Brand Portfolio Strategy

Auteur
David A. Aaker is the Vice-Chairman of Prophet, Professor Emeritus of Marketing Strategy at the Haas School of Business, University of California at Berkeley, Advisor to Dentsu, Inc., and a recognized authority on brands and brand management. The winner of the Paul D. Converse Award for outstanding contributions to the development of the science of marketing and the Vijay Mahajan Award for Career Contributions to Marketing Strategy, he has published more than ninety articles and eleven books, including Strategic Market Management, Managing Brand Equity, Building Strong Brands, and Brand Leadership (coauthored with Eric Joachimsthaler).

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In this long-awaited book from the world’s premier brand expert and author of the seminal work Building Strong Brands, David Aaker shows managers how to construct a brand portfolio strategy that will support a company’s business strategy and create relevance, differentiation, energy, leverage, and clarity.

Building on case studies of world-class brands such as Dell, Disney, Microsoft, Sony, Dove, Intel, CitiGroup, and PowerBar, Aaker demonstrates how powerful, cohesive brand strategies have enabled managers to revitalize brands, support business growth, and create discipline in confused, bloated portfolios of master brands, subbrands, endorser brands, cobrands, and brand extensions.

Renowned brand guru Aaker demonstrates that assuring that each brand in the portfolio has a clear role and actively reinforces and supports the other portfolio brands will profoundly affect the firm’s profitability. Brand Portfolio Strategy is required reading not only for brand managers but for all managers with bottom-line responsibility to their shareholders.

Échantillon de lecture
Chapter 1: Brand Portfolio Strategy

CHAPTER 1BRAND PORTFOLIO STRATEGY

We hire eagles and teach them to fly in formation.

—D. WAYNE CALLOWAY, FORMER CEO OF PEPSICO

You don’t get harmony when everyone sings the same note.

—DOUG FLOYD

Nobody has ever bet enough on a winning horse.

—RICHARD SASULY

THE INTEL CASE

During the 1990s, Intel achieved remarkable success in terms of increase in sales, stock return, and market capitalization.I Sales of its microprocessors went from $1.2 billion in 1989 to more than $33 billion in 2000. Its market capitalization grew to more than $400 billion in just over thirty years. Intel’s ability and willingness to reinvent its product line again and again—making obsolete business areas in which it had big investments—certainly played a key role in its success. Its operational excellence in creating complex new products with breathtaking speed and operating microprocessor fabrication plants efficiently and effectively was also critical.

Intel’s brand portfolio strategy, however, played a critical role as well. And this brand portfolio strategy could not have emerged without the brilliance of Dennis Carter, Intel’s marketing guru during the 1990s, and the support of Andy Grove at the very top of the organization. Few organizations, particularly in the high-tech sector, are blessed with such assets.

Intel’s brand story really starts in 1978, when it created the 8086 microprocessor chip, which won IBM’s approval to power its first personal computer. The Intel chip and its subsequent generations (the 286 in 1982, the 386 in 1985, and the 486 in 1989) defined the industry standard and was the dominant brand.

In early 1991, Intel was facing pressure from competitors exploiting the fact that Intel failed to obtain trademark protection on the X86 series. These firms created confusion by calling their “clone” products names like the AMD386, implying that they were as effective as any other 386-powered PC.

To respond to this business challenge, Intel in the spring of 1991 began a remarkable ingredient-branding program (“Intel Inside”), with an initial budget of around $100 million. This decision was very controversial within Intel—such a large sum of money could have been used for R&D, and many argued that brand building was irrelevant for a firm that only sold its products to a handful of computer manufacturers. Within a relatively short time, however, the Intel Inside logo became ubiquitous, and the program became an incredible success. The logo, shown in Figure 1-1, has a light, personal touch, as if someone wrote it on an informal note—a sharp departure from the formal corporate logo (Intel with a dropped e).

The Intel Inside program involved a tightly controlled partnership between Intel and computer manufacturers. Each partner received a 6 percent rebate on its purchases of Intel microprocessors, which was deposited into a market development fund that paid for up to 50 percent of the partner’s advertising. (To qualify, the advertising needed to pass certain tests, the main one being to present the Intel Inside logo correctly on product and in the ad.) Computer partners were required to create subbrands for products using a competing microprocessor so buyers would realize that they were buying a computer without Intel Inside. Although the program became expensive—its structure caused the budget to grow to well over $1 billion per year as sales rose—it also created a huge differential advantage over competitors trying to make inroads with computer manufacturers.

The bottom line was that for many years, “Intel Inside” meant a roughly 10 percent premium on the sales price of a computer featuring the logo. Because of the exposure of the branding program, Intel was given credit for creating products that were reliable, compatible with software products, and innovative, and for being an organization of substance and leadership. All this happened even though most computer users had no idea what a microprocessor was or why Intel’s were better.

There were important secondary benefits. The Intel Inside program caused advertising for computers to explode. Ironically, advertising agencies, at first unhappy having their artistry compromised by foreign logos, became creatively flexible when they realized that advertising billings were going to skyrocket. In addition, the computer partner firms became attached to the advertising allowance; in fact, with margins squeezed, they had a hard time competing without it. The program thus became a significant loyalty incentive for Intel. “Intel Inside” became one of the most important brands in their portfolio.

In the fall of 1992, Intel was ready to announce the successor to the 486 chip in the face of increasing competitor confusion, even given the Intel Inside campaign. A huge decision loomed. Should the successor be called Intel 586, thereby leveraging the Intel Inside brand and providing a familiar and logical roadmap to customers who had adapted the X86 progression? Or should it be given a new name, such as Pentium? It was a very difficult decision.

Four key issues guided the decision to develop the Pentium brand. First, despite the success of the Intel Inside program, the basic confusion issue would remain if the product was named Intel 586, thanks to market entries such as AMD586. Second, the cost of creating a new brand and transitioning customers to it, although huge, was within the capacity and will of Intel—few new products in any industry are so blessed. The fact that a new brand had news value would make the job easier. Third, the Intel Inside equity and program, rather than being wasted, could be leveraged by linking the two brands. A visual presentation of the Pentium brand was integrated into the Intel Inside logo, as shown in Figure 1-1; in essence the Intel Inside brand became an endor…