Creating a brand portfolio strategy ensures that each brand contributes to your goals. It also addresses the needs of diverse customers and aims to minimize the risks while maximizing returns.
In other words, it doesn’t just impact your branding; the health of your business depends on it as well.
In this article, we’ll discuss the steps needed to create a brand portfolio strategy, the advantages of a brand portfolio, and how to effectively manage the portfolios.
TL;DR – 3 Steps to Build a Brand Portfolio Strategy
No time for the details right now? Here’s a quick summary of the steps needed to manage your portfolio of brands:
- Determine your brand intent
- Evaluate brand performance
- Map out your game plan
I will discuss each of these steps in detail in this article, so read on to learn more.
But to get it right, your messaging needs to be spot on.
Join me, Nora Sudduth, to refine your marketing with messaging that tells your unique story and highlights the value your brands provide to your audience. Connect with me today.
What is a Brand Portfolio?
Brands under the same parent company comprise one brand portfolio.
Ideally, each brand serves a specific function that contributes to your business goals and reinforces your brand message.
They also have varying levels of importance so you can pinpoint which ones to prioritize, streamline their roles, and maximize their collective impact.
There are two models of brand portfolios:
- House of brands: In this model, the brands’ association with the parent brand is not explicit (as they have different brand names).
For example, Unilever’s house of brands includes Dove, Pond’s, and Axe.
- Branded house: Companies following this model (also called “branded property”) have brands that share the same name or logo and are operated by the parent company.
Example: Amazon Prime, Amazon Fresh, Amazon Kindle, etc., under the Amazon brand.
Brand Portfolio Examples
You can take inspiration from real-world examples of brand portfolios below:
Johnson & Johnson’s House of Brands
A known healthcare company, Johnson & Johnson’s portfolio of brands covers three main product categories: pharmaceutical, medical technology, and consumer products.
This multinational corporation is a good example of how a business can leverage its brand portfolio to branch out into related business areas and maximize its growth potential.
Healthcare is a vast landscape teeming with business opportunities, and Johnson & Johnson clearly understands that. With hundreds of brands in its portfolio, it uses brands to effectively cover as wide a share as possible.
Under the same parent company, Johnson & Johnson’s brands also share the same value of “redefining healthcare.”
Some of the most well-known brands under the Johnson & Johnson house are Band-Aid (consumer health), Benadryl (pharmaceutical), and DePuy Synthes (medical technology).
You can follow this example to ensure that each of your brands stays true to your brand pillars.
Google’s Branded House
When we think of brands like Google Calendar, Gmail, and Google Meet, we don’t think of them as individual entities. We think of their parent company, Google.
That’s mainly because their products are designed to be used within the Google ecosystem–which is exactly how a branded house works.
The average Google user opens Google Docs to create a document, takes photos from Google Photos, and stores the document in Google Drive.
For a powerhouse brand like Google, this model works because the name of its parent company is its strongest branding asset, which is why it makes sense to market the company’s sub-brands under the same name.
Advantages of Brand Portfolios
If you’re looking to scale, an organized brand portfolio is one of the surest ways forward.
Here’s why:
Wider Market Reach
As with the Johnson & Johnson example, an organized portfolio will help you effectively reach various target markets by clarifying the value that each brand provides.
Let’s take Coca-Cola’s example. With more than 200 brands in their portfolio, they have managed to reach a wide market by promoting brands that appeal to audience segments with different considerations for buying a product.
For the weight watchers, they have Diet Coke. For the health-conscious, there’s the newly released Tapo Chico Sabores, a sparkling mineral water drink with no added sugar. Need a little boost for an all-nighter at work? Pack a Monster Energy drink. That’s only to name a few.
Consistency in Messaging
When managing as many brands as some of the world’s largest corporations do, your messaging could become blurry and confusing.
For instance, with a collection as eclectic as Coca-Cola’s, it’s easy for brands to communicate messages that veer away from a parent company’s brand identity.
Managing a brand portfolio helps ensure that though your brands may address various needs and appeal to totally different market segments, they still share the same values and reinforce the same core messages.
Looking again at Coca-Cola’s example, although their brands may look wildly different, they all have one thing in common: their mission “to refresh the world.”
Cohesive Business Strategy
Managing your brands requires you to examine whether each effectively helps you achieve your ambition for your business.
A brand portfolio ensures that each brand points toward the same agenda and helps achieve your business goals.
Carrying brands that don’t help you achieve your goals will only hamper your growth, so some companies choose to sell off brands that don’t contribute to their objectives.
One example is when beauty company L’Oreal sold off The Body Shop in 2017 after the natural beauty brand’s weak performance and an apparent misalignment between the companies’ values.
What Are Brand Portfolio Roles?
If you examine the brands in your portfolio more closely, you will notice that they fulfill different functions in relation to your business strategy.
These four roles are the following:
Cash Cow
These are the most recognizable and most profitable brands in your portfolio. They typically don’t require much upkeep and are able to generate enough income to stay afloat independently.
As the term suggests, they are the brands that companies keep as is and maintain mainly for the profits they bring in.
Flanker
These are brands that companies launch within a market where they already have an existing brand.
Though they are technically competing brands, they actually complement each other.
For example, Diet Coke is a flanker brand to Coke. It appeals to a different group of customers within the same market, allowing the company to enlarge its market share and boost sales.
