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Brand Portfolio Strategy: Creating Relevance, Differentiation, Energy, Leverage, and Clarity (English Edition) [Format Kindle]

David A. Aaker

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Chapter 1: Brand 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. 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 endorser for the Pentium brand. Finally, the new product was judged to be substantive enough to justify a new name, even though a new name for every future generation would ultimately be costly and confusing. Because a costly new fabrication plant needed healthy initial demand to pay off, one motivation for the new brand was to signal to customers that the new generation was worth an upgrade.

Intel subsequently developed an improvement to the Pentium that provided superior graphic capability. Rather than naming the chip a Pentium II, or giving it an entirely new name, the branded technology name MMX was added to the Pentium brand (the graphical representation is shown in Figure 1-1). The Pentium brand would thus have more time to repay its investment, and a new-generation impact could be reserved for a time in which the advance was more substantial. Later generations did emerge, leveraging the Pentium brand and equity with names like Pentium Pro (1995), Pentium II (1997), Pentium III (1999), and Pentium 4 (2000). The advent of the Pentium 4 ushered in a new visual design (shown in Figure 1-1) to emphasize its newness and to provide a look that suggested substance, reliability, and quality.

Clearly, a crucial, ongoing brand portfolio strategy issue is how to use branding to identify product improvements. When the improvements are minor or involve corrections of prior mistakes, then it is not appropriate or worthwhile to signal a change. When the improvements are significant, the choice lies between a branded feature (like MMX), a new generation (like Pentium III), or a totally new brand (like the replacement of the X86 series with Pentium). The communication cost, the risk of freezing sales of the existing brand, and the degree of preempting the news value of future technological developments will all depend on which of the three brand signals is used.

In 1998 Intel decided that it needed to participate in the market for mid-range and higher servers and workstations. To address this market, Intel developed features that allowed four or eight processors to be linked to supply the power needed for these higher-end machines. A branding issue then arose. On one hand, the Pentium brand was strongly associated with lower-end personal computers for homes as well as businesses, and as such it would not be regarded as suitable for servers and workstations. On the other hand, the market would not support developing yet another standalone brand alongside Intel Inside and Pentium. The solution was to introduce a subbrand, the Pentium II Xeon. The subbrand distanced the new microprocessor enough from Pentium to make it palatable for the higher-end users. It had the secondary advantage of enhancing the Pentium brand. Another practical consideration was that the use of the Xeon name by itself had some trademark complications that disappeared when it was merged with the Pentium II name.

In 1999 another problem -- or opportunity -- emerged. As the PC market matured, a value segment emerged, led by some Intel competitors eager to find a niche and willing to undercut the price points of the premium microprocessor business. Intel needed to compete in this market, if only defensively, but using the Pentium brand (even with a subbrand) would have been extremely risky. The solution was a stand-alone brand, Celeron, that was not directly linked to Pentium (as Figure 1-1 shows). The brand-building budget, like that of many value brands, was minimal: the target market found the brand, rather than the other way around.

A decision was made to link the Celeron to Intel Inside, so there was an indirect link to Pentium. The trade-off was the need for the Intel endorsement to provide credibility to Celeron, versus the need to protect the Pentium brand from the image tarnishment of the lower-end entry.

In 2001, the Intel Xeon processor was introduced with the logo shown in Figure 1-1. Several factors combined to allow the subbrand to step out from behind the Pentium brand. Technological advances such as NetBurst architecture rather dramatically improved the processor's power, and now that the Xeon brand had been established it was thus more feasible to suppor...

Revue de presse

Bernhard Eggli Managing Director, Head of Brand Management, UBS There's no authority on branding to equal David Aaker, and here he shows again his weight of experience and keenness of insight. This is a thoughtful exploration of how to structure, manage, and extend a brand portfolio for maximum value. The passages on how to energize and differentiate a brand are especially illuminating. Excellent.

Sam Hill President, Helios Consulting; former Vice Chairman, DMB&B Brand portfolio optimization will be the value-creating management approach of the next decade, and will change the way we do business as fundamentally as has business process reengineering or six sigma. Dr. Aaker has written a simple and pragmatic guidebook that will be tremendously useful to strategists. He has almost single-handedly transformed branding from an art into a science, and no one is better qualified to lead the discussion on brand portfolio strategy.

