A robust brand portfolio strategy is crucial for organisations that are seeking to drive growth and profitability.
Effectively managing a company’s sub-brands, products, and services is vital to success. By organising these elements, customers can easily understand a business’s offerings and find what they need. The primary objective of a brand portfolio strategy is to maximise the value of each brand, product, or service while minimising the risk of market confusion and cannibalisation.
Portfolio issues are common in most industries, and the B2B tech sector is no exception. Such problems often result from rapid growth through mergers and acquisitions, continuous line extensions that dilute the brand’s essence, or a creeping focus that has gotten out of control. A clear and well-defined portfolio can significantly improve a company’s market position and long-term profitability.
3 reasons why the right portfolio strategy can drive growth
There are several reasons why a well-planned brand portfolio strategy is beneficial for businesses:
- Effective expansion. Good planning allows for effective expansion while maintaining a business’s position. By balancing clear brand boundaries and acknowledging the relationship between each sub-brand, product, or service, organisations can achieve a more focused market share and avoid portfolio self-cannibalisation. It also enhances a company’s reputation and fosters positive brand associations, increasing brand loyalty, customer advocacy, recognition, and market share.
- Better risk management. A well-designed portfolio enables better risk management by creating more leverage or offsetting risks. For instance, a sub-brand can be ring-fenced in a house of brands approach, which allows a product or service to remain distant from the parent brand’s negative reputation while maintaining the flow of equity. Alternatively, a branded house approach can leverage the parent brand’s benefits in a new market to gain a competitive edge.
- Shared resource. A well-organised brand portfolio can simplify processes, cut costs, and enhance efficiency by pooling production, distribution, and marketing resources. To achieve this, a portfolio must be lean and free from elements that sap investment and dilute brand efficiency, much like a garden infested with weeds.
Developing and maintaining a brand portfolio can be challenging, requiring a comprehensive understanding of the parent brand, a review of the value proposition, target market, competitive positioning, and linkages between each brand within the family. Each brand in a portfolio should function like a football player on a field, with specific roles in offensive and defensive strategies against the competition. To win the game, each player must fulfil their position’s specific function and contribute to the bigger team’s success.
If you would like any assistance with your brand portfolio strategy, please drop us a line — we’d be happy to chat to see how we can help.
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