Entry-Level
An entry-level brand is a more affordable option that companies offer to entice potential customers to convert.
Their main aim is to hook people and get them to try the brand out, which is ideal when targeting an untapped audience or people using other brands.
Entry-level brands also serve as stepping stones toward more expensive or higher-end brands.
Prestige
Companies may communicate luxury or superior quality by promoting high-end brands. These brands have hefty price tags and appeal to a more discerning or quality-focused target market.
Some companies add prestige brands to their portfolio in the hopes of creating a positive effect on their other brands or persuading customers that if one brand is that good, the others should also be worth trying.
An example of a prestige brand is Volvo, a luxury brand under the parent company Zhejiang Geely Holding, which also produces more affordable Geely cars.
Steps to Build a Brand Portfolio Strategy
A brand portfolio can impact your business long-term.
Not only will it allow you to plan for the years ahead, but it will also help you evaluate how each brand supports your desired business trajectory.
You can follow these steps to get started:
1. Determine Your Brand Intent
Your strategic intent is your ambition for your business, which you can pinpoint by asking:
- Where do I want my business to be in the years to come?
- How do my brands contribute to that goal?
- What values do my brands communicate, and do they align with my ambition?
- What other non-monetary goals do I want to achieve with my branding?
If you haven’t built a brand portfolio before, expect it to get a bit messy. You may find that some brands are totally off-track from where you intend to be in the next, say, ten years.
That’s okay.
One of the main steps of creating your portfolio is spotting those issues now—which means an opportunity to redirect.
2. Evaluate Brand Performance
Once your goals are in place, it’s time to examine the brands you own.
There are several considerations when doing this:
- Financial performance: If it hurts your bottom line, it has to either go or get redirected. Look at how each brand is performing profit-wise to learn the financial impact each has on your business as a whole.
- Consumer needs: Each brand must serve a purpose in your portfolio, and one of those should be addressing customer pain points and problems. Brands that do so provide value that translates into profit.
- Market opportunities: Do your existing brands allow you to expand your market share? Do they appeal to an audience that your other brands don’t?
- Alignment to business goals: Last but not least, how do they help you achieve your business goals? Do they propel you forward? Every brand must contribute to your strategic intent.
3. Map Out Your Game Plan
The final step is drawing a brand portfolio strategy or a plan for shaping and managing your business.
Think of it as a multi-piece puzzle, with each piece a different brand that completes your intended picture when put in the right place.
To do this, you must:
- Specify brand roles: Which are your cash cow, flanker, entry-level, and prestige brands? Identify your drivers or flagship brands and determine how to maximize their potential for growing your business.
- Assess areas for growth: When drawing your game plan, you may find gaps where a brand should be contributing to your business objectives.
This is when you might consider adding a brand to attract a new market, address a market shift, or capture a larger market share.
- Differentiate each brand: Each brand must communicate a unique value proposition with its key messaging. Doing so ensures that the brand appeals to its intended audience and doesn’t simply become copies (and hence competitors) of your other brands.
Once you have a solid brand portfolio, it’s time for the next step. Ensuring your brands reach your target market.
An effective way to do that is to have a strong messaging strategy that enables your customers to connect more closely with your brands.
If you need guidance for creating highly targeted messaging, let’s connect for a discovery call, and I’ll help you devise an effective messaging plan.
How to Ace Brand Portfolio Management
Managing a ton of brands isn’t easy, even if you’re not a giant conglomerate!
So, let me share some tips on how to manage your portfolio effectively:
- Start with a business strategy: Your brand portfolio should support your business strategy and how you intend to introduce your brands and offerings to (or establish their place in) your market.
- Don’t just look at economic value: Not all brands in your portfolio are meant to be cash cows.
While financial incentive is important, other factors (like the ability to foster customer loyalty or funnel customers to other brands within the portfolio) also deserve space in your evaluations.
- Revisit established brands, too: Even your strongest brands might need updating. They’re great for bringing energy into your other, less prominent brands, but they themselves could use a boost every now and then.
Consider partnering with other companies, igniting interest with events, or adopting new trends.
Frequently Asked Questions (FAQs)
Below are some of the most commonly asked questions about brand portfolio strategy:
What Makes a Good Brand Portfolio?
A good brand portfolio:
- Contributes to your business goals: A solid portfolio strategy ensures that brands work together toward the same objectives.
- Differentiates each brand: This avoids brands that overlap or compete against each other.
- Drives growth: A brand portfolio supports your business strategy and allows you to scale with ease.
What is the Difference Between Brand Portfolio Strategy and Brand Architecture?
A brand portfolio strategy is the master plan for shaping and managing the brands within your company.
A brand architecture is the hierarchy that your brands follow. It defines the roles they fulfill and their interrelationship under the same umbrella company.
Conclusion
A brand portfolio is not just a collection of names.
It’s closely tied to your business strategy and ensures that each brand helps make your business ambitions come true.
To build a portfolio, identify your strategic intent, evaluate the performance of your brands, and create brand architecture that specifies each brand’s role.
Pro Tip: To thrive in a crowded market, each brand in your portfolio must differentiate itself and make it clear why it’s the brand to choose. You cannot do that with generic messaging.
What you need is a strategic, personalized messaging strategy that showcases your unique brand value and articulates your story in a way that drives results. I can help you create a winning campaign through this. Join me for a discovery call today.
