Building Brands in Turbulent Times

Building Brands in Turbulent Times
Listening in.
What Excites Me?
What Concerns Me?
What I want to understand more

about?
Ideas for my business..
XPotential 2010
The Crisis Global Economic Downturn
We are facing unprecedented times
Most economies are in recession or with

significantly reduced growth
Unemployment rate in the UK at 7.8% in

March 2010, highest in 12 years
US government implemented a $700bn

bailout package to help businesses
UK government implemented a 500bn

bailout package to help the banks
Export-led economic recover will take until

2011 (Growth <1% predicted in 2010)
(Ernst & Young)
Asian Markets are forced to revise their

economic models from export to domestic
consumption
XPotential 2010
The Consumer in the Economic Crisis:
Most people have lost value

(homes, jobs, savings)
Dramatically reducing spending
Huge uncertainty and less

confident of the future
Trading down in many categories

(food, personal care, fashion)
Stopping spending in others

(housing, cars, white goods)
Putting put more of their salary

into savings or repaying debt
XPotential 2010
The Consumer in the Economic Crisis:
Has higher affinity to Brands they

trust and have bought over a period
of time
Is not open to risk in new

innovations (products or services)
Is not open to make expensive

commitments for the long term
Is open to low risk promotions or

added value offers but mainly with
Brands they trust
XPotential 2010
The Retailers in the Economic Crisis:
Prioritising cash and working capital
De-stocking to free up cash and reduce risk
Asking for longer credit terms and more flexible

supply
Asking for added value and lower prices from

suppliers
Running more promotions and offers (av. +9.6%

since last year)
Average saving offered to shoppers
Branded products 29.0% - 35.4%
Own label 23.3% - 30.4%
Source: Compiled for The Grocer 10 April 2010 issue by Assosia.

Note: Typical saving are calculated on a per-item basis c
XPotential 2010
The Company in the Economic Crisis:
Seeing a dramatic reduction on Top Line Sales
Consequent impact on the bottom line

results
Unrelenting and consistent pressure to

drastically reduce costs and minimise risk:
Typically brand/media communication,

innovation and training will suffer first
More dramatic cost cutting will then follow
Many suppliers are under risk
XPotential 2010
Implication
The Global Economic Crisis threatens all companies. No matter what

country, no matter what sector they operate in.
Brands are a Companys most important asset
In turbulent times, customers and consumers will prioritise their

business with Brands that they trust to deliver value
Companies that focus on building brands will have the best

opportunity to emerge as winners
XPotential 2010
What can Brands do to weather the storm?
XPotential 2010
10
9 Key Success Factors
XPotential 2010
11
Key Success Factors
1. The importance of a Clear Vision and Strategy
XPotential 2010
12

review and align to the year ahead
Crises will come and go
Successful companies will always have a

clear long term Vision and Strategy (3-5
years)
Their Vision and Strategy will always be

built around Building Brand Value not just
the financial measures of Sales and Profit
Successful companies live their Vision,

Strategy and Brands through their people,
process and products to deliver performance
XPotential 2010
13
Importance of a clear Vision and Strategy

Example: Reckitt Benckiser
Global company with 17 Powerbrands (62% total
business), all either top or number 2 in their
market
Constant Innovation to provide better products for
consumers
Maverick innovations are given a chance to trial (e.g.
AirWick FreshMatic most successful launch in RB
history)
An RB product formulation is revised every 8 hours
Products launched in the past 3 years account for
35% to 40% net revenue
Net revenue has more than doubled in the past 10

years
RB Sells 15 million consumer units a day across
180 countries
Global citizen attitude of managers is essential in
open-minded and competitive globalization
Sources: Harvard Business Review, April 2010
The Grocer February 6th 2010
XPotential 2010
14

Review the Vision and Strategy with the team. Understand the latest
trends / data on the economic forecast and align the activities and
measures for the coming year
Do not lose sight of the long term review activities and objectives of
your long term strategy to take into account the crisis but ensure that
you are still building towards your Vision
XPotential 2010
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Communicate: Make sure that your teams are fully aware of the
Vision and Strategy, any changes and understand the
consequences within the crisis
Individuals need to Know and Understand before they will Believe

and Act
XPotential 2010
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Key Success Factors
2. Put the Brand at the heart of the organisation
XPotential 2010
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The Brand is the most important asset of your

company
Your Brand is the sum of your emotional

relationship with your customers or consumers
Brands that are invested in in a constant way will

deliver value to the company over many years
XPotential 2010
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Every individual in the company has the power to

add value to the brand or to take value away
It is critical for everyone in the organisation to

understand their role in building brands
XPotential 2010
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Ensure the Brand is at the Heart of the Organization

Example: Tesco Lotus
The mission of Tesco is to earn a lifetime
of loyalty from its customers
Challenge is to align the individuals in
the company to understand and believe
in the Tesco Lotus Brand
Clarified the Brand and what it means
for Thailand and began to cascade it
through all of the 36,000 employees
Includes People, Processes, Design,
Advertising, Products
XPotential 2010
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The crisis is the most important time

to ensure that everyone understands
the Brand
Ensure that you can explain your

Brand clearly to everyone in the
company
Help them to understand the brand and to

understand how they and their department
contribute to the value of the Brand
Align the departmental objectives with

strategic objectives for the Brands
XPotential 2010
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Key Success Factors
3. Focus on your Core offerings but continue to

invest in innovation
XPotential 2010
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3. Focus on your Core offerings but continue to invest

in innovation
Every successful company has a core set of

products or services that will deliver 80% of the
value to the company
In time of growth the major investment is

focussed on growth drivers while core products
will attract less investment
XPotential 2010
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in innovation
In times of crisis investments will be

reduced so the core becomes more
important in sustaining the critical mass of
the company
XPotential 2010
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in innovation
Example: Pizza Express
During the economic slowdown, less
people are dining out. To keep attracting
their loyal customers families, young
urbanites who enjoy going out and having
a good time, Pizza Express launched a
series of promotions.
The most successful is the Classic
Favourite Menu 10 favourite mains + a
drink for 10.
XPotential 2010
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Focus on the core offering and invest in innovation

Example: Hyundai Assurance Program
Hyundai has been selling more cars when everyone is selling less.
In January of 2009, while nearly every other car manufacturer reported
double-digit sales declines, Hyundai sales were up 14.3% compared to
the same period last year. How did they do it?*
Hyundai Assurance program, allows consumers to return their new
Hyundai without hurting their credit if they lose their jobs.
* Source: Automotive News, www.allcarsreview.com, Hyundai says Assurance program is effective, Feb 2009
XPotential 2010
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in innovation
In these times of crisis review your

portfolio strategy.
Continuing high levels of investment in

new products may not be a good short
term decision
Look for opportunities for incremental

innovation on your core ranges
Look for ways of keeping new news but at

little or no incremental cost to the
customer or consumer
Look for ways of increasing the confidence

level of consumers
XPotential 2010
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Key Success Factors
4. Focus on your loyal and high potential

customers
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4. Focus on your loyal and high potential customers
No company will ever have enough resources to meet the

needs of every customer or consumer
Every Brand has its loyal consumers / customers. These

are also called the heavy users
Always ensure that your loyal customers will appreciate

and benefit from your activities
High potential customers are your loyal customers of the

future. Successful companies identify them and
understand their needs
XPotential 2010
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Focus on loyal and high potential customers

Example: Essential Waitrose
In March 2009, Waitrose launched Essential
Waitrose -- its first value range to counter
perceptions that it was more expensive than its
rivals on everyday items with the pledge:
'Quality you'd expect at prices you wouldn't'.
Due to the economic downturn, Waitrose was
losing a lot of its core customers to other
supermarkets. Essential Waitrose is part of the
work Waitrose is doing to on improve
customers' value perception.
In the week to June 12, sales of the re-priced and repackaged lines were
up between 20 and 60 per cent. The range has also lifted the grocers
overall sales, with sales increasing 10 per cent year on year each week in
the last month.*
* Source: Retail Week,Waitrose value range lifts sales , 22 June 2009
XPotential 2010
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4. Focus on your loyal and high potential customers
Ensure that you have a clear segmentation of your

customers (that you know the core and loyal users,
the high potentials and the low priority)
Ensure that the attention of your sales force,

commercial teams, marketing teams are focussed
mainly on those loyal and high potential customers
Ensure that your teams understand their needs

(from the perspectives of your customers) and build
these into their plans
Use this understanding as a way of adding value to

your customer or consumer
VIP
XPotential 2010
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Key Success Factors
5. Ensure that your business processes and

teams are efficient and effective
XPotential 2010
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5. Ensure that your business processes and teams are

efficient and effective
The Brand of your business is your most

important asset
Your people are the most important way that

you will invest in the brands
For many organisations efficiency is a major

issue people resources are being wasted
XPotential 2010
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Great organisations ensure that they are able

to focus their resources efficiently and
effectively through:
9 fewer priority business processes that drive
the organisation
9 clear and simply described steps /
frameworks for action
9 training and coaching staff in making
process part of their everyday work
XPotential 2010
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Ensure your business processes and teams are

Example: Unilever
As one of the largest FMCG companies in the
world, business process efficiencies are needed to
maintain their place amongst global leaders
In 2008, 1.1 b savings from supply chain and
operational efficiencies 1
Improved transportation network and
carriers to save money and improve
services
Rationalization of manufacturing base to
meet target of streamlining 50-60 sites by
2010
Brought logistic and supply chain operation
in Europe together in one regional structure
based in Switzerland.
Embarking on similar move to centralize
supply chain in Asia by moving regional hub
to Singapore
* Source: Unilever annual repor 2008
XPotential 2010
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Review your Business processes and

prioritise those that deliver the most
value to your Brands
Review the priority processes in

teams to ensure that all the key steps
are clear
Develop training of the teams that

ensures that they know and
understand the process and believe
and act in the best way
Ensure that you have clear measures

(KPIs) designed to measure efficiency
and effectiveness
XPotential 2010
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Key Success Factors
6. Maximise your communication investment
XPotential 2010
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Communication in many organisations is one of the most
expensive investments of brand building
With the huge fragmentation of media channels
communicating with customers and consumers has
never been more difficult
Communication is also one of the most difficult
investments to measure in terms of a ROI
Communication can take many forms from the
traditional media (radio, TV, Press) through to new
media (sms, internet) through to in-store
communication (Point of Sale, Promotions).
XPotential 2010
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Successful organisations have a clear focus of communication on their
target audience, a Single Minded Message and a deep understanding of
the touch points with their consumer / customer
Great communication ensures that the consistent message is received
through a variety of different and relevant media
XPotential 2010
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Understand the target audience and the
relevant touch points
Review media channels relevant to your
touch points and each ones role in
delivering the message
Prioritise budget spending in media
channels where your message will be
heard.
Address at least 2 objectives: creating
awareness and driving purchase
Create a communication strategy that
ensures that you align the media channels
to deliver a synergistic impact on the
consumer
XPotential 2010
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Key Success Factors
7. Manage your costs and cash in the best

interests of your Brands
XPotential 2010
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7. Manage your costs and cash in the best interests of

your Brands
The Day to Day management of costs and

cash is a core skill which is well controlled
by all organisations
Successful Brand focussed organisations

will continually be challenging themselves
to review and reduce costs across their
entire value chain
The economic crisis is forcing companies

to dramatically reduce costs
Successful organisations will reduce cost

effectively but without harming their
brand
XPotential 2010
42
7. Manage your costs and cash in the best interests of

your Brands review your entire cost structure
Review your entire cost structure in a

transparent way (include all relevant
stakeholders / department heads)
Understand all the main cost drivers of your
Brands and Business
Ensure that the real / medium long term

implications on the Brand for reductions or
eradication is clear
Set your self a stretching target for reduction

of costs and ensure that you continue to
deliver cost reduction as part of the long
term plan
Communicate the importance of cost

reduction across the entire organisation
XPotential 2010
43
Manage your costs and cash in the best interest of

your brand
Example: Sainsburys
Sainsburys like-for-like sales were up 5.5% in
2009. Accomplished by cost-cutting, pricecutting and Jamie Olivers appeal1
>75% total cost inflation offset by cost
efficiency programs.2
Significant savings made on improved
distribution network
Cost savings made without touching the
customer experience and without major
changes to communication budget for the
brand
"The fund-raising will

provide us with the financial
flexibility to take advantage
of current opportunities to
grow our business further
and faster."
Improved trade cash flow management,

supported by the growth of Sainsburys supply
chain financing platform has achieved a
working capital improvement of 167 million on
last year in cash generated from operations
Justin King, Sainsburys Chief Executive
1
2
3
Source: www.guardian.co.uk, 17 June 2009, Has Justin King rescued Sainsburys by design or is he just lucky?
Source: Sainsburys annual report 2009
Source: www.j-sainsbury.co.uk, press release 17 June, 2009
XPotential 2010
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Key Success Factors
8. Focus on market share and profit
XPotential 2010
45
8. Focus on market share, working capital and profit
The Crisis is putting pressure on organisations

especially their growth
Successful organisations use a portfolio of

measures of Brand Value including the traditional
measures of financial accounting
Market Share is a key measure for a financial

crisis where markets are falling
Brands that focus on Market Share growth in a

financial crisis will be in a much stronger position
to benefit
Profit and Working Capital measures are essential

to ensure that the fundamentals of the business
are healthy
XPotential 2010
46
Focus on market share and profit

Example: Virgin Atlantic
Virgin Atlantic reported doubling of profit in
year ended Feb 2009 compared to British
Airways which reported a record 401m pretax loss
Virgin Atlantic trades in the same markets as
British Airways but has less exposure to the
financial services sector and is stronger in
long haul leisure1
Premium air travel is a vital revenue source
for airlines
Virgin Atlantic prides itself on listening to
its customers to provide fun, class and
comfort
1
We have increasing
share in the more
profitable premium
sector1
Steve Ridgway: Virgin Atlantic chief
Source: Telegraph.co.uk, 26 May 2009 Virgin Atlantic boss warns no airlines will make money this year
NewYorkTimes 5 Feb 2010 British Airways posts surprise quarterly profit

http://finance yahoo com Virg
XPotential 2010
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8. Focus on market share, working capital and profit
Review your key measures especially growth

and make realistic adjustments to the
objectives
Focus your teams on building market share
Look for opportunities in your key customers

to collaborate and build share
Align the finance team / supply chain and

commercial teams to come up with activities
for working capital improvement to reduce
debt
Make the measures the main topic of every

management team agenda
XPotential 2010
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Key Success Factors
9. Manage the short term but prepare for the

longer term
XPotential 2010
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9. Manage the short term but prepare for the longer

term
Every company will go through periods of

growth and periods of decline
Successful companies manage short term

decline to ensure that they emerge stronger
at the end
Successful companies use the opportunity

of the economic crisis to review their plans
and business structure
Successful companies will understand the

long term impact of the crisis on their
consumers, customers and markets
XPotential 2010
50
9. Manage the short term but prepare for the longer

term
Use trend analysis to develop scenarios of the long term

impact / changes to the markets you operate in
Ensure that as a management team you understand the

long term implications for your business, brands and
consumers and customers
Review the foundations of your Vision and Strategy to

ensure that they are still strong and will be sustainable for
the long term
If not then adapt or develop a new Vision and Strategy
XPotential 2010
51
Summary
The Global Economic Crisis threatens all

companies. No matter what country no
matter what sector they operate in
Brands are a Companys most important

asset and in these turbulent times
customers will want to do business only
with Brands that they trust
Those companies that focus on their

brands will have the best opportunity to
come out of this crisis as winners with
even stronger and more trusted brands
XPotential 2010
52
Key Success Factors

1.
The importance of a Clear Vision and Strategy
2.
Put the Brand (s) at the heart of the organisation
3.
Focus on your Core offerings but continue to invest in innovation
4.
Focus on your loyal and high potential customers
5.
Ensure that your business processes and teams are efficient and
effective
6.
Maximise your communication investment
7.
Manage your costs and cash in the best interests of you Brands
8.
Focus on market share and profit
9.
Manage the short term but prepare for the longer term
XPotential 2010
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Manage the short term and prepare

