Brands, including sub-brands and extensions, are proliferating at a breakneck pace in industries such as beverages, consumer goods, food, household goods, and personal care. This growth makes it more difficult to consistently define customer segments and positioning goals. Managing brands in a coordinated manner helps a company avoid confusing its customers, optimizes investment in product development and marketing, and makes it easier to multiply its power without direct dependence on competitors.

Apple is a great benchmark for brand management from multiple variables. On this occasion, it is also an excellent example for the subject at hand in this reading. When Steve Jobs returned to Apple in 1997, ousted John Sculley, one of the first actions he took was to eliminate up to 70% of the range of products offered at the time. Was it revenge? Today we can say that it was a strategy that managed to reposition Apple precisely at a time when it seemed that it had lost its way. Jobs’ vision was simple and involved making it easier for people to choose based on simply two questions: 1- Are you an individual or a professional?, 2- Do you want a laptop or a desktop? Sufficient and intelligent decision.

What is a Brand Portfolio Strategy?

Brands are associative networks of meanings. They add value to products, services, and organizations through their ability to reach people’s hearts and minds. Trademarks are able to distinguish one product from another, even when these products are functionally identical.

Most organizations have a portfolio full of brands, sub-brands, product brands, and names. Their origins may be mixed, but managers are often faced with the problem of answering questions such as: Is it better to enter new markets with our current brand or with a new brand? What to do with the brands of two merging organizations? How to manage and organize dozens of products?

A company’s set of brands, sub-brands, or names forms a brand portfolio. A brand portfolio strategy consists of defining a management approach (current situation) Towards the establishment (future situation) of the brand portfolio, in a way that maximizes its performance and adds value in the market. When combined with a visualization that incorporates dimensions such as consumer segments, pricing, value propositions, or channels, you get a reflection of a situation that allows you to increase portfolio value by making strategic decisions about restructuring, acquiring, divesting, or launching new brands.

Benefits of a Brand Portfolio Strategy

  • Clarify the positioning and value proposition, connecting much better with customers.
  • Address the needs of specific consumer segments, articulating messages in such a way that everyone hears what they need to hear.
  • Significant reduction in investment in branding, marketing and communication, achieving exponential improvements in terms of efficiency.
  • Enhance
    engagement
    and facilitate growth by increasing the confidence of customers who are more accepting of new products.
  • Build and protect
    brand equity
    , which has a direct impact on business value.

How to Create a Brand Portfolio Strategy

The key to the issue lies in prioritization. In most markets, one-third of products generate more than 70% of a company’s value. Traditional growth levers, such as boosting volume, raising prices, or reducing costs, have become less effective. However, optimizing the mix of products and services or prioritizing customers and markets represents a great alternative.

The analysis and mapping of these scenarios will facilitate growth strategies focused on the most profitable segments and reduce investments in the least profitable ones. And all of this will improve the experiences that customers have with brands. With a focus on those brands that show the greatest growth and with the redefinition of those that do not achieve the desired objectives, Brand Management will provide:

  • Greater clarity regarding the role of each of the brands, making it easier for the consumer to understand.
  • Increased visibility of corporate brands, reinforced by a set of sub-brands that work together from a level that directly contacts customers.
  • Better credibility of all brands, as specialists in specific segments, also increasing their relevance.

Think that, more than a simple ordering, you must contemplate how each of the parts relates to each other, establishing the appropriate roles for each of the brands.
To do this, in a brand portfolio strategy you will find it interesting to follow these 4 steps:

  1. Think like the customer.In most cases, a change of mentality is necessary to stop thinking from the company and start taking a view from the customer. Examine need states : the intersection between what customers want and how they want it. Identify the reality gap with respect to what you’re offering. Strategies created from an internal vision must be completely transformed into an external vision that facilitates the understanding of the offer by the client and according to their demands. Just look at the example from Apple above.
  2. Analyze the value that each segment and each brand brings.In large portfolios, there are great duplications that do nothing but detract from the value of the brand. It analyzes well what is the contribution of each of the segments and brands, both from a rational and emotional perspective connected to consumers. Find the balance between reality and business opportunity. Use a map that combines category, consumer, product, and trends.
  3. Optimize growth opportunities. It focuses on those segments that can be extended in multiple dimensions. This implies fewer, but stronger and more leveraged brands in different areas (sectors, channels, applications, etc.) and new platforms that achieve synergies favored by economies of scale. Identify your goal: you’re pursuing growth, performance, or maintaining market share. It repositions those brands that have lost relevance, unifies those that compete for the same customers, disinvests in those that absorb more resources than they generate.
  4. Develop a strategy and action plan. Translate your conclusions into a strategy that includes the different moves to be made. Share it with all stakeholders in your organization. Finally, it develops an action plan, a roadmap that guides all the movements, signals to the different managers and determines which are the measuring instruments.

Before you add new segments, new products, new brands, think about it. Portfolio optimization means finding the right balance between efficiency and customer value inputs. A range should only be extended when it really makes it easier for a certain segment of customers to choose, if not, think about cutting before adding.

Remember, a valuable brand brings many more benefits than simply an available brand.

 

Carlos Puig Falcó
CEO of Branward