How do you know when you have too many variants in your brand portfolio? In my opinion, the answer is that it’s when you can’t answer that question! Can you?
One of the most popular evergreen posts on C3Centricity is “The Beginners Guide to Brand Portfolio Management.” It seems that we all suffer from a deep-rooted fear of managing and reducing our brand portfolio, especially when it includes many historic or regional variants.
That is why I decided to write about these best-kept secrets in portfolio management, which even large corporations are not always aware of!
MORE IS RARELY BETTER!
We live in an over-abundant world of consumer choice, but more is rarely better. The paradox of choice is a powerful concept popularised by Barry Schwartz.
It states that people actually feel freer when they are given fewer choices. Have you never ended up walking out of a store without the purchase you had planned, because you had been faced with too many choices? I know I have – often!
It is said that the limited choice offered in hard discounters in one of the reasons for their success. It appears that it’s not only about lower prices.
Retailers such as Aldi and Lidl present just one or two brands of each category they stock, in addition to their own brand. The branded products they do sell are almost always the cheapest offering the brand has, or one of their older versions that are no longer very popular. And they are usually at the same price if not even higher than in normal supermarkets!In this over-abundant world of consumer choice, more is rarely better. #consumer #brand #Marketing Click To Tweet
More than fifteen years after the first research on which Schwartz based his theory was conducted, new studies have given some alternative perspectives on choice. They claim that large assortments are not always a bad thing. In the study by Gao & Simonson, they propose that there are many factors which were forgotten in Schwartz’s original study.
You can read the full findings of this latest work in Neuromarketing. What I found of particular interest in this article, being the customer champion that I am, is that they conclude by saying that it all depends on understanding your customer – doesn’t everything?! Their summary findings state that:
“In certain situations (when the ‘whether to buy’ decision comes before the ‘which option is best’ decision) a large assortment CAN increase purchase likelihood. Especially in eCommerce, it is possible to reap the benefits of a large product assortment, while helping customers make choices?”
In other words, the online searches that we all now perform before purchasing many articles, will benefit from a wide selection of offers. Once we have decided to buy, then a large choice can become a barrier to the final purchase.Renovations should be replacements of less successful offers, not additions to your already over-extended brand. Otherwise you end up confusing your customers with too much choice. #Brand #Marketing #Portfolio Click To Tweet
THE 5 SECRETS
In conclusion, to summarise the best strategies for brand portfolio management, which seem to be a well-guarded secret since many corporations still ignore them, are:
- Remember, that if you offer a vast choice of variants for each brand, consumers could get analysis paralysis and end up walking out of the store without buying anything.
- You need to manage the corporate brand just as you do your other brands, especially if it appears prominently on packaging or your other communications’ materials.
- Make an annual review of all your brands and variants and ruthlessly cut the bottom 20%. If you want to keep any of them, then you must have a good reason – such as that it’s a recent launch – and a plan to actively support them.
- Innovate less but better. Be more targeted with each innovation and include your consumers in their development.
- Be realistic in your distribution targets. Know what will sell where and why. Not only are you more likely to keep your share, but you’ll also make friends with your retailers.
Coming back to the leading consumer brands from the Interbrands’ list, all top ten excel in brand portfolio strategies that are precisely differentiated, clearly targeted and well communicated.
David Aaker wrote an article on L’Oreal a few years ago that explains the above theories very well. Even if it’s from December 2013, not much has changed and it still makes a great read; highly recommended.
I believe that most brands with tens or hundreds of variants in a market, are being managed by lazy marketers. People who don’t have the courage to manage their brands effectively by regularly trimming their poorest performers. They must face up to the lack of success of some of their “babies”.
Are you one of these marketers? What’s your excuse? I’d love to hear your reasons for keeping all your SKUs.