for the longer term
Example: Honda UK (Swindon Plant)
Due to the economic slowdown, the
Honda Swindon Plant shut down for 4
months.
Voluntary redundancy was taken by 1300
workers, the remaining 3400 workers
agreed to 3% pay cut for 10 months.
The Honda Jazz Hondas best selling
small car, previously only built in Japan
and China will be built at the Swindon
later this year.
To manage the short term, Honda shut
down temporarily while maintaining their
skilled and loyal workforce. To prepare
for the long term, Honda used the shut
down period to update, streamline and
modernise the production line in
preparation for production of the Jazz.
XPotential 2010
54
Our Credentials
XPotential is a brand focused strategy consultancy that
helps to align individuals, functions and organisations
throughout the world to create and deliver Brand Value.
We work with some of the worlds biggest brands to deliver
outstanding results. We orientate individuals and teams in the
organisations to focus their responsibilities to deliver value to
their most important asset - their brand. We are proud to have
worked with over 30 companies in over 50 countries and
touched tens of thousands of individuals, delivering some of
their most impressive business results.
We do this through working closely with the leadership of
organisations to develop Brand Centric Vision and Strategy
through a deep understand of the challenges and opportunities
for the Brands and the Company, the Brand Vision and the key
audience for change.
We then design and implement a programme of brand centric
change including communication, engagement, training and
follow up. We have worked both cross functionally and also
through specific areas including sales, supply chain,
innovation, marketing, R&D, finance and HR.
XPotential 2010
55
We align individuals, functions and organisations,

throughout the world, to create and deliver brand equity
XPotential (Brasil)
Av. Divino Salvador, 716
Moema
So Paulo- SP
CEP 04078-012
XPotential Ltd (UK)

4/5 Market Square
Marlow
Bucks
SL7 3HH
XPotential (Thailand) Co. Ltd

Q House Lumpini
Level 27, 1 South Sathorn Rd
Tungmahamek, Bangkok
Thailand, 10120
Tel: (55) 11 5051 9194

Fax: (55) 11 5054 0421
Mobile: (55)11 9939-0203
Tel: +44 1628 485847

Fax: +44 1628 478065
Tel: +66 (0) 2610 3706

Fax: +66(0) 2610 3601
contato@xpotential.com.br
info@xpotential.co.uk
info@xpotential.co.uk
http://www.xpotential.co.uk/
XPotential 2009
56
Building Brands in Turbulent Times
XPotential 2010
57

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Building Brands in Turbulent Times

What Excites Me?

What Concerns Me?

What I want to understand more

Ideas for my business..

The Crisis Global Economic Downturn

We are facing unprecedented times

Most economies are in recession or with

Unemployment rate in the UK at 7.8% in

US government implemented a $700bn

UK government implemented a 500bn

Export-led economic recover will take until

Asian Markets are forced to revise their

The Consumer in the Economic Crisis:

Most people have lost value

Dramatically reducing spending

Huge uncertainty and less

Trading down in many categories

Stopping spending in others

Putting put more of their salary

The Consumer in the Economic Crisis:

Has higher affinity to Brands they

Is not open to risk in new

Is not open to make expensive

Is open to low risk promotions or

The Retailers in the Economic Crisis:

Prioritising cash and working capital

De-stocking to free up cash and reduce risk

Asking for longer credit terms and more flexible

Asking for added value and lower prices from

Running more promotions and offers (av. +9.6%

Average saving offered to shoppers

Branded products 29.0% - 35.4%

Own label 23.3% - 30.4%

Source: Compiled for The Grocer 10 April 2010 issue by Assosia.

The Company in the Economic Crisis:

Seeing a dramatic reduction on Top Line Sales

Consequent impact on the bottom line

Unrelenting and consistent pressure to

Typically brand/media communication,

More dramatic cost cutting will then follow

Many suppliers are under risk

The Global Economic Crisis threatens all companies. No matter what

Brands are a Companys most important asset

In turbulent times, customers and consumers will prioritise their

Companies that focus on building brands will have the best

What can Brands do to weather the storm?

9 Key Success Factors

Key Success Factors

1. The importance of a Clear Vision and Strategy

1. The importance of a Clear Vision and Strategy

Crises will come and go

Successful companies will always have a

Their Vision and Strategy will always be

Successful companies live their Vision,

Importance of a clear Vision and Strategy

Net revenue has more than doubled in the past 10

1. The importance of a Clear Vision and Strategy

1. The importance of a Clear Vision and Strategy