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 in 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’s not only about lower prices.
They usually present just one or two brands for each item they stock and the branded products they do stock are almost always at the same price if not even higher than in normal supermarkets.
More than ten years after the first research on which Schwartz based his theory, new studies have given some alternative perspectives on choice, claiming 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 article on this latest work in Neuromarketing. What I found of particular interest, 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 things, will benefit from a wide selection of offers. Once we have decided to buy, then a large choice can become a barrier to final purchase.
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 like your other brands, especially if it appears prominently on packaging and your other communications’ materials.
- Make an annual review of all your brands and variants and ruthlessly cut the bottom 20%.