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Drive Profits through Your Brand

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White paper that shows how to drive profits through your brand. It looks at the P&L and shows the four areas you can use to drive increased profits, whether it's pricing, costs, share or market size. Step by step it shows how to leverage as well as potential watch outs at each step. It also shows how the power of a Beloved Brand can drive more profit. Feel free to download and share with others.

Drive Profits through Your Brand

  1. 1. WHITE HOW TO DRIVE PROFIT THROUGHPAPER YOUR BRAND Graham Robertson | President of Beloved Brands Inc.
  2. 2. Table of Contents PageThe Love for Brands 3Using price as a Weapon 4Managing Costs 5Going After Share 5Increasing the Size of the Market 6How a Beloved Brand is More Profitable 7About Beloved Brands Inc. 8 The more loved the Brand, the More Valuable the Brand Visit the blog at beloved-brands.com
  3. 3. The more loved the brand, the more powerful the brand and in turn the higher growth and profit it can generate.A beloved brand can use the connection with their consumers as a source of power. The tighter the connection toconsumers, the more loved the brand. As a brand becomes more loved, it becomes more powerful, and is able to wieldthat power onto all aspects of the market. A Beloved Brand can entice consumers to keep coming back, it can fight offcompetitors to win with keytargets, it can generate earnedmedia easier, it can challengesuppliers to come back withlower costs and it leverage itspositional power to gainpreferential treatment with realestate owners, government ortour operators. Even employeeswould rather work for apowerful beloved brand than anindifferent brand.Brands move along a “LOVECURVE” going from Indifferentto Like It to Love It, and thenthey’ll make it their Brand forLife. The farther along the curve,the more connected to thebrand. The “Brand Love Curve”can be linked to the BrandFunnel which becomes theunderlying scoreboard. You canuse the funnel to map out the buying process for the consumer, identifying both strategy and tactics to move themalong the funnel towards being more loved. Used properly, the Power of the Brand can help drive the P&L with fourimportant levers: driving increased price, lowering costs, increasing share, creating new markets. As a result, a powerfulconnected brand is much more efficient. And that efficiency can leverage the P&L to invest back in the brand’sconnectivity and drive Profit and over the long run create value for the Brand.As a Brand Leader looks to how to drive their Brand through the P&L, there are four ways the Brand Leader can drive profits, price, costs, share and market size. The more loved the Brand, the More Valuable the Brand Visit the blog at beloved-brands.com
  4. 4. Using price as a weapon to drive Brand Value. It can be a price change, up or down, or it could be trying to get consumers to trade up or trade down. Price Increase: You can do a price increase if the market or brand allows you. It likely has to be based on passing along cost increases. Factors that help are whether you are a healthy brand or it’s a healthy market as well as the power of your brand vs. competition and channel. Price Decrease: Used when fighting off competitor, if you need to react to a sluggish economy or channel pressure. Another reason to decrease price is if you have a competitive advantage around cost, whether that’s manufacturing, materials or distribution.There are watch outs forprice changes. It’s difficult toexecute especially if it has togo through retailers. Youneed to understand powerrelationships–how powerfulare the retailers. Many times,price changes are scrutinizedso badly by retailers that youmust have proof of why you are doing it. It’s likely your Competitors will over-react. So your assumptions you used to gowith the price increase will change right after. And finally, it’s not easy to change back. Trading Up: If you have in a range of products, sometimes it can be beneficial to get consumers to trade up. Can you carve out a meaningful difference to create a second tier that goes beyond your current brand? Do your brand image/ratings allow it? Trading Down: Risky, but you see un-served market, with minimal damage to image/reputation of the brand. In a tough economy, it might be better to create a value set of products rather than lower the price on your main products.Beloved Brands seem more capable at driving profits through pricing, but they also are careful to ensure the premiumdoes not become excessive to create backlash. There are a few watch outs around trying to trade up or down: Premiumskus can feel orphaned at retail world—on the shelf or missing ads or displays. Managing multiple price levels can bedifficult—what to support, price differences etc. For all the effort you go to, make sure your margins stay consistentlystrong through the trading up or down. Be careful that you don’t lose focus on your core business. You can’t be all thingsto everyone. The final concern is what it does your Brand’s image, especially risky when trading downward. The more loved the Brand, the More Valuable the Brand Visit the blog at beloved-brands.com
