IMPACT OF BRANDS THROUGHOUTTHE VALUE CHAIN
gain importance in an increasingly complex world! management is a key issue for all players in theautomotive value brands operational - how to implement brandmanagement- 2 -BCN-8010-97000-010-197E
gain importance in an increasingly complex world!- 3 -BCN-8010-97000-010-197E
A brand is a trustworthy, distinctive promise to the customer that … … differentiates similar products from competition … adds value in the mind of the consumer to the objective product performance … builds strong relationships with customers based on emotional values … provides security and familiarity to facilitate the purchasing decisionSource: Roland Berger & Partners- 4 -BCN-8010-97000-010-197E
Las marcas añaden valor para diferenciar los productosrtrProductBrandAdded valueProduct characteristcs Designed, developed and manufactured Created in the minds of the customers Objective performance based on Perceived quality based on emotionalmeasurable characteristicsvalues Limited lifecycle with decreasing value at Unlimited existence with increasing valuethe endover timeSource: Roland Berger & Partners- 5 -BCN-8010-97000-010-197E
Successful brands have a sharp profile, are pre-pointed to a target worldbased on authentic valuelr r rfil ...Clear and sharp profile ...0246810“Fun” rit t trt rl… prepointed to a target world“Quality”“Solidarity”“Hedonism”“Solidarity”Thrill & FunEnvironment/“Price”DesignAudiSatisfaction of ResponsibilityemotionalNew &needsClanningCool tti, … based on authentic, SeatReason/riil, rl loriginal, real valuesSenseVWServiceSmartQualityShoppingSatisfaction of SafetySkodafunctionalComfortneedsPrice, Price,PriceCustomized“Price”“Value”"Automotive joy of life"ConsumptionConsumptionlimitationmaximization Expressive design Lifeable and design experience Fun to drive Adventageous value for money ratio- 6 -BCN-8010-97000-010-197E
Everyday, everyone of us needs to handle enormous amounts of information -brands are the light towers of orientationIlustrativeConsumer: Mind SetSender: Brand ProfileEachEconsumerFilter“Solidarity”“Fun”0246810Thrill&FunFairreceives“Fun”New&CoolNaturClanningBasicAktiv“Quality”–+2% “Solidarity”BewährtComfortmessagesTotal CostCustomized“Price”each dayR“Price”“Quality”98%Source: Roland Berger & Partners- 7 -BCN-8010-97000-010-197E
Brand management increases profitability and thereby creates valuerir f r itift f rDrivers of brand equityShift of demand curveConquestPriceIncrease profitability by:1Realize price premium and/or1Cu2Increase sales volumestomerAwareness2satisfactionImagePerceivedqualityConsiderationLoyaltyVolumeSource: Roland Berger & Partners- 8 -BCN-8010-97000-010-197E
Coca-Cola is the most precious brand - with a brand equity exceeding by farall other strong brandsBrand value ranking [$ US m]83,845Coca-Cola1M56,654icrosoft2IBM43,7813…Ford33,1975…Mercedes17,78112…Toyota12,31020…BMW11,28122Source: Interbrand- 9 -BCN-8010-97000-010-197E
ailimaFdadimitnIAcross all industries, brands strive for their “share of wallet”Homo HybridicusIllustrativeProfesión BossHermesCoca ColaMercedesKelloggsDisneyMarlboroSwatchEgoLevisCalvin KleinadidasPro7NikePlayboyOakleyPorscheBurtonApollinarisDeportesSource: Roland Berger & Partners- 10 -BCN-8010-97000-010-197E...Ocio
ihctogamaTBrands need to be developed constantly - or they will die!IllustrativeAlstoIn-BrandeStar-BranddalbrelloRBeneficiorecibidodel clienteBajoNo-NameOut-BrandConocimiento de marca0 %100 %Source: Roland Berger & Partners- 11 -BCN-8010-97000-010-197EAddidasBraunAfri Cola
The Coca-Cola crisis in this summer is a clear sign of its brand valueSales of Coca-Cola in Spain1999: +9% (1% underthe budget)Jan. 99Jun. 99Dec. 99- 12 -BCN-8010-97000-010-197E
The market awards some brandsNominal precies (pesetas 1999)ó: Press; Roland Berger & Partners Analysis- 13 -BCN-8010-97000-010-197E
The OEMs invest a lot of money to transfer us the good qualities of theirbrands*)Publicity investment x car selled (Spain 1998)*) Rate price. The real cost can be although 55% inferiorSource: Metrics in Marketing (Grupo Mediaplaning); Roland Berger & Partners Analysis- 14 -BCN-8010-97000-010-197EPesetas x car
B. Brand management is a key issue for all players in the automotive valuechain- 15 -BCN-8010-97000-010-197E
Brand management is key for all player to gain market power and controlcustomersFinancialservicesBrokersPre-ventaOEMsDealersPost-ventaVentaAfter-saleSuppliers- 16 -BCN-8010-97000-010-197E
Example OEMs: VW¡s multi-brand strategy aims at maximising market sharert r r (r)Market share VW Group (Europe)Continuous extension of brand portfolio17,717,117,1+50 models derived from 5 platforms16,815,8Clear direction of each brand towardsstrategic competitorOverlapping target groups allowinginternal competition949596979899- 17 -BCN-8010-97000-010-197E
Example carbroker: AutobyTel has built the strongest automotive E-Commerce brandAwarenessRelevance Ranked 7 in awareness among all E- Best-known car brokerCommerce brands worldwide 44% of all Americans using car brokershave visited AutobytelAUTOBYTEL Diversification in after- Generates double thesales businessturnoveer than nextcompetitor Custome retention programs 1996 - 1999 CAGR= 189%LoyaltyPreference- 18 -BCN-8010-97000-010-197E
Example dealer: By building trustful brands, Autonation translates its visioninto tangible resultsCreate customers for life by providingleading automotive retail and rentalVisionproducts and servicesRetail BrandE-Commerce BrandBrands Build trust in one-price, haggle fore Integrates 400 dealer-shipsphilosophy Sales projection of US& 750 Mil Denver pilot:(~2% of total sales)Impact–Consideration ~70% among all carbuyers–Sales up 40%–Margin from 2% to 3%- 19 -BCN-8010-97000-010-197E
In the case of Home Link, contrast with OEMs were avoided following a strong"pull-strategyJohnson Control establishes its"Home Link" product in the1market place via the after marketHome Link becomes a "marketstandard"Most high-end OEMs are todayequipped with Home Link32The product's success makesOEMs decide to integrate HomeLink into new high-end modelsSource: Johnson Control, Roland Berger & Partners- 20 -BCN-8010-97000-010-197E
OEM-components: some world-known examples show that componentbranding can be a success storyHome LinkSource: Roland Berger & Partners- 21 -BCN-8010-97000-010-197E
Success stories in component's branding consistenly show the importance of5 key factorsKey factors in components' brandingLa tecnologíaProporcionaEs una parteEl clientese controla/un beneficioTecnologíaComponentessustanciallo puede ver opertenece alrelevantediferencialde marcadel producto finalexperimentarproveedor deal clientecomponentesINTELSHIMANOGORE-TEXHOME LINKDOLBYSource: Roland Berger & Partners- 22 -BCN-8010-97000-010-197E
Despite the value-oriented brand positioning of Fiat ...Brand-Image-Positioning EuropeEmotionaleAlfa RomeoPorsche“Sportiness""Styling"BMWLancia"Price-CitroënHondaValueRoverRatioSeat“Luxury"PeugeotHyundaiAudiLadaSuzukiMazdaAffordableTop “Technologically Pr„EquimentImageiceMitsubishiAdvanced"DaewooLevel“RenaultToyotaOpelSkodaSaabFordMercedesNissan“Environmental-Friendliness"VW„Reliability"“Safety"Volvo"Service"RationaleSource: Marketing-Systems- 23 -BCN-8010-97000-010-197E
… a sporty coupe was credibly positioned thanks to the application of strongcomponent brands Pininfarina as a Design-Label visibleon cockpit and body Use of visibly marked Brembo Brakes for theturbo version– Brembo brakes are also used and valued by manufacturers of race cars– Fiat coupe’s target customers know and respect Brembo’s quality and brand Component Branding is beneficial for bothsides–Brembo is a visible part of a high performancevehicle–Fiat benefits from the Brembo image- 24 -BCN-8010-97000-010-197E
Component Branding requires a paradigm shift within the marketing of thesupplierBusiness-to-Business Marketing Price, quality Customer relation-Conven- Buying centertiltionalilFinallirtilrsSupplierOEMRetailerscstrcustomer Increasing integration andimportance of suppliers Increasing importanceof soft facts Branding supportsPull effectbuying decisionstComponentriBrandingilFinallirtilrsSupplierOEMRetailerscstrcustomerCreate preference at the final customer- 25 -BCN-8010-97000-010-197E
Even if success stories largely differ from one another, some general rulescan be drawn – and transfered to the automotive supplier industryOEM component branding:key learnings from success stories1By adding value to the final product, component's branding not only benefits suppliers but creates significant advantages for OEMs and customers2To be effective, components' branding has to rely on substantial prerequisites, which are mainly linked to technology and customer's perception3There are several different ways to establish a component's brand in the market place. Each company selected its own model and then followed it with extreme consistency4The automotive supplier industry offers clear potential for component branding especially in interior electronicsSource: Roland Berger & Partners- 26 -BCN-8010-97000-010-197E
4Long-term trends in the automotive industry seem to favour the opportunityfor component suppliers to explore branding strategiesGeneral trends boosting components' brandingTechnology and quality become more and more equal. OEMs needOEMs' increasing effort toto "stand out" from competitors increasing the value delivered todifferentiatecustomersOEMs reduce the depth ofThe importance/weight of component's suppliers on vehicle'stheir manufacturing activitytotal value increasesOEMs increase the use ofAchieving differentiation at reasonable cost involves increasingsmart platformspersonalization of what customers "see and perceive"stOEMs' fast move towards1-tier suppliers become system - integrators and therefore themodularizationreal technology leadersSource: Roland Berger & Partners- 27 -BCN-8010-97000-010-197E
brands operational - how to implement brand management- 28 -BCN-8010-97000-010-197E
Prerequisites to implement brand management1 Operationalize brand values into guidelines and actionplans2 Derive vehicle characteristics and capabilitie/resourcesfrom brand values3 Monitor brand equity to track the success ofimplementation - what gets mesured gets done- 29 -BCN-8010-97000-010-197E
