Just as too many cooks can spoil the broth,
too many brands can spoil the strategy….
Companies generally don’t invest much time determining the number of brands they need to support their business strategy. Similarly, they don’t give much thought to brand architecture or how brands relate to one another from a consumer perspective. Decisions about the brand portfolio are often made for historical reasons rather than based on business strategy driven by consumer logic.
Brands evolve over time, shaped by consumer, customer, and competitive influences. Sometimes new brands with similar audiences and offerings may be introduced to address specific situations. Examples could include a flanker brand to protect the base business against a competitive threat, or an emerging premium category best tackled through a new brand. Often companies accumulate brands through acquisitions.
Of course, there are pros and cons to having a large number of brands. Large portfolios can make it more difficult for competition to enter your market, allow stronger representation on shelf, and distribute your risk in a given market.
On the downside, brand proliferation generally reduces individual brand strength and market share, while increasing costs associated with inventory, logistics, and channel management. Most importantly, if your strategy is to build a strong brand franchise, having numerous brands competing for resources will inevitably dilute your marketing effort, resulting in limiting the growth of that key brand.
There are a number of organizations that have addressed the issue of too many brands. For example, in 1999 Unilever announced its’ Path to Growth’ initiative, targeted at decreasing complexity, reducing costs, and increasing efficiency across their global system. The initiative impacted brands accounting for 90% of the then $27B in revenue. Four years later, the company had consolidated 1600 global and regional brands down to around 400.
While your company may not have an issue of the above magnitude, perhaps you have concluded that a better long term strategy would be to streamline your market offering, and concentrate resources on a particular franchise. If so, I’d recommend a structured process with the following key stages:
1. Strategy First
Since the brand structure must support future growth, ensure the business strategy is endorsed by management, well understood internally, and with key tactics aligned to the strategy. For instance, if you have a multi-channel business strategy, an architecture that merges everything under a single brand could cause problems.
2. Audit your Current Environment
It’s important to really understand the current situation, including the history around where the brands came from, what the trademarks and description of wares are, and how the brands operate in various categories and within specific customers and geographies. This is a time for internal collaboration… obtaining input from major constituencies, including sales, operations, legal, purchasing, and logistics. Respect individuals with tenure, as they can have a valuable perspective on the brand roadmap.
The next stage in the process is to evaluate each brand relative to the strategy. For example, does each brand have a unique consumer role, or is there overlap with other brands in the portfolio? Do like brands exist solely from a customer listing standpoint, and if so, is this in line with the strategy?
If information is scant, this stage may benefit from research to better understand key drivers of consumer purchase behaviour, and how your brand benefits are perceived versus competition. Research may also provide awareness of evolving trends and help validate positioning alternatives.
4. Plan & Execute
Having completed due diligence both internally and externally, the real work is about to begin. This is important work, and needs a solid plan with performance metrics, realistic timelines, and clear, frequent communication. Numerous areas across the organization will be impacted, and you’ll want input and commitment from all. Obvious touch points include those listed above, as well as others. For example, if the organization is going through significant transformation, ensure HR is included. Button this project down with timelines, budgets, and a method for measuring progress.