A business needs to stay relevant in a dynamic market in which new categories and sub-categories are emerging, mergers or brand extensions are taking place. Too often a brand finds its market share declining despite retaining strong awareness, image, and even loyalty. Customers are simply no longer buying. A brand portfolio strategy can help address relevance. Managing brands in a coordinated way helps a company to avoid confusing its customers, investing in overlapping product-development and marketing efforts and multiplying its brands at its own rather that its competitor’s expense. Here are five key elements to consider in managing a brand portfolio:
Differentiation is the only alternative to price-dominated competition. However, achieving a sustainable point of differentiation is difficult. Offering base points of differentiation that are effective is generally short-lived as competitors copy them quickly.
A portfolio solution is to create branded differentiators, branded features, services or programmes that provide a sustainable point of differentiation.
Most brands can use more energy. The energy gap problem is particularly troublesome, ironically, for market-leader firms in mature categories that often have an enviable reputation of high quality, trustworthiness and innovation. Such brands nearly always tend to be viewed as boring.
The portfolio solution is to create a branded energiser, a branded product, promotion, sponsorship programme or other entity that will enhance and energise a target brand. The target brand which may be boring, can be linked to a brand that has substantial energy.
Most companies desire growth in order to create organisational vitality and to realise the objectives of investors. Even if a growth sub-market is discovered for which competition is modest and an attractive offering is available, a brand asset will be needed to enable the growth option.
A portfolio solution is to create and leverage brand assets. A brand extension strategy leverages brands into adjacent product classes. In doing so it is useful to build brand platforms that will eventually span many products, perhaps using sub-brands rather than looking to incremental extensions.
The concern in any extension decision is the impact that the extension has on the brand – in addition to the help the brand will give to the extension. An ill-conceived or badly implemented extension can damage the brand. Brands can also be used to extend vertically. The super-premium market is attractive as it contains most of the product vitality and attractive margins. Vertical brand extensions are often compelling but they represent delicate brand portfolio issues because moving up involves brand credibility and moving a brand down involves risk.
Consumers and employees become frustrated in trying to determine what the firm stands for in the various product-market settings. There is also a lack of brand-building focus, resulting in ineffective use of brand-building budgets. A portfolio strategy can enhance focus and clarity. One route is simply to reduce the number of brands, especially those that are strategic.
Another route is to clarify the roles that the various brands would play, develop them for success in those roles and make sure they are used consistently. Still another is to leverage the corporate brand within the portfolio. This usually represents the people, values and culture of an organisation and it is often ideally suited to being an endorser brand.
Start and end with the consumer
The starting point for marketers is to define categories as consumer do. The marketers need a disciplined way of evaluating their brands’ opportunities, like analizing the need states – the intersection betweet what customers want and how they want it.
Brand Portfolio Strategy by David A. Aaker