Anil Menon Vice President, Corporate Brand Strategy & Worldwide Market Intelligence, IBM Corporation Effective branding is a mission-critical business priority. And, as product-markets increasingly commoditize, a clear brand strategy can offer a path to competitive differentiation, particularly for B2B companies. Professor Aaker is at his brilliant best in this book with clear advice on how to make brands 'real' in the daily life of an organization and relevant in the marketplace.

Philip Kotler Professor of International Marketing, Kellogg School of Management, Northwestern University Brand Portfolio Strategy is a 'must' read for any company saddled with brands whose roles and relationships go begging for clarification and wiser direction. David Aaker, our most original conceptual thinker on branding, has again pushed brand management into exciting new territory.

John Elkins, EVP, Global Brand, Marketing & Corporate Relations, Visa International With timely insight, Aaker shows how to use portfolio tools to help firms address the strategic challenge of staying relevant and differentiated in dynamic markets.

Anna Catalano Group Vice President, Marketing, BP Aaker's epilogue of 20 takeaways should be a bible for all brand managers who want to drive business success.

Peter Sealey Ph.D., former Chief Marketing Officer, The Coca-Cola Company Brand Portfolio Strategy hits the mark dead center into the most relevant and hotly debated topic in marketing today. Aaker builds on his previous trilogy of seminal branding books with his best offering yet -- a great strategic and practical read.

