Brand Portfolio Secrets to Success (5 Things You Need to Know)

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.

In this over-abundant world of consumer choice, more is rarely better. #consumer #brand #Marketing Click To Tweet

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.

THE 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 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%. 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 of 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.


Need help in cleaning up your brand portfolio, so you can put your efforts where they will bring the most return?

Let us help; contact us here.


C3Centricity used images from the book “Winning Customer Centricity” in this post.

 

Brand Portfolio Management: How to Make More (Money) with Less (Brands)

How do you know when you have too many brands 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 Brand Portfolio Management”. This week I’d like to take it a little further and speak about some of the reasons brand portfolio management is so important.

 

Br and portfolio management

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

                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 brands 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) brand, so I decided to look at the sub-category of consumer brands (Interbrand separates Food and Beverage brands from other consumer brands, don’t ask me why, especially when many make both! The four beverage brands in the top 100 – Coca-Cola (3), Pepsi (22), Nescafe (37), Sprite (69) – would all fall into the top ten consumer brands):

                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 Interbrand says in the summary of this category

“Consumer brands 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 brands, that window is narrow.”

This might explain why consumer brands 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 brands’ SKUs about 15 years ago from thousands 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 brand 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 understanding 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 brands from the Interbrands’ 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 brands 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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