Portfolio power: harnessing a group of brands to drive profitable growth

Abstract

Brand portfolio management is not just a marketing issue, in which a sub‐optimal portfolio dilutes marketing messages and confuses customers. It also directly affects corporate profitability. Ill‐defined and overlapping brands in a portfolio lead to erosion in price premiums, weaker manufacturing economies, and sub‐scale distribution. In a slower economy, the problems of an under performing portfolio are even more acute: While adding brands is easy, it becomes difficult to harvest the value in a brand or to divest it. Effective brand portfolio management starts by creating a fact base about the equity in each brand and the brand’s economic contribution. The application of analytical tools can inform decisions about individual and collective brand strategies from targeting and positioning to investments, partnerships, and extension opportunities. Linking the intangibles of brands to hard financial metrics allows companies to exploit the full potential of their brands and thereby gain a competitive advantage.