Overview

This guide explains how to develop the overall goals for the Annual Plan.

The key messages are:

• Financial
• Brand equity
• Learning

What are Annual Plan Goals?

The Annual Plan goals describe specifically the outcomes that are desired from the Annual Plan and how they will be measured. They describe how the plan will link the long-term strategic intent of the brand to its short-term needs. The goals therefore serve to balance the need for delivering immediate financial results as well as driving the brand towards its longer-term strategic vision.

The three types of goals are:

• Typically volume, revenue and margin goals. May include some measure of return such as Return on Invested Capital (ROIC).
• Overall budgets for marketing spends.

• Quantitative goals on brand promise, category-specific equities and general equities - wherever brand equity is being tracked.
• In situations where brand equity is not tracked, qualitative objectives articulate “what we are trying to accomplish” in terms of customer perceptions of the brand.

• Knowledge of customers, channels, competitors, technologies or other aspects that will advance the long-term strength of the business.

Why are Annual Plan Goals important?

Annual Plan Goals are critical because they are the basis for developing the entire plan. They define (and quantify) the desired outcomes and are the measures by which the success of the plan is determined. Without well-thought through goals, the annual plan could lead to a series of meaningless activities that cause the brand to drift or worse.

The Annual Plan goals determine:

These goals are instrumental in defining the extent to which the brand is charged with contributing to the immediate financial returns of the company as well as actioning the long-term strategy for the brand.

While financial goals are usually set for most brands, the setting of explicit brand equity and learning goals is only done by a few best practice companies. This is because of the increased short-term focus of most Annual Plans on delivering volume, revenue and margin targets set for the brand by senior management. It is no doubt that the brand’s financial returns is of primary concern to all. However, this is an outcome of the longer-term strength of the brand. And hence investing in the health of the brand and the learning that fuels competitive advantage is an essential ingredient for an effective Annual Plan.

How do you set Annual Plan Goals?

Financial Goals

Financial goals are usually set by a combination of bottom-up planning and forecasting and top-down goal setting. Both of these perspectives are important:

• The top-down approach reflects the strategy of the company in delivering expected shareholder value and the allocation of resources across businesses and brands.
• The bottom-up approach serves as an important reality check on what is reasonable for the brand to deliver.

In a perfect world, both of these approaches align perfectly to set a goal that both senior management and the brand team are comfortable with. This rarely, if ever, happens. Here are some tips to consider in setting useful and relevant financial goals:

• Ensure that sources of incremental revenue are identified:
  • Exchange rate, new products, price increases, volume mix, core growth, etc.

• Make explicit the rationale and assumptions behind the goal. This helps the team in understanding and meeting the intent of the plan in new and creative ways.
• Identify the forecasting or predictive model used and the variables incorporated.
• Review learning from situation assessment summary before setting goals. This ensures that the goal setting is done within the right context of the business realities.

• Set goals for 2-3 scenarios:
  • Aggressive, realistic, conservative

Brand Equity Goals

Brand equity goals are defined at three levels of equity-ownership:

(See the Brand Equity: Guide for further definition on these elements).

Brand equity goals are preferably set quantitatively. This is, however, possible only if brand equity is actually being tracked regularly and includes tracking of key competitive brands as well.

Here are some useful tips in setting brand equity goals:

• When you set brand equity goals, consider how long it takes brand associations to change in consumer’s minds and historical brand equity tracking data in the category.
• Refer to the Long-term Equity Appreciation Plan (LEAP), which includes the five-year brand equity targets. (The annual brand equity goal is an annual increment towards the five-year targets.)
• Align brand equity improvement opportunities with revenue potential by looking for purchase/consumption choice determining equities for target consumer segments, in which the brand has little or no ownership of. These equities when strengthened with the target segment(s) will translate to higher revenue.
• If brand equity is not tracked, provide direction by highlighting:
  • Key equities the brand is trying to own relative to competition.
  • The customer perceptions and attitudes you are trying to change or maintain.
  • Key elements of the brand vision strategy you want to reinforce.
  • The brand character and tone.

Learning Goals

Learning goals define how important knowledge assets can be added to the business, which build the long-term wealth of the company. To identify learning goals: