Branding Strategy Insider helps marketing oriented leaders and professionals like you build strong brands. BSI readers know, we regularly answer questions from marketers everywhere. Today we hear from Diego, a CMO in Santiago, Chile who has this question about brand portfolio strategy.
“We are a company in Chile and operate in 5 other countries in South America. Each of the countries we operate in has their own food brand (details withheld) (brand a,b,c,d,e) that are either leaders or second place in their category.
The product of each brand is almost exactly identical as each country produces it with the same ingredients. Sales of brand B are much higher than the rest (bigger country), this has allowed us to invest in better