We live in a world of brands. Corporations, products, not-for-profit organizations, celebrities, politicians, nations, tourist destinations, movies, and more, can now all be looked at as brands. Today, many corporations suffer from brand proliferation, a phenomenon in which companies keep producing more and more brands without giving strategic consideration to how these additions affect their overall brand portfolio. This article reviews key terms, concepts, and tips related to brand portfolio strategy, the strategic approach to preventing brand proliferation.

(A subset of the Google brand portfolio)

The brand portfolio must be considered during brand strategy decisions such as whether to introduce or phase out brands and sub-brands, extend a brand into another product category, position a brand as more premium or low cost, enter new markets or categories, and more. Unfortunately, in many organizations, consideration of the brand portfolio comes as somewhat of an afterthought.

There are 5 tips that can help companies take on the challenge of brand portfolio strategy:

1) Define Brand Roles
2) Think Long Term
3) Take a Consumer Perspective
4) Consider Brand Architecture Models
5) Hire Someone

Brand Portfolio Strategy – Define Brand Roles

Although many companies introduce more and more brands to keep up with changing consumer demands, it is important to limit new brand introductions to customer-relevant brands that are needed to meet business goals; in other words, when it comes to brands in a portfolio, in many cases less is more. Fewer brands in the portfolio reduce the possibility of overlaps and inefficiencies. Also, the chances of consumers becoming confused about the brand and its sub-brands will be reduced. If a company has a brand addition that will strengthen the portfolio, it should not be avoided, but new brands should always have a well-defined role.

Brand Portfolio Strateg – Think Long Term

Companies that are managing brand portfolios are often challenged by resource allocation, tending to under-spend on brands that will drive future profits and growth and overspend on mature or struggling brands. The brand portfolio manager must balance the dual tensions of near-term profit and loss with the creation of long-term asset value. Brand valuation tools can be utilized to assist in the decision-making process, ensuring that the most valuable brands are kept and given a greater share of resources. A qualitative approach may also be effective for assessing the brand portfolio, so long as decision-makers keep long-term business goals in mind.

Brand Portfolio Strateg – Take a Consumer Perspective

Decisions surrounding the brand portfolio should not only include the review of financial information and opinions that originate inside the boardroom; they should also take into account consumer perspectives. This can be achieved by conducting market and consumer research, using either quantitative or qualitative methods (or a combination of the two) to investigate consumer perceptions about the brand portfolio. The following questions should be answered:

• What brands do customers perceive as being in the portfolio?
• What relationships do customers see between brands in the portfolio?
• Do customers transfer the value (positive or negative) that they see in one brand to others in the portfolio?

As a brand and its value are ultimately built in consumers’ minds, it is essential that the needs, perceptions, and expectations of consumers are considered for all decisions related to the brand portfolio.

Brand Portfolio Strateg – Consider Brand Architecture Models

Brand architecture can be defined as “the way the pieces of the brand portfolio are structured, managed, and perceived in terms of how they relate to each other and add value to the organization” (Petromilli, Morrison, and Million, 2002, p. 22). Brand architecture also determines how brands are differentiated from one another. In practice, brand architectures have become increasingly complex over the past decades, often due to large-scale mergers, acquisitions, and expansions into new markets. However, archetypal brand architecture approaches include:

1) Branded House (Monolithic, or Masterbrand)
E.g. Virgin

2) House of Brands (or Holding Company)
E.g. P&G

3) Combination or Hybrid
E.g. Johnson & Johnson

Each approach to brand architecture has unique advantages and disadvantages. For example, a branded house enhances clarity and synergy among the brands in the group. The brand equity built for the single brand in a branded house can be transferred to support additional business units or product lines. At the same time, a product or service failure that does not deliver on the brand promise will reduce the brand equity of the whole group. For a house of brands, on the other hand, the advantage is that the master brand can remain separate from those it owns so the failure of a single brand will not have as much of an impact. A disadvantage of a house of brands architecture is that significant resources are needed to build up the equity of each individual brand and to promote synergy. As such, a brand architecture approach should be informed by overarching brand strategy rather than solely for reputation management or legal reasons.

Brand Portfolio Strategy – Hire Someone

Concern for the brand portfolio should not be left in the hands of a marketing manager who has numerous other areas of responsibility; many companies today are in need of a dedicated brand portfolio manager. This person or team works with product divisions and functional groups to allow for a more effective allocation of resources and the realization of synergy across brands. Having such a role in the organization will prevent brands from being treated as “silos” owned by individuals or organizational units. Whereas decentralized groups may not have a good grasp of the total brand portfolio, or have any incentive to care about it, a brand portfolio manager can take a portfolio perspective and be rewarded based on portfolio-related performance indicators.

Conclusion

Brand portfolio strategy is a complex but important aspect of strategy for companies of all sizes and stages of growth. Although the five tips mentioned in this article are a good starting point for companies and brands, there are many other factors to be considered when it comes to brand portfolio strategy, including the vision, values, positioning, opportunities, consumer perceptions, market trends, and competitor positioning, related to corporate and product brands. Such considerations are critical for strategically building brand equity.

References
Aaker, D. A. (2004). Brand portfolio strategy. New York: Free Press.
Chartered Institute of Marketing. (2003.) Brand Portfolio and Architecture.
Petromilli, M., Morrison, D., & Million, M. (2002). Brand architecture: building brand portfolio value. Strategy and Leadership, 30 (5), 22-28.
Pierce, A., & Moukanas, H. (2002). Portfolio power: harnessing a group of brands to drive profitable growth. Strategy and Leadership, 30 (5), 22-28.

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AUTHOR

• Ying MuGeneral Manager, US