15
Brand Power
Brand Power
Brand Power
Edited by
Paul Stobart Director, Interbrand Group plc
.......................................................
© Paul Stobart 1994 Softcover reprint of the hardcover 1st edition 1994 978-0-333-57013-5
All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission.
No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 9HE.
Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages.
First published 1994 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world
ISBN 978-1-349-12842-6 ISBN 978-1-349-12840-2 (eBook) DOI 10.1007/978-1-349-12840-2
A catalogue record for this book is available from the British Library.
10 98 7 6543 04 03 02 01 00 99 98 97 96
Contents
List of Figures vii
List of Illustrations viii
List of Plates X
Acknowledgements xii
Notes on the Contributors xiii
Preface XV
Introduction 1 (Paul Stobart, Director, Interbrand Group plc)
1. The Importance of Brand Power 17 (Donald Keough, Former President and Chief Operating Officer, The Coca-Cola Company)
2. Creating Brand Power 33 (Sir Anthony Tennant, Former Chairman, Guinness plc)
3. The Management of Global Brands 53 (Camillo Pagano, Former Executive Vice President, Nestle SA)
4. The Importance of Market-Perceived Quality 65 (Dr Bradley Gale, Founder, Market Driven Quality Inc.)
5. Adding Brand Value 85 (Sir Allen Sheppard, Chairman and Group Chief Executive, Grand Metropolitan plc)
6. Power Branding in the Automotive Industry 103 (Professor Werner Niefer, Former Chairman, Mercedes-Benz AG)
v
. VI CONTENTS
7. The Emergence of Retail Brand Power 121 (Terry Leahy, Marketing Director, Tesco Group plc)
8. From Bulk to Brand 137 (Nicolo Polla, Marketing Director, Galbani)
9. Franchising: How Brand Power Works 151 (Luciano Benetton, President, Benetton)
10. Protecting Power Brands 167 (Garo Partoyan, Mars Incorporated)
11. Brand-Based Strategy and Structure: The Scandinavian Experience 189 (Carsten Dahlman, Senior Partner, Siar Bossard)
12. Assessing Brand Value 209 (Michael Birkin, Group Chief Executive, Interbrand Group plc)
13. Brands, Culture and Business in Japan 225 (Keijiro Nakabe, Maruha Corporation)
14. Brand Power: The Future 241 (John Murphy, Chairman, Interbrand Group plc)
List of Figures
3.1 Summary of the changes in the marketing environment 56
4.1 Market-perceived quality boosts margins 66 4.2 Power brands: the essentials 69 4.3 Chicken business: cu~tomer' s purchase decision 71 4.4 Model of brand selection 73 4.5 Superior quality and heftier advertising go together 74 4.6 Improving quality boosts market share 75 4.7 Market leaders spend to build the franchise 75 4.8 Superior quality and heftier advertising yield price
premiums 76 4.9 Profitability, market rank and the advertising/
promotion mix 77 4.10 Market leadership is based on superior market-
perceived quality 79 4.11 Quality and market position drive profitability 81 5.1 Brand leaders in the UK and USA: 1933-93 91 5.2 World class brand classification system 96 5.3 Principles of brand valuation 97 6.1 Mercedes-Benz key indicators 109
11.1 Factors creating change in the Scandinavian consumer market 192
11.2 Different types of business structure 201 11.3 The characteristics of different business structures 204 12.1 Calculating brand earnings 214 12.2 Brand strength vs. brand value 219 12.3 Calculating brand value: earnings multiple and DCF
methods 221 13.1 The MMBM Programme 233 14.1 Brands purchased 1988/90- goodwill as a
percentage of purchase price 244
.. VII
List of Illustrations
I.1 The Mars bar 5 !.2 Sony 7 1.1 Coca-Cola distribution 20 1.2 Coca-Cola marketing 21 1.3 Coca-Cola commercial 23 1.4 Coca-Cola vending machines 24 1.5 Coca-Cola street vendor 25 1.6 Coca-Cola in Time magazine 27 1.7 Coca-Cola Sprite illustration 29 1.8 Coca-Cola in outer space 30 1.9 John F. Kennedy and Coca-Cola 32 2.1 Guinness 34 2.2 Tanqueray Sterling vodka 38 2.3 Old Parr Elizabethan whisky 40 2.4 Johnnie Walker golf sponsorship 41 2.5 Craftsmanship in Dewars' production 42 2.6 Johnnie Walker Red and Black Label 47 2.7 Canned Guinness 50 2.8 Advertising canned Guinness 52 3.1 Kit Kat 54 3.2 Milo world-wide 55 3.3 Nesquik packaging 59 3.4 Original Maggi brand products 60 3.5 Extended Maggi brand range 61 3.6 Buitoni Italian cuisine 63 3.7 Nescafe 64 5.1 Smirnoff 92 5.2 Grand Metropolitan brands 100 6.1 Mercedes-Benz logo 104 6.2 Mercedes-Benz SK trucks 109 6.3 Mercedes SL 111 6.4 Mercedes badge 112 6.5 Mercedes cars 114
... VIII
. LIST OF ILLUSTRATIONS IX
6.6 Mercedes buses 115 6.7 Mercedes and motor racing 118 7.1 T esco store in the 1940s 123 7.2 Tesco store in the 1960s 124 7.3 Tesco Healthy Eating products 126 7.4 Tesco's 'shopping environment' 128 7.5 Tesco delicatessen counter 130 7.6 New Tesco superstore 135 7.7 Tesco and image advertising 136
10.1 Mars M&M brand 169 10.2 Distinctive designs 170 10.3 Uncle Benn's rice 171 10.4 Distinctive product shapes 172 10.5 Mars brand extended 180 10.6 Famous trade marks 185 13.1 Original Taiyo Fishery logo 225 13.2 Maruha: new company name and logo 226 13.3 Maruha flag on fishing fleet 228 13.4 Maruha brand on processed foods 230 13.5 Marivesta support brand 235 13.6 Yokohama BayStars 236 13.7 BayStars and the community 238
List of Plates
1 2 3 4 5 6 7 8 9
10
11 12 13 14 15
16 17
18
19 20
21 22 23
24 25-26
27
X
Kodak: an abstract name full of brand equity Bass: the first registered trade mark in Britain Quaker: an enduring identity Hertz: a power brand in car rental services Kellogg's: pre-eminent in breakfast cereals Marlboro: an internationally recognised icon Lea & Perrins Worcestershire Sauce Guinness: a powerful brand identity Cinzano: international brand power Malibu: a strong brand in Grand Metropolitan plc's portfolio Baileys: a marketing success story Green Giant: turning a commodity into a power brand J&B Rare: a powerful heritage Galbani: the best in Italian cheese Some cheeses, like mozzarella, appear in well-known shapes to promote recognition Certosa: a brand name for crescenza cheese Galbani's brand power enhances the appeal of provolone cheese Dolcelatte: a brand name prominently on all cheese packaging Dolcelatte: a brand name for gorgonzola cheese Gal bani's logo is shown prominently on all cheese packaging The ubiquitous 'camioncini' of Galbani Benetton: brand power in fashion The retail experience is an important element of the Benetton brand mix Provocative advertising from Benetton Benetton raises awareness on issues others might wish to disguise Benetton' s advertising is sometimes controversial
LIST OF PLATES Xi
28 The Colors magazine from Benetton 29 Benetton and Grand Prix racing 30 Sports sponsorship from Benetton 31 M&M's 32 Whiskas: the best-selling pet food in the world 33 Pedigree: a power brand in dog food 34 Mars bar: a power brand since 1932 35 Snickers: a strong international confectionery brand 36 Another power brand from the Mars portfolio 37 Mars Bar Ice Cream: a highly successful line extension 38 Hovis: capturing brand value 39 Ritz crackers was acquired by BSN in 1988 40 Steinlager: one of New Zealand's most famous brands 41 Adidas and Slazenger: power brands in sport 42 The Whyte & Mackay brand portfolio 43 Cucci: protecting brand power 44 Kraft was acquired by Philip Morris for $12.9 million in
1988 45 Coca-Cola: the world's number one brand 46 McDonald's: the world leader in fast foods 47 Heineken: brand power in beer 48 Swatch: creating real brand power in less than a decade
Acknowledgements
The editor and publishers would like to thank all those brand owners and their agents and associates who have supplied information and illustrations for this book. It should be mentioned that virtually every product or corporate name mentioned in the book is a registered trade mark and virtually every logo reproduced in the book is the specific property of a company .
.. XII
Notes on the Contributors
Luciano Benetton is President of Benetton Group SpA, world leader in the design, manufacture and distribution of casual clothing for men, women and children.
Michael Birkin is Group Chief Executive of Interbrand Group plc, the leading branding consultancy, and has considerable experience in the brand valuation field.
Carsten Dahlman is a senior partner of Siar Bossard, the Scandinavian arm of the international management consultancy group, Groupe Bossard.
Dr Bradley Gale is the founder of Market Driven Quality Inc, a market strategy firm based in the USA. He served for 12 years as Research Director for the PIMS* programme (* Profit Impact of Market Strategy).
Donald Keough has recently retired from his position as President and Chief Operating Officer of the Coca-Cola Company, the world's largest manufacturer of soft drinks and owner of one of the world's true power brands, CocaCola.
Terry Leahy is Marketing Director of Tesco Group plc, one of Britain's largest and most successful food retailing organisations.
John Murphy is Chairman of Interbrand Group plc, the leading branding consultancy, and an acknowledged expert on brand strategy.
Keijiro Nakabe is President of Maruha Corporation, the biggest food and fishery group in Japan.
. .. XIII
XiV NOTES ON THE CONTRIBUTORS
The late Professor Werner Niefer was President of Mercedes-Benz AG, the manufacturer of luxury motor cars, buses and trucks. Shortly after his retirement from MercedesBenz Professor Niefer died. Professor. Niefer presided over Mercedes-Benz at a time of significant growth and expansion. He will be sorely missed by all who knew him.
Camillo Pagano was previously Executive Vice-President of Nestle SA, responsible for International Brand Development until his retirement in 1992.
Garo Partoyan is General Counsel, Marketing and Technology, for Mars Incorporated, owner of the internationally renowned Mars confectionery brand.
Nicolo Polla is Marketing Director of SpA Egidio Galbani, the world's largest manufacturer of branded cheese. Egidio Galbani is now part of the BSN Group.
Sir Allen Sheppard is Chairman of Grand Metropolitan plc, one of Britain's largest companies and owner of some of the world's most powerful food and drinks brands.
Paul Stobart (editor) is a Director of Interbrand Group plc, the leading branding consultancy.
Sir Anthony Tennant has just retired from his position of Chairman of Guinness plc, owners of the famous Guinness stout and a large portfolio of internationally acclaimed spirits' brands.
Preface
Paul Stobart Editor
An increasing number of the world's most influential companies have come to recognise that their brands are of enormous value and that failure to maintain and support these important assets can lead to failure of the company itself.
Many in the world of marketing have commented over the years on the power of individual brands and the value that they have in contributing to the financial well-being of a company. Seldom, however, have the owners of the world's leading brands been invited to give their views on the importance of brands and branding. With this in mind, my colleagues and I at Interbrand set out to establish whether leading brand owners would be interested in contributing to a book whose primary objective was to provide brand owners with the opportunity to put forward their own views on the power and importance of brands. The response was overwhelming -brand owners from all round the world were keen to take part in what they believed to be an important initiative.
The title of the book, Brand Power, was chosen quite deliberately. Brands are powerful strategic weapons which, if handled correctly and managed sensibly, can provide their owners with considerable rewards. If brand power is harnessed effectively, growth in market share and corporate profitability normally follows.
The topics covered in this book are all connected in some way with the central theme of the importance of brand power. Contributions from senior executives from Coca-Cola, Guinness, Nestle, Grand Metropolitan, Mercedes-Benz, BSN,
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XVi PREFACE
Benetton, Tesco and Mars cover subjects such as the importance of brand power and how to create, manage and value brand power. The Japanese perspective on the potential for power branding in the Japanese market is put forward by the President of Maruha Corporation, one of the world's leading fishery and food manufacturing groups. And, although the views of the world's great brand owners form the centrepiece to this book, I have also included important contributions from academics, management consultants and marketing experts.
I would like to thank all the contributors to this book for all the work they have put into their respective chapters. It has been a great privilege to work so closely with such a knowledgeable panel. Without them and their efforts this book would not have been possible.
I am also grateful to many of my colleagues at Interbrand for their support and help during the preparation of Brand Power. In particular I would like to thank Debbie Kitson and Claire Yates, who were responsible for much of the administrative control of what proved to be a highly complex and logistically difficult process. I am also indebted to John Murphy, Chairman of Interbrand, whose advice and assistance proved so helpful throughout the entire Brand Power project.
London PAUL STOBART
