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Brand Portfolio and Architecture

By Marketing Advisory, 3EA
Brand Portfolio and Architecture

A brand portfolio is simply the umbrella under which a brand or a line of brand lies to serve the needs of various customer segment. Small business may have a single brand under them but multinational corporations usually have multiple brand under their portfolio. Brand portfolio strategy aims at maximising market coverage & minimise the brand overlap.

The main advantage of having a brand portfolio is that top management can see how all the portfolios are performing and take strategic decisions accordingly.

Within a portfolio, a brand can play multiple roles:

Flankers (Fighters): These are placed with respect to the competitor's brand so that the flagship brand remains protected. Management has to make sure that flankers do no cannibalize the flagship brand.

Cash Cows: These brands usually require zero or very less marketing support and still they are able to provide decent profits.

Low-end entry level: Relatively low priced brands designed to attract first time consumers to a particular brand who can later be graduated to High priced brands.

High-end Prestige: These are the products that are offered at a very high price with an agenda of creating a sense of prestige in the minds of the customers.

Is it important to manage Brand Portfolio?
Yes, it is important (usually in cases of big portfolio) as it helps to restructure by repositioning, consolidating and expanding the brands accordingly.

Managing also helps in the resource allocation as R&D and marketing spend should be focused on the areas with best ROI. Every brand requires resources in different quantity and without a clear picture of the brand portfolio, it will be difficult to understand how best to support the brand.

Efficiency of the company increases as the stand alone brands will always create confusion whereas brand portfolio could be cost efficient by creating economies of scale in manufacturing as well as communication.

Characteristics of Ideal Brand Portfolio
a. The Portfolio should be in line with the company's Mission & vision Statement.
b. Discontinuing of the products which aren't aligning with the company's vision even though they are profitable.
c. Should not create confusion in the mind of the customers.
d. According to the brand positioning, portfolio should include/acquire the brands so that the customer stays in the ecosystem.

Brand Architecture is defined as the organisational structure of brand portfolio that specifies roles of the brand and the relationship between them. This tool helps manager to understand complex brand architecture issues & also helps minimising customer confusion by laying out product structure in a way that it is easier for them to understand what a brand has to offer.

There are several benefits of creating brand architecture:
a. Target the needs of specific customer segment
Helps in segmenting the message & services. Thus, target audience receives the message they are looking for.
b. Reduction in marketing costs
Brand architecture leads to the more efficient way of marketing, there is a huge savings on the marketing costs and cross promotion of the brands is also possible.
c. Revenue growth through cross selling
When you clearly articulate the story about how the brands complement each other, then it makes easier for the brand to sell their products.
d. Gain clear & consistent image in the marketplace
Through the visual aid of the brand architecture, you can actually show people how we are different which in turn boost the confidence of all the stakeholders.

According to Acker, there are 5 building blocks of Brand Architecture as shown below

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All in all, there are 3 types of architectures available:

a. Branded House
Here all the operating companies and portfolio fall under the name of a master brand. This leads to minimum confusion & builds equity for the one single brand.

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b. House of brands
Here, multiple brands are present underneath the parent brand. This is usually done to protect the parent brand name in case one of the brand fails.

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c. Endorsed Brand
It's a hybrid structure where some brand extension features the parent brand's name and some don't. This provides flexibility in naming. This may lead to the fact that the people may fail to realise the connection between the extended brand & the parent brand.

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Key lessons:
- Be customer oriented in terms of brand portfolio. For e.g, your portfolio strategy should drive the R&D of the business not the other way round.
- Ensure that the architecture provides the clarity to the customers as well as other stakeholders. If they aren't able to understand it, then brand architecture needs to be updated.
- With changing times, the portfolio strategy should also be dynamic & should keep on changing with the needs of the customer (Majorly in the technology sector).

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Article by: Marketing Advisory, 3EA