks Taco Bell KFC Pizza Hut Sonic Dunkin' Donuts Panera Chipotle Arby's Papa John's Domino's… Popeyes Dairy Queen Jack in the Box Hardee's Carl's Jr. BEER QSR TOTAL MARKET BRAND TITLE STYLE CLICK TO EDIT MASTERPOWER FULL RANKING 0% 5% 10%15%20% Power is reported as a percentage to reflect the relationship it has with Volume Share. 0% 5% 10% 15% 20%
  • 18. CLICK TO EDIT MASTER TITLE STYLE WHAT’S THE TOTAL MARKET VALUE? 18
  • 19. BRAND POWER BY ETHNICITY CLICK TO EDIT MASTER TITLE STYLE The BCCI allows brand owners to pinpoint growth opportunities by dissecting their brand’s Power by ethnicity. Whites 2 Hispanics 1 Blacks 0 Asians -1 -2 Charts show deviation from brand’s total market Power by ethnicity 2 2 1.3 1 -0.6 -1.2 -1 -2 -2 -3 -3 -4 -4 Tot Market Power: 4.2% / MCO: 93% 0.5 0 -1 -0.2 1 0 0.1 -2.2 -2.6 -3.4 Tot Market Power: 8.9% / MCO: 67% -0.1 -1.8 -3 -2.1 -4 Tot Market Power: 4.1% / MCO: 93% 2 • • 19 Brand Power scores for Sonic, Sam Adams and Citizens Bank, for example, indicate room for growth with all three minority segments, especially the two fastest growing groups: Hispanics and Asians. McDonald’s, on the other hand, seems to have an opportunity to become more meaningful and be more top of mind among White consumers. 0.6 0.7 0.6 1 0 -1 -0.7 -2 -3 -4 Tot Market Power: 13.4% / MCO: 103%
  • 20. REVENUE IMPLICATIONS CLICK TO EDIT MASTER TITLE STYLE Using the Selig Center’s expenditure data, we estimate that Sonic, for example, has the opportunity to grow revenue today by as much as $248M, if the brand is able to create a meaningful connection with ethnic consumers. $248M 4.5% 4.2% 4.1% 4.0% 4.0% 4.3% 3.6% 3.5% 4.0% 2.9% 3.0% 2.5% 2.0% Whites Hispanics Blacks Asians Sonic’s Power within each ethnic segment Total Market Power: 4.2% 20 Down 3.8%, -186M 3.6% 3.3% Up 8.3%, +328M 3.3% A sense of urgency: If all things remain equal, Sonic’s share and revenue will likely decline just as a result of demographic population changes – Census: 98% of growth coming from ethnic consumers, especially Hispanics and Asians. Conversely, Jack in the Box is expected to benefit from this shift. 1.5% 2013 2020 2050 Power shift over time
  • 21. SCENARIO PLANNING – TITLE STYLE CLICK TO EDIT MASTER A CASE STUDY What if Sonic… The BCCI analysis and custom modeling tool help marketers understand the revenue potential of dialing up various marketing levers within and/or across groups. Increased Meaningful by 8% among Hispanics, from 78 to 84 Increased Salient by 20% among Asians, from 76 to 91 2 1 Power goes up to 4.3%, and revenue increases by $179MM Power goes up to 4.3%, and revenue increases by $63MM Whites Hispanic s 0.1 Blacks Asians 0 -1 -2 -0.6 -0.2 -1.2 91 Power 4.3 78 90 -3 94 92 Total Market Power: 4.2% MCO: 93% Index : 100 Revenue estimate based on the Selig Center’s data on consumer expenditure by ethnicity. Power 4 86 85 Index : 100 Power 2.9 76 98 125 106 -4 21 87 Power 3.6 Index : 100 Index : 100
  • 22. IN SUMMARY CLICK TO EDIT MASTER TITLE STYLE • • The BCCI Ranking and Brand Power Score rank brands based on how they are doing in nurturing a meaningful connection with consumers across all segments of the population, including Whites • 22 The Brand Cross-Cultural Index is a unique tool to help brands grow in today’s increasingly multicultural marketplace Given the growth of the multicultural segments in the U.S., it is now imperative for brands to understand where they rank amongst their peers and quantify the brand value they are leaving on the table
  • 23. CONTACT US CLICK TO EDIT MASTER TITLE STYLE For additional information about the Brand Cross-Cultural Index (BCCI), visit www.millwardbrown.com or www.ogilvy.com. Contact David and Jeffrey with questions or to schedule a one-on-one conversation. David Burgos VP of Cultural Strategy Millward Brown david.burgos@millwardbrown.com @DavidBurgosatMB +1 (630) 955-8933 23 Jeffrey Bowman Sr. Partner, Managing Director Ogilvy & Mather jeffrey.bowman@ogilvy.com @jeffreylbowman +1 (512) 466-6592