Guidelines and action plans should be derived from the new brand positioningOperationalization of brand valuesBrand1Positioning statementpositioningBrand2ProductPriceCommunicationDistributionguidelinesMarketing andDistributionOrganization of Action3communicationchannelsSales-Marketing-ServiceprogramsSource: Roland Berger & Partners- 30 -BCN-8010-97000-010-197E
Bringing the product to the prospective customers and using communicationto increase knowledge about them are very importantr itiiiti rlt r iliBrand positioningCommunication related brand guidelinesClever … All communication has to reflect and support the positioningHigh quality … Target customers require different communication styles andcommunication approachesReasonably priced … Bringing the products to the target customers will be the key task inUnique …communicationFor young and Limited resources and budgets force to look for the most effectiveyoung-minded people …means to reach target customers…Source: Roland Berger & Partners- 31 -BCN-8010-97000-010-197E
In marketing and communication, the action plans comprise product, pricingand communication issuesAction program for Marketing and CommunicationExampleCountry/"Player"Timing/YearsIssueActionsABCHQ12341. Define the model program for the next three years– Redefine standards to be fulfilled in the next vehicle generationProduct– Agree on tactical features and special feature-sets– Define limited editions2. Define long-term product development issues for the European market1. Adapt strategic pricing position to actualized/upgraded product spe- cifications (additional basic standards)Pricing2. Install target costing processes for future European models/versionsCommuni-Review and update communication strategy and marketing planaccording to new brand positioning/target group etc. cation= active= coordination and support = activity time= on-going engagementSource: Roland Berger & Partners- 32 -BCN-8010-97000-010-197E
In marketing and communication, the action plans comprise product, pricingand communication issuesBrand ValuesModelBrandrequire-1mentson productWeighting of vehicleProduct level2characteristicsEvaluation of development3objectsDetermination of development integration4own core in-house capabilitiesCapabilitystructurelevelDerivation of outsourcing5strategiesExplicit brand profileSource: Roland Berger & Partners- 33 -BCN-8010-97000-010-197E
One example of a product requirement is “sportiness”, which can be achievedby having excellent traction and road handlingExample Premium ManufacturerExampleProduct requirementSport-Sportiness as a brand requirement ...iness...is expressed in driving performance byDrivingChexcellent traction in all kinds of weatheraracteristicperformance:conditions...excellenttraction...and is among other things achieved byProductElectromagnetic shockmeans of the electromagnetic shockabsorption controlabsorption control (optimum loaddistribution and road grip)... System know-how (control strategy,In-house...to achieve this, the system know-howsimulation)capabilities Commissioning (partner/supplier(control strategy/simulation) ...management)External...must be established in partnership with a System supplier/development partner forservicesseries development control unit/actuatingsystems suppliersystemSource: Roland Berger & Partners- 34 -BCN-8010-97000-010-197EDef. capabilityDef. capabilityProduct configurationstructurestructure
A cascade approach derives capabilities and resource allocationsystematically from brand valuesCascade approachTarget-segmentorientationTest criteria/customer survey1PremiumvaluesTechnological trendsEvaluation criteria2Vehicle(scarcity of resources,BrandProduct brandcharacteristicsvaluesrequirementsfront-loading)3DevelopmentBrandPrioritizedobjectsProcurement marketrequirevehicle4mentscharacteristicsCapabilityVehiclePrioritizedstructurecharac-development5teristicsobjectsOutsourcingDevelopVerticaloptionsHow is the brandmentintegrationobjectsorganizationaldifferentiated?CoreDistribution ofunitsWhich characteristicsin-labor/giveehichousedevelopment an vle itscap-partnerspecific profile?What developmentabilitiesobjects are used toachieve these features?Which capabilities arenecessary to provideWhat is the bestfor thesedistribution of labordevelopments?with developmentpartners?- 35 -BCN-8010-97000-010-197E
Brand equity is built from a combination of brand results and brand potentialr lirt lir liResources analysisMarket analysisBrand analysis Marketing budget Price Premium Awareness Product innovation Additional sales/increase in Relevancemarket share Preference LoyaltyBrand resultsBrand potentialBRAND EQUITY- 36 -BCN-8010-97000-010-197E
Closing- 37 -BCN-8010-97000-010-197E
Lessons learned Brands are the key to sucsess for all players in the automotive sector Brand management is a complex task - based on a clear brand positioning the totalextended enterprise should contribute to a player's brand values Each "player" in the automotive value chain hast to "find its own way" how to build anddevelop its brand(s) To foster and control the success of brand management a comprehensive monitoring ofbrand equity is mandatory- 38 -BCN-8010-97000-010-197E
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