1 | Managing your brand in a recession 25th March 2009

2 | Philip Stevenson

3 |

4 | Changing consumer demand Losers and Winners (or the relatively unscathed) Tips in a downturn Today

5 | Financial crisis Energy crisis Raw materials crisis Food crisis Consumer confidence crisis *

6 | “In a crises, you can downsize, right size, focus and outsource, but, you can't fire the brand.” Anonymous

7 | “Instead, brands need to become more effective and efficient, in order to not only survive, but win” Interbrand

8 | Your weapon? Brand. Why? It drives choice.

9 Influencing choice through customer perceptions = Economic value Brand Positioning Touch points Brand Perception Decision Criteria Behaviour Sales & Profit impact Economic Value A clear and compelling brand positioning… …consistently brought to life through everything you say and do… …Raising awareness of your differentiation and emotional relevance… …making the case for your brand over other alternatives, influencing choice… …which leads to price premiums, loyalty and advocacy… …this increased demand leads to financial benefits… …that creates brand and shareholder value…

If managed correctly brand can drive long term economic value BGB PortfolioMSCI WorldS&P 500 Annual Average Return4.73%0.05%-0.92% Standard Deviation14.76%18.02%15.36% Sharpe Ratio

11 | Back to the real world for a minute Same flavour Higher price More preferred Excellent coffee Unbranded

12 | …but that behaviour is now changing Similar flavour Lower price No less preferred Same flavour Higher price More preferred +14% +1,000 outlets -50% -1,000 outlets

13 | Changing consumer demand Losers and Winners (or the relatively unscathed) Actions in a downturn Today

14 | Shopper’s world is in turmoil

15 | Spending patterns are shifting Delay Household durables (e.g., electronics, appliances, and furniture) Stop Travel (e.g. airlines, resorts, casinos, holiday companies) Reduce Personal durables (e.g. clothing) Indulgences (e.g. premium coffee) Leisure services (e.g. Dining out, salon treatments) Switch Household cleaning products Groceries (Booz & Company September 2008: 1,000 households )

16 | Brands that have fostered a sense of allegiance with their consumers are more likely to withstand an economic downturn.

17 | Changing consumer demand Losers and Winners (and the relatively unscathed) Tips in a downturn Today

18 | Worst effected

19 | Worst effected Luxury goods Home furnishings Personal care Electronics Holidays

20 | Less effected CDS spread < 50 Hershey Nestle Coca-Cola Kellogg's McDonalds

21 Winners Bird's custard +20% Fray Bentos +41% Vimto +11% Board games +200%. (Source: Guardian March 2009: Figures relate to Asda sales)

22 Winners Where can you get a lobster for a fiver? The answer is Lidl. Mary Morgan, Corporate Lawyer, Clapham

23 | Point of View on changing consumer demand Losers and Winners (and the relatively unscathed) Tips in a downturn Today

24 | 1) Know your consumers Source: “Reacting to Recession” M&C Saatchi July 2008 Crash Dieters Treaters Scrimpers Abstainers Justifiers Clothcutters Ostriches Vultures

25 2) Adapt to the value equation Value = Price Attributes + other costs

26 3) Don’t abandon long term strategy % growth $1.4 bn Reebok #1

27 3) Don’t abandon long term strategy Trebled marketing investment % profit increase $3 bn Nike #1

28 4) Create and communicate differentiation Be engaging Reinforce differentiation Build value back into the brand Don’t price it out

29 5) Build value in, don’t price it out Build value proposition from the core brand proposition Manage the balance between Quality and Value Drive value from the heart of the brand.

30 6) Make it personal Less personal = Less loyal Customers need to identify with the brand Become indispensible

31 7) Defend against own label

32 7) Defend against own label Differentiate on a visceral level Leverage the brand personality Elevate from a rational decision Focus on tangible POD Resist making price dominant message

33 7) Defend against own label Differentiate on a visceral level Leverage the brand personality Elevate from a rational decision Focus on tangible POD Resist making price dominant message

34 7) Defend against own label Differentiate on a visceral level Leverage the brand personality Elevate from a rational decision Focus on tangible POD Resist making price dominant message

35 7) Defend against own label Differentiate on a visceral level Leverage the brand personality Elevate from a rational decision Focus on tangible POD Resist making price dominant message

36 8) Know your retailer – ‘partnership’ How does my brand help your brand? What journey do shoppers of my brand take through your store? How can my brand help drive value based on your brand proposition? Give ideas for customising your promotions in our category in this time

37 | So, to conclude …

Thank you