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Br and Portfolio Management: How to Make More (Money) with Less (Br ands)

How do you know when you have too many br ands and variants? In my opinion the answer is that you have too many when you can’t answer the question! A couple of months ago I wrote a very popular piece called “ A Beginners Guide to Br and Portfolio Management”. This week I’d like to take it a little further and speak about some of the reasons br and portfolio management is so important.

 

Br and portfolio management

Br and management is essential to a healthy business, but marketing has one of the quickest promotion ladders of many professions. That’s great news for marketers, less so for br ands. Why? Well because marketers want to make an impression and get that promotion as quickly as possible. And one of the easiest ways is by launching a new br and or variant.

 

I believe this is one of the main reasons why we poor consumers often end up NOT buying something, because we just can’t make our minds up between the vast choice of flavours, packs and sizes on display in some large hypermarkets. More is most definitely not always better when it comes to retailing! (>>Tweet this<<)

Does a br and really need tens of flavours / aromas and hundreds of variants? I decided to take a look at the leading global br ands to help answer this. According to Interbr and, these are the top 10 most valuable global br ands:

                1. Apple
                2. Google
                3. Coca-Cola
                4. IBM
                5. Microsoft
                6. General Electric
                7. McDonald’s
                8. Samsung
                9. Intel
                10. Toyota

Now most of these br ands certainly don’t have hundreds of variants from which to choose and therefore final selection is relatively easy. However, interestingly only one of these is a CPG (consumer packaged goods) br and, so I decided to look at the sub-category of consumer br ands (Interbr and separates Food and Beverage br ands from other consumer br ands, don’t ask me why, especially when many make both! The four beverage br ands in the top 100 – Coca-Cola (3), Pepsi (22), Nescafe (37), Sprite (69) – would all fall into the top ten consumer br ands):

                1. Gillette (16)
                2. Pampers (29)
                3. Kellogg’s (30)
                4. L’Oreal (39)
                5. Danone (49)
                6. Colgate (50)
                7. Heinz (53)
                8. Nestle (56)
                9. Johnson & Johnson (81)
                10. Duracell (85)

As Elan Cole from Interbr and says in the summary of this category

“Consumer br ands bank on their unique versions of these products to generate and grow value. But as soon as one br and patents a technology, competitors ( and the retailer that sells it) race to copy it, one-up it, or make it in strawberry flavor. The advantage that technology brings to a br and is only as valuable as the window of time that the br and controls the manufacturing and access to it. For consumer br ands, that window is narrow.”

This might explain why consumer br ands tend to have far more variants than some of the other leading br ands and categories mentioned above, whose technical advances often last longer.

Two of the leaders in CPG (Unilever and P&G) both culled the number of their br ands’ SKUs about 15 years ago from thous ands down to “mere” hundreds and continue to do so on a regular basis. Taking Pareto’s Principle as a guide, it is relatively easy to cut the bottom 5%, 10% or even 20% of br and variants without losing any significant share. This is why both companies continue to do this on a frequent basis.

What is surprising however, is that other CPG giants don’t, or at least not to the same extent! It’s as if they know they should be making cuts and so make a few, but in the end they don’t go far enough because they seem to be scared of losing share. If you are struggling to make this difficult decision yourself, then perhaps I can provide a few reasons to convince you to make that much needed pruning:

  • Those multiplications of flavours, aromas, packaging etc you are making are renovations, not innovations. Wake up marketers, you are not innovating!
  • Retailers can’t stock every variant, so the more you offer the less chance you have of getting wide distribution. Think back to your pre-launch market assumptions; I bet they included a wildly exaggerated level of distribution in order to get that precious launch approval.
  • Precise targeting and a deep underst anding of your consumers are the most successful ways to limit SKU explosion. If you are suffering from too many variants, then perhaps you should go back and review what you know about your consumers and what they really need.
  • Arguably some categories need constant renovation (food?), but even that’s no excuse for simply multiplying SKUs. Use the “one in, one out” rule, because if you don’t the retailer probably will and without regard for your own plans and preferences.
  • Remember, that if you offer a vast choice of variants for each br and, consumers could get analysis paralysis and end up walking out of the store without buying anything

Coming back to the leading consumer br ands from the Interbr ands’ list, all top ten excel in br and portfolio strategies that are precisely differentiated, clearly targeted and well communicated. David Aaker wrote an article on L’Oreal a few months ago ( Which firm has the best br and portfolio?) which explains the above theories quite well.

I believe most br ands with hundreds of variants in a market, are being managed by a lazy marketer who also doesn’t have the courage to face up to the lack of success of some of his “babies”. Are you one of them? What’s your excuse? I’d love to hear your reasons for keeping all your SKUs.

C³Centricity used images from Microsoft and Dreamstime in this post.

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