Brand Stimulus 2 - Brand Portfolio Management

Brand Portfolio Management Now is the time to prune and grow

Brand Stimulus Series

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INTERBRAND BRAND STIMULUS SERIES

Interbrand Brand Stimulus Series

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In this series, you’ll learn how we’ve developed branding solutions that have stimulated growth for some remarkable businesses around the world.

Where to cut spending and where to invest limited dollars

It has never been easy to manage a brand in a non-marketing driven organization. In traditional consumer packaged goods businesses, the sun and moon revolve around marketing, brand and customer insights. Brand management is considered an essential part of business success and brand portfolio management is a key driver of top and bottom line growth.

In services, technology or manufacturing-driven organizations, brand management is not as revered or even respected. Often considered a cost centre rather than a business driver, it is viewed as a nice-to-do, not a must-have. Even in times of economic prosperity, the case for proactive brand management can fall on deaf ears. During a downturn it can seem impossible, with marketing budgets first on the block for cost-cutting.

While all businesses wrestle with the issue of how to save money and grow in contracting markets, brand builders in non-marketing driven organizations face the dilemma of how to do more with less – in many cases – much less. The questions of where to cut, where to spend and how to grow revenue are more important than ever. For organizations that have not traditionally relied on the power of brands, some significant answers can be found in brand portfolio management.

What is brand portfolio management?

Brand portfolio management is a strategic examination of your branded offerings across the organization. It starts with your customers, the needs you are satisfying and, in some cases, the needs you are not satisfying. The end game is to efficiently manage branded offerings to create greater value and uncover new opportunities for growth. Brands are assets, and each asset must be regularly monitored to assess its contribution and role within the overall portfolio.

The tangible dimension of brand portfolio management is brand architecture. Based on the roles that various brands play in a portfolio, brand architecture is how a company needs to strategically organize its total array of offerings to face the marketplace, how it expresses these offerings verbally and visually, and how all the brand names and identities relate to each other. There are several primary models for brand architecture, ranging from a single masterbrand system to a house of freestanding brands, as well as hybrid versions of these.

Brand architecture Four primary models Freestanding The product/service brands stand alone with limited or no connection to the corporate brand.

Endorsed The product/service brands are prominent, with an endorsement from the corporate brand.

Maker’s Mark Both corporate and appropriate product/ service brands are used with the emphasis on the product brands.

Masterbrand One brand to identify all products/services and descriptors to unique product competencies.

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Freestanding

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Endorsed

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Maker’s Mark

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The words “brand portfolio management” conjure up images of Proctor and Gamble, Unilever, and Kraft Foods with their vast array of categories and brands, each playing a strategic role to maximize total portfolio value. Perhaps this is why organizations with a single brand, or a corporate brand that plays a smaller role in the customer purchase decision, often fail to apply the discipline of brand portfolio management and also fail to reap the rewards.

Whether you are managing a single masterbrand or a large number of freestanding brands, the offerings behind your brand architecture are typically vast and evolving.

This applies to almost all businesses. Even B2B companies, with a single masterbrand and generally fewer customers, need to ensure that the way they present their branded services and solutions to clients builds optimal brand value. Equally important is the need to understand opportunities for growth and innovation based on unmet customer needs, and create additions to the portfolio that align with the existing framework.

Case study 1 Pruning to support new brand investment with better return A leading technology company’s existing portfolio was a particular challenge. It grew from internal development, with every product developer feeling the need to create a new brand. The result was an array of functional and suggestive product names, complex versioning systems and confusing ingredient brands. We simplified the brand architecture and reduced the number of brands by 85% to focus investment on one masterbrand with clear sub-brand product lines.

Case study 2 Uncovering the white space for new revenue-generating opportunities We helped a leading home improvement retailer find opportunities to satisfy unmet customer needs. With many successful private label brands, an in-depth analysis was required to evaluate the brands to drop, extend, add or reposition. We started with an understanding of the brands’ current hierarchy status, their organizational alignment, and their strengths and weaknesses. Then we aligned the brands’ equities with the category requirements.

The analysis uncovered category opportunities for growth that could be captured by adding new brands to the portfolio and identified categories that should be avoided.

