A portfolio of brands

The trick is to establish clear roles, relationships and boundaries for the brands

Some businesses develop new brands on a regular basis. They may even choose to do so while their governing brand remains hidden from view. There are many reasons why a company decides to develop a brand. For some, managing a distinct message would be the primary reason, for others it is all about reputation.

When a business has several brands to manage most marketers recognise that it makes good sense to develop a portfolio system to help ensure the brands are all managed in a coordinated way. This helps the company avoid confusing its audiences, investing in overlapping product-development and marketing efforts, and multiplying its brands at its own rather than its competitors’ expense. Also, killing off weaker or ill-fitting parts of the product range – an aspect of brand-portfolio management if absolutely required – frees marketers to focus resources on the stronger remaining brands and to position them distinctively. A well managed portfolio of brands therefore reduces the complexity of the marketing effort and counteracts the decreasing efficiency and effectiveness of traditional media and distribution channels.

The trick is to establish clear roles, relationships and boundaries for the brands; giving individual brand managers scope to be creative, while also ensuring there is a single overview of all brand activities. Mars is an interesting example. The group’s website demonstrates very simply how the organisation is segmented and how a portfolio strategy for different brands within each segment is coordinated.

Mars pet brand portfolio

 

If the motivation for developing new brands is simply about seeking new revenue streams, existing research suggests it doesn’t always follow that adding new brands to your portfolio is a money maker. Brand moves that look economically attractive or strategically tidy may struggle because of the complex interrelationships between products and segments or a backlash from consumers. For example, Volkswagen’s success at repositioning Seat and Skoda merely raised the bar for some of their core products, such as the Golf, which saw some of its own market share dwindle. Maybe this was no bad thing. But it did pose a challenge to VW all the same.

Developing clear roles, relationships and boundaries for your portfolio of brands requires you to go through the following three key steps.

  1. Understand where your brands are currently playing in the market. This is about understanding where they sit in relation to each other as well as to the competitive environment around them.
  2. Determine the required roles for each of the brands and then develop a strategy to govern what brand moves may be appropriate. For example; should some of them be consolidated, other divested or repositioned?
  3. The aim is to integrate brand moves to transform the portfolio into a considered collection of brands that clearly respect each other’s role in the market place while collectively covering the best possible spread in the market place.

 

Portfolio management

However, getting the strategy right is only part of the battle. It perhaps goes without saying that companies will also need to make organisational changes if they are to adapt their brand portfolios to shifting trends, competitive responses, mergers, and new-product launches while also managing the natural life cycle of their brands.

At Interrelated we understand marketers are uneasy about rigorous brand-portfolio management, but there is a lot to be gained if this mindset can be overcome. As always, setting the portfolio strategy isn’t a onetime event. It needs to become part of the day-to-day running of the business and we can help you navigate through this process.

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