Brand ChallengesClarity, Leverage, Energy, Differentiation & Relevance

DAVID A. AAKERPROPHETCMO Conference

Monterey, October 2004

Proprietary and Confidential PROPHET1

Brand Building Pays Off!!

Proprietary and Confidential PROPHET2

Intel

Proprietary and Confidential PROPHET3

IBM Brand

�$800 million in communications

�Pre Lou Gerstner—10% of budget on brand

�Post Lou Gerstner—50% of budget on brand� A single agency worldwide—O&M

Proprietary and Confidential PROPHET4

Stock Market Reaction to BE & ROI

-20%

-10%

0%

10%

20%

30%

40%

Large Loss Loss Gain Large Gain

ROI Change

BE Change

Stoc

k R

etur

n

Proprietary and Confidential PROPHET5

Brand Portfolio Challenges

�Clarity & Focus

�Leverage

�Energy

�Differentiation

�Relevance

Proprietary and Confidential PROPHET6

Clarity of Mission

US-based small-package, ground delivery company

Global provider of distribution, logistics, and financial services

UPS Global Advisor

1995 2004

Proprietary and Confidential PROPHET7

Too Many Brands:Focus Missing

Anadrill Schlumberger Well Completion

Dowell Schlumberger Wire line Services

GeoQuest Schlumberger Oilfield Software

Proprietary and Confidential PROPHET8

Brand Portfolio Challenges

�Clarity & Focus

�Leverage

�Energy

�Differentiation

�Relevance

Proprietary and Confidential PROPHET9

Leverage the Brand Portfolio

Body Refreshers

Deodorant Shampoo/Conditioner

Nutrium Body Wash

Beauty Bar� USD $200 Million

Complete Feminine Personal Care brand� Over USD $2 Billion

1994 2004

Proprietary and Confidential PROPHET10

Extension Risks

�Visible lack of success

�Damage associations� Inconsistent with competence

� Inconsistent with quality/prestige

Proprietary and Confidential PROPHET11

Brand Portfolio Challenges

�Clarity & Focus

�Leverage

�Energy

�Differentiation

�Relevance

Proprietary and Confidential PROPHET12

Subbrand or brand that energizes and enhances a parent brand

Branded Energizers based on:� Products� Promotions� Endorsers

Branded Energizer

Proprietary and Confidential PROPHET13

Branded Energizers

IBM ThinkPad TrackPoint

Proprietary and Confidential PROPHET14

The Oscar Mayer Wienermobile (1936)

Branded EnergizersVisibility:

Oscar Mayer Talent Search (Best Practices/Kraft/Brand Bldg)Program:

Proprietary and Confidential PROPHET15

Proprietary and Confidential PROPHET16

Proprietary and Confidential PROPHET17

Tiger Woods

Branded Energizers

Proprietary and Confidential PROPHET18

Brand Portfolio Challenges

�Clarity & Focus

�Leverage

�Energy

�Differentiation

�Relevance

Proprietary and Confidential PROPHET19

“Differentiation is the engine of the brand train…if the engine stops,

so will the train.”- Stuart Agris,

BAV Guru

Proprietary and Confidential PROPHET20

An actively managed branded feature, service, program or

ingredient that provides meaningful differentiation to the parent brand

Branded Differentiator

Proprietary and Confidential PROPHET21

Branded Differentiator

Proprietary and Confidential PROPHET22

Edition

Branded Differentiator

Proprietary and Confidential PROPHET23

Brand Portfolio Challenges

�Clarity & Focus

�Leverage

�Energy

�Differentiation

�Relevance

Proprietary and Confidential PROPHET24

Minivan SUV

Hybrid

Proprietary and Confidential PROPHET25

Carl Zeiss® Vario-Sonnar® T* Lens

Cyber-shot®Digital Camera DSC-F828

Proprietary and Confidential PROPHET26

Maintaining Relevance

TrendNeglectors

TrendNeglectors

TrendResponders

TrendResponders

TrendDriversTrend

Drivers

Proprietary and Confidential PROPHET27

Trend Neglectors

�Just not good at it

�Believe trends are fads

�“Stick-to-your-knitting” firms

Proprietary and Confidential PROPHET28

Maintaining Relevance

TrendNeglectors

TrendNeglectors

TrendResponders

TrendResponders

TrendDriversTrend

Drivers

Proprietary and Confidential PROPHET29

Healthy Fast Food Trend

TraditionalFast Food

HealthyFast Food

Proprietary and Confidential PROPHET30

Adapting with Ingredient Brand

Proprietary and Confidential PROPHET31

Garden Sensations™ Salads

Subbranded Offering

Proprietary and Confidential PROPHET32

Newman’s OwnSalad Dressing

Co-branded Offering

Proprietary and Confidential PROPHET33

Separate Brand

Proprietary and Confidential PROPHET34

Maintaining Relevance

TrendNeglectors

TrendNeglectors

TrendResponders

TrendResponders

TrendDriversTrend

Drivers

Proprietary and Confidential PROPHET35

Trend Driver

20021996

Proprietary and Confidential PROPHET36

Defined and DominatedLager Beer Category

Created theDry Beer Category

Proprietary and Confidential PROPHET37

Targeting womenNutritionally balancedGood tasting

1986Energy Bar

Trend Driver

Category Fragments

Proprietary and Confidential PROPHET38

Trend Driver

Proprietary and Confidential PROPHET39

Brand Portfolio Challenges

�Clarity & Focus

�Leverage

�Energy

�Differentiation

�Relevance

Brand ChallengesClarity, Leverage, Energy, Differentiation & Relevance

DAVID A. AAKERPROPHETCMO Conference

Monterey, October 2004