Neglected in the good times Plants and flowers left unattended in adequate climate conditions grow and produce an interesting, unexpected wild garden. Similarly, brand portfolios tend to get bigger when conditions are favourable, through new acquisitions or new product innovation. Branded offerings can increase because of internally-driven initiatives even though they may not be adding unique value to the overall portfolio.

But when business conditions are strong, (enough marketing time and money to support additional brands) brand portfolios are often left unattended. Organizations are not forced to make hard portfolio choices because they don’t have to. So many branded offerings, whether performing well or not, live on in the absence of regular scrutiny.

The hazard of neglected brand portfolios is inefficiency and missed opportunity.

An unmanaged portfolio can be confusing to customers, expensive to maintain and detrimental to the brand. It limits an organization’s ability to discover the best opportunities for innovation, and direct their marketing support where it will have the greatest impact on performance.

Big opportunity in the bad times When resources are limited and pressure is on to find new revenue opportunities, brand portfolio management can provide a fact base for answers. Mapping current portfolio offerings by segment, understanding customer needs, comparing brand value (a financial metric that includes both role of brand and brand strength) and business value enables organizations to make the right strategic choices for increasing or decreasing brand investment. It uncovers strategic opportunities for revenue growth by highlighting unmet needs from the customer point of view.

Understanding the brand value of your total portfolio also provides a financial metric for ongoing brand value growth.

You have to be ready There are certain requirements to implement brand portfolio management successfully in an organization that is not traditionally brand or marketing-driven.

1. Openness to change Organizations must be open to shedding brand perceptions based on historical, political and internally driven views and replace it with a fact-based, external view of the way people buy. If leadership has an unwavering emotional attachment to particular brands regardless of an external fact base about the brand’s performance or potential, portfolio strategy will be challenging.

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Key takeaway Brand Portfolio Management enables organizations to make the right decisions to: • Eliminate or reduce spending on branded offerings that do not generate sufficient value.

• Increase spending on branded offerings that have potential to generate greater brand value.

• Innovate with new branded offerings that capture unmet needs to grow top line revenue.

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2. Courage Organizations must have the courage to take action to drive top line as well as bottom line growth. Investing in information is an intelligent decision; not having the courage to use it invites risk.

3. Commitment Organizations must commit to ongoing brand portfolio management. This is not a one-time corporate initiative; it is a way of doing business. Brand portfolio management should evolve over time. This requires putting a system in place with clear leadership, responsibilities, skilled resources and profile within the organization.

It also requires a commitment to ongoing measurement to provide current data about which brands are performing.

The time is now With openness to change, courage and commitment, organizations can more optimally manage their brand portfolios by cutting costs in the right places, investing limited dollars wisely and capturing opportunities for growth. The good news is that in an economic downturn, old rules of engagement are turned upside down and the window for change is opened. Today, companies are looking for solid answers to tough business questions. Any previously held views on what brand portfolio management can or cannot accomplish should be reconsidered. Now is the time for a strategic approach to brand portfolio management to receive more attention on the executive agenda than ever before.

Read the entire Brand Stimulus Series 1. Do you know what customers value now? Profiting from shifting consumer behaviors.

2. Brand portfolio management: Now is the time to prune and grow.

3. Delivering the brand experience. Is your organization aligned to meet its promises to customers?

4. Is your marketing measurement just good enough? Getting better information to optimize your marketing mix.

We can stimulate business growth in ways you might never have considered.

Interbrand started in 1974 when the world still thought of brands as just another word for logo.

What kind of stimulus will help you get the most value out of your brand?

We have changed the world’s view of branding and brand management by creating and managing brands as valuable business assets.

We now have nearly 40 offices and are the world’s largest brand consultancy.

We bring together a diverse range of insightful thinkers making our business both rigorously analytical and highly creative.

Interbrand has the broadest geographical presence – offering more people, more disciplines, and more knowledge tailored to our clients. Our work goes deeper and further.

We create and manage brand value by making the brand central to the business’s strategic aims. We’re not interested in simply being the world’s biggest brand consultancy. We want to be the most valued.

Want to find out more? Please contact us. bev.tudhope@interbrand.com 416 628 2060

ted.graham@interbrand.com 416 628 2080

www.interbrand.com

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