  5. 5. Managing cost as a weapon to enhance the Brand’s Value. It can be either your cost of goods or the potential selling costs. Cost of Goods Decreases: You are able to use the power of your brand to drive power over your suppliers; you find cheaper potential raw materials, process improvement or find off-shore manufacturing. Cost of Goods Increases: Make sure that you manage the COGs as they increase. Watch out for suppliers trying to pass along costs. But realize that with new technology, investing in brand’s improved image, going after premium markets, offering new benefit or a format change, that cost of good increases could be a reality.The watch outs with managing costs: with cuts, make sure the product change is not significantly noticeable. You shouldunderstand any potential impact in the eyes of your consumer on your brand’s performance and image. Can the P&Lcover these costs, either increased sales or efficiency elsewhere? Managing your margin % is crucial to the long-termsuccess of your brand. Selling Cost Decrease: To counter changes in the P&L (price, volume or cost), it’s very tempting to look to short-term P&L management or look at changes in go-to-market model. Where a brand stands on the product life cycle or how loved the brand is can really impact the selling costs. Even though we think that Beloved Brands have endless spending, they actually likely have a lower investment to sales ratio. Selling Cost Increase: When you’re in Investment mode, defensive position trying to hold share against an aggressive competitor or when you see a proven payback in higher sales–with corresponding margins.Always be in an ROI mindset: Manage your marketing costs as though every DOLLAR has to efficiently drive sales. Realizethat short-term cuts can carry longer term impact. Competitive reaction can influence the impact of investment stance–like a price change, your competitor might over-react to your increases in spending. Externally, the Share and Volume game are traditional tools for brand. Either stealing other users or getting current users to use more. Offensive Share Gains: Use it when you have a significant Competitive Advantage or you see untapped needs in the market. Or opportunistic, use first mover advantage on new technology. Defensive Share Stance: Hold the fort until you can catch up on technology, maintain profitability, loyal base of followers needs protecting.Be careful when trying to gain share. A Beloved Brand has a drawing power where it does gain share without having touse attack modes. Attacking competitors can be difficult. It could just become a spend escalation with both brands justgoing at it. After a share war that’s not based on a substantive reasoning (eg. technology change), there might end upwith no winners, just losers. Many times, the channel will try to play one competitor against another for their own gain.Watch out what consumers you target in a competitive battle: some may just come in because of the lower price and goback to their usual brand. The more loved the Brand, the More Valuable the Brand Visit the blog at beloved-brands.com
  6. 6.  Get Current Users to Use More: When there is an opportunity to turn loyal users into creating a potential routine. Changing behaviours is more difficult than enticing trial. It’s a good strategy to use, when your there’s real benefit to your consumer using more. It’s hard to just get them to use more without a real reason.There has to be a real benefit connected to using more or it might look hollow/shallow. Driving routines is a challenge.Even with “lifesaving” medicines, the biggest issue is compliance. Find something in their current life to help eitherground it or latch onto. When I worked on Listerine, people only used mouthwash 20-30 times a year compared to 700+brushing occasions. So we focused on connecting rinsing with Listerine to the twice daily brushing routine.Increase the Size of Market by Finding New Users or Creating New Uses. Find New Users: When there is an untapped or under-served need. There could be a significant changing demographic that impacts your base. Or you are able to translate/transfer your reputation to a new user group. 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. Create New Uses: Format Line Extensions that take your experience or name elsewhere. Able to leverage same benefit in convenient “on the go” offering. 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. Be careful because the legendary stories (Arm and Hammer) don’t come along as much as we hope.Beloved Brands drive strong sales growth, which helps the P&L work harder and more efficiently.1. Higher volume helps you exert pressure on costs. That could be supply costs, operations costs, distribution over even media costs.2. Get More for Less From the Trade. You can begin exerting power over the sales channels to your advantage– trimming variable trade costs with retailers while demanding more display, prime real estate, coop advertising and more control over pricing. ROI on trade programs.3. Smarter More Efficient Management: manage your inventories, meet customer expectations, control pricing and drive cheaper costs.4. Growth means you start outgrowing any fixed costs. This includes start-up costs, sales force, product plants or R&D costs.5. Lower Cost of Capital: More certainty means lower risk and you can re-invest, knowing the ROI will be quicker and stronger. How the Love for a Brand Impacts on ProfitabilityYou should be looking at your business through the lens of your brand.Yes, the brand promise sets up how the externalcommunity views your brand whether that’s consumers, customers or key influencers. It’s the consistency in deliveringthe promise that connects consumers with your brand, both emotionally and rationally, letting it become a part of theirlives. But equally so, brand becomes an internal beacon to help guide behaviour, decisions, action, structure and theformation of a culture. You should drive your growth and profitability through your brand, with a focus on driving share,enhancing price while managing costs and finding new markets. The more loved the Brand, the More Valuable the Brand Visit the blog at beloved-brands.com
  7. 7. Consumer’s love is a source of power, changing the dynamic versus the channel, suppliers, competitors and even the consumers.Consumers feel more and think less. It’s a part of them. They are fans, craving the brand and build it into their life.They can’t live without the brand. It becomes easier to charge consumers a premium for your brand. You can drivemore sales per consumer creating a routine; you can easily convert them to a broader portfolio of your brands withnew product launches.The Channel needs the brand, caters to them, cannot stand up to them. With a beloved brand, it becomes wellknown that consumers would switch customers before switching brands. This leaves the channel less powerful innegotiations and will give the beloved brand preferential treatment. Price increases, lower trade percentages, tradesupport and success of new launches all impact the P&L positively.Suppliers are at the mercy of the brand. In pure economics, the higher volumes give you efficiencies to drive downcosts and increase your margins. But even more, suppliers build their business completely around the brand andcan’t get out. Pushing the suppliers to cut costs has a big impact on COGs.Agencies will want to be part of the brand. Program costs should be more efficient not just on the volume but onagencies reducing their own margins/pricing in order to have your brand on their client roster. At the agency, thebest creative people will want to work on the beloved brand. This can positively impact program costs—includinglower fees, production costs or access to better talent.It becomes hard for New Brands to break through. New brand starts in the rational position making it difficult tobreak the emotional bond the Beloved Brand has created. It has to be significantly better to even gain considerationbecause the consumer isn’t as rational as they are emotional in their decision making. The Beloved Brand canmaintain their share by holding on to the very loyal base of consumers.No real Competitive Substitutes can match. It becomes less about product and more about connection and howconsumer feels though the brand. The Beloved Brand has a Monopoly on feelings. Takes away ability to substitute tocompete. It’s less about rational points of difference, even going beyond the emotional differences that can beexpressed. It becomes about the experience and the perceptions. The Beloved Brand can easily steal share, driveusers to use more and even create new uses that directly impact the competitors within the scope of the BelovedBrand.Special Treatment from Earned and influenced Media. Traditional Media is more likely to give lower rates based onvolume. But they’ll look for alternative sponsorship or special arrangements for a brand that is loved. They see thebenefits of association and will push to have that brand part of their brand. With the news media, the moves ofBeloved Brand become newsworthy and will have an easier time gaining a return on a PR push. Within the socialmedia area, Beloved Brands are more likely to be liked, shared or searched. This gives the Beloved Brand a muchmore efficient spending to sales ratios. Most marketers will tell you that branding is about positioning. I think positioning is a means to driving growth and making money. The more loved the Brand, the More Valuable the Brand Visit the blog at beloved-brands.com
  8. 8. About Beloved Brands Inc. I started Beloved Brands Inc. to help your brand realize its full potential value by generating more love for your brand.The biggest difference that I offer is that I will challenge your team to come up with new ideas that willdrive real growth. I have walked a mile in your shoes. I am a former business leader with a reputation forfinding growth where others could not, whether it’s a turnaround, re-positioning, new product launch orsustaining success. With my experience, I’ll be able to get you and your team to a strategic actionplan that will set your brand up to win in the market. I bring a unique perspective: I believe the more loved the brand, the more valuable is the brand. Brands move along a Brand Love Curve, going from Indifferent to Like It to Love It and finally to the Beloved Brand status. It is the tight bond created between a brand and its consumers that can be used as a source of power to drive further growth and profits. Brands can find themselves stuck at a point on the curve, uncertain how to get more from their brand. I will help unleash the power of your brand by finding aUnique Selling Proposition that best matches the needs of your consumers with your brand’s assets. Together, we’ll develop strategies that will make your brand become a more beloved brand and in turn a more powerful and more profitable brand. The areas where I can help you the most are: Strategic Planning: I will help your team to develop a Brand Plan with vision, mission, objectives, strategies and tactics. I will help you to discover a Unique Selling Proposition that matches up the needs of your consumers against your brand assets. The plan and new positioning will separate you from your competitors and set you up to win in the market. Marketing Training: I know I can make your team better, because I have done it my entire career. You can get a training program customized for your team, which will meet specific needs or adjusted to any level of your team. I also provide coaching at the brand team level or personalized one-on-ones for key individuals. The Marketing Training program includes: 1. Strategic Thinking 2. Brand Plans 3. Developing Creative Briefs 4. Driving Profits through your Brand 5. P&L and Forecasting Management 6. Judging Advertising Creative 7. Media Planning 8. Marketing Careers The more loved the Brand, the More Valuable the Brand Visit the blog at beloved-brands.com