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Brands can be among a companys most valuable assets but too many brands and sub-brands can
limit growth and productivity.
In the past year alone, we have seen the likes of P&G, GE, Microsoft and Mondelez trim their
portfolio of brands for the purposes of getting back to their core, stream-lining or driving efficiency
and effectiveness through their business. This is no easy task but the results of optimizing brand
portfolios often has a dramatically positive impact on the future success of the corporation. A.G.
Lafley summed up things well when he shared his view on P&Gs plans to divest some of their
brands to optimize their portfolio, he said:
Im not interested in size at all, Im interested in whether we are the preferred choice of shoppers.
This paper outlines our thinking about managing brand portfolios and brand architectures and
outlines our approach to Brand Portfolio Optimization.
Over the last twenty years brand owners hunting growth have bought, created and extended more
and more new brands and sub-brands. Some are still buying, but more have announced plans to
streamline and prioritize ever burgeoning portfolios. Rather than deliver the growth they desire,
too often the results have been an over-proliferation of smaller brands and sub-brands creating
cluttered portfolios and over-complicated architectures.
This over-proliferation makes strategic brand management much more complex and timeconsuming. Too many brands and a plethora of sub-brands encourage a lack of focus.
Every brand manager will want to defend their brand but businesses need to make the often
emotionally difficult decision to focus on fewer brands. The dangers are primarily two-fold:
A. Too much focus on building the minor brands, at the expense of the key strategic ones.
A significant and very real danger is where there is so much emphasis being placed on the minor or
local jewel brands that the more important strategic, international and global brands get reduced
resources budget and time.
B. Lack of clarity for consumers (and staff)
For consumers, an over-proliferation of brands can lead to situations where a company is
increasingly competing with itself where brands lack differentiation and so are fighting it out for
the same consumers. Consumers dont really understand the differences and so simply switch to
buying on price or promotion.
For sales and marketing teams, selling a portfolio of fewer truly powerful brands to your customers
is easier and more effective. As in most instances the paradox of choice comes into play, customers
appreciate choice but not chaos.
The solution
The objective of Brand Portfolio Optimization is therefore to help structure and prioritize your
portfolio of brands to best deliver your business objectives. The best way to achieve this is to deploy
the smallest number of brand properties to effectively and efficiently occupy the biggest possible
space in the market.
Companies need an approach that marries their business strategy with an evaluation of each
brands potential. They need to simplify as much as possiblebut no more. There is a role for
multiple brand portfolio but not for the increasingly complex and confused stamp collections that
had been emerging.
Identify business
competencies and
brand strengths
to identify which
brands are most
suitable to own a
territory.
Create a future
facing framework
of the market
and identify
which territories
exist within this
market.
Using the
framework,
prioritize the
territories in
which you want
to and are able
to compete most
effectively.
Identify which of
your brands are
most suitable to
own your prioritized
territories, and the
smallest number of
properties needed to
occupy the biggest
market space.
Within each
positioning
territory, explore
the optimal brand
architecture
configuration for
each of the key
brands.
Within each
archetype,
develop a strong
identity and
brand position
which clearly
communicates
key differences.
Create a roadmap
to plan the
maximum
footprint without
over-stretching
the brand.
Walmark
Walmark is the largest producer of vitamins, minerals and supplements in CEE. It has over 40
brands across its core markets. The Value Engineers worked with Walmark to optimize their
portfolio helping them to develop and deliver strategies focussed on fewer brands. In 18 months
several of these focus brands are already number one across the markets in which they are sold with
others following suit.
5. Provide clarity for the consumer and aid their purchase decision making
and simultaneously help guide the brand team in their allocation of
resources
The final reason overlaps to some degree with some of the other routes described above and is
perhaps a summation of an overall reason for a portfolio of sub-brands. Namely, a portfolio of subbrands should aim to provide the guidance and signposting for consumers deciding what do I want
to buy? It can then simultaneously provide some internal clarity about the strategic importance of
key sub-ranges and thereby provide guidance for allocation of brand building, marketing resources,
and budget.
Muller Yoghurts has a set of sub-brands which helps signal the different ranges within its portfolio
Muller Corner, Muller Light, Mullerice, Muller Amore, Muller Little Stars and Muller Vitality.
However, like with most things in life it is possible to have too much or many of a good thing and one
of the greatest problems facing companies nowadays is an over-proliferation of sub-brands.
So while there are many reasons for creating sub-brands there are almost as many good reasons for
limiting their use too:
A. Too much focus on building the sub-brands/endorsed sub-brands and not the masterbrand
B. Too many (costly) sub-brand building programmes diluting resources
C. Lack of clarity for consumers (and staff)
D. Trying to enter into sectors that are contradictory to the masterbrand
i)
Ensure there is a common understanding of the relevant terms internally
Even in the most experienced of marketing teams it can be amazing to find the different
understanding and definitions of what is and isnt a sub-brand. So defining the terms, making
sense of the soup of possible confusions by creating a common vocabulary and definitions is an
important first step what is a sub-brand, an endorsed brand, a product descriptor?
ii)
Having a clarity of purpose a clear rationale for the brand architecture
It is relatively easy to make at least a superficial case for a new sub-brand when segmentation and
consumer insight are so important to all marketers, but brand architecture decisions need to be
objectively assessed against
-
the business strategy - what do you want to achieve and where do you want to take/drive
the brand
-
the brand strategy - what do you want the brand to mean/stand for- what are the
parameters of this
The business strategy and economics often suggest a more monolithic structure with less subbranding whilst marketing may veer towards a more segmented approach. Like most things in
marketing there is no one right answer but the tension between the two is important and ensures a
balanced judgement is made.
iii)
Creating and maintaining a manageable portfolio
Following on from the above, it pays therefore to have an agreed process for selection (and
retention/culling) of sub-brands.
Companies need a process and agreed basis on which each candidate should be assessed - again
reflecting both business and brand strategy needs. The sorts of criteria might include:
Is it sufficiently commercially attractive to justify its creation or maintenance?
Does the sub-brand help drive business that fits strategically with the overall brand (re)positioning?
Does it help build a category/sector or key brand attribute (value or personality) that is central to the
future brand development?
Finally regular reviews need to consider not just new candidates for inclusion but also candidates
to be pruned, downgraded, or migrated into other properties. It may not be a case of one in one
out but if the only decision is whether to add more and more sub-brands, it would suggest overproliferation is only a matter of time.
It is worth remembering that given the increasing restrictions on launching new (master)brands,
launching a new sub-brand is one way for ambitious brand managers to make their mark, and so
companies need to guard against unnecessary empire building. In short the need is not too oversimplify, not too over-proliferate but to manage a commercial and consumer relevant multiplicity of
offers.
To talk with the Value Engineers about your brand portfolio or to find out about our approaches to
help optimize the impact of individual brands please contact:
Owen Williams, Group CEO in the UK - owen.williams@thevalueengineers.com
Alex Waters, President in the USA alex.waters@thevalueengineers.com
Giles Lury, Chairman in the UK giles.lury@thevalueengineers.com
Chris Potts, EVP in the USA chris.potts@thevalueengineers.com