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22 internautes sur 24 ont trouvé ce commentaire utile 
5.0 étoiles sur 5 Aaker's Greatest Achievement Thus Far 18 mars 2004
Par Robert Morris - Publié sur
Aaker has earned and deserves his renown as an expert on branding. Perhaps you have read one or more of his previous books: Managing Brand Equity (1991), Building Strong Brands (1995), Developing Business Strategies (1998), Brand Leadership (with Eric Joachimsthaler, 2000), and Strategic Market Management (2001). In my opinion Brand Portfolio Strategy is Aaaker's most important work thus far. One of the most popular recent buzz words is "portfolio" which, insofar as strategy is concerned, is best understood in terms of diversity which creates or allows for options and opportunities otherwise unavailable. According to Aaker, the brand portfolio strategy "provides the structure and discipline needed to have successful business strategy. A brand portfolio strategy which is confused and incoherent can handicap and sometimes doom a business strategy. One that fosters organizational and market strategies, creates relevant. differentiated and energized brand assets, and leverage es those brand assets, on the other hand, will. support and enable business strategy." The brand portfolio strategy which Aaker advocates, therefore, creates relevance, differentiation, energy, leverage, and clarity.
There is a diagram inside the front and back covers of this book which illustrates precisely what such a strategy involves, and, what the various relationships are between and among its various components. (As I read this book, I found it helpful to refer back to the diagram occasionally as I would to a map throughout a journey. The same diagram also appears on page 17.) I appreciate the fact that Aaker illustrates each of his core concepts by examining various corporations' successes and failures with a brand portfolio strategy, notably Intel, Disney, Microsoft, Citigroup, SONY, Dove, GE Appliances, Dell, and Unilever.
After having read the previous sentence, decision-makers in small-to-midsize companies may conclude that the brand portfolio strategy offers little (if any) value to them. That would be a mistake and I apologize if I inadvertently encourage anyone to reach that conclusion. Aaker's quotation of a remark by Frank Lloyd Wright seems (to me) relevant both to the brand portfolio and to almost every organization, regardless of size of nature: "Always design [or redesign] a thing by considering it in its next larger context -- a chair in a room, a room in a house, a house in an environment, and environment in a city plan." That is as true for a family-owned automotive repair shop as it is for General Motors.
One of this book's several value-added benefits consists of dozens of quotations such as Wright's which provide Aaker's narrative with tasty seasoning while helping him to clarify his key points. Here are some other quotations which I especially appreciate:
"Beware of all enterprises which require new clothes." Henry David Thoreau
"Plans are nothing, planning is everything." Dwight Eisenhower
(Eisenhower's observation reminded me of a Hebrew aphorism: "Man plans and then God howls with laughter.")
"The best way to predict the future is to invent it." Alan Kay
"You do not merely want to be considered just the best of the best. You want to be considered the only one who does what you do." Jerry Garcia
Whatever their size and nature may be, all organizations really do need to position themselves so as to be perceived in the marketplace as having relevance, differentiation, energy, leverage, and clarity. In this brilliant book, Aaker explains HOW to accomplish that. Those who share my high regard for this book are urged to check out Harvard Business Review on Brand Management, Kaplan and Norton's The Strategy-Focused Organization, Godin's The Purple Cow, Finzel's Change Is Like a Slinky.
25 internautes sur 32 ont trouvé ce commentaire utile 
3.0 étoiles sur 5 Not As Good As Aaker's Previous (or First) books on Branding 20 avril 2004
Par Un client - Publié sur
The book is overly filled with newly-invented jargons such as Brand Differentiator, Brand Relevance, Range Brand, Sub-brand with Brand Differentiator, which can make readers overwhelmed with decoding the content.
A responsible writer on Branding should help readers simplify the complex and make it easy for them to know the true picture of branding.
This book is not entirely new. About 20% of the content(I would say more than the author admitted in the Preface) is based on Aaker's old books like Brand Equity, Building Brand Identity, and Brand Leadership. Examples are predictable and have been used before in his old books, mostly including Intel, Marriott, and the like. The cases drawn for this book can be very biased since Intel, Sony, Microsoft, Dove and so forth are world-class,big budget brands. Of course they have the know-how and abundant resources to build successful brands. Aaker should quote some medium or low budget brand cases that turn themselves into successful brands.
As a Vice-Chairman of Prophet, a brand consultancy, readers may worry about Aaker's (not just a Brand/Marketing Professor from Berkeley now!) objectivity in examples selections as well.
Besides, the Clients that Prophet serve are mostly not the world-class brands(except just one or two, like Adidas). This may reduce the credibility of Aaker as a branding expert in the first place since he wrote about the world-class brands, not really building the world-class brands himself or with his colleagues.
There is a tendency for authors to rush out new books these days. In fact, quality does count. For authors who have been preaching the importance of good quality in the branding process, they should walk the talk themselves!
1 internautes sur 1 ont trouvé ce commentaire utile 
3.0 étoiles sur 5 The Brand Argument GrowsThinner 24 février 2006
Par Tomas Hrivnak - Publié sur
In fact, after Building Strong Brands, Brand Portfolio strategy has been a big disappointment for me. The book failed to deliver practically on all of the dimensions from the title: it is not very relevant, it definitely doesn't energize the reader, doesn't offer much inspiration for brand leverage and clarity of writing also isn't one of its virtues. Well, it IS different - perhaps just becasue there are not very many texts on the issue. Not a big help for practical brand management, I'm afraid.
1 internautes sur 1 ont trouvé ce commentaire utile 
5.0 étoiles sur 5 Indispensible 14 mai 2007
Par Huijskes - Publié sur
David Aaker might be the Kottler of brand strategy. Brand strategy is not an exact science. Aaker can't change that. But he does give the field a profound and comprehensive set of definitions, that makes the development process of a portfolio strategy a transparent one for al involved.
4.0 étoiles sur 5 Excellent investment of time and money 23 juin 2005
Par James Gallagher - Publié sur
As brands assume roles equal to or more important than the actual products, keeping them dynamic and relevent becomes ever more crucial for business performance. Yet that challenge is becoming more complex as brands proliferate, cluttering brand porfolios and diluting brand equities.

In this book, Aaker builds a framework for understanding the key issues in brand management based on analysis of common initiatives taken by leading companies. It takes a theoretical approach, but it is based in real world examples that make it easy to follow.

I found the section on brand extensions very useful. For example, when considering a brand extensions, should the existing brand be leveraged, simply using a descriptor to define the offering; or should a new sub-brand created...if so, which will play the greater role in defining the offering and driving purchase -- the subbrand or the master?
These are the sorts of issues brand managers and strategists face on a daily basis so Aaker's exporation of these issues is very useful.

"Brand Portfolio Strategy" is not in the category of "brand enlightenment" tales, like Scott Bedbury's "A new brand world". It takes time to get through, can be rather dry.... but overall I found it an excellent investment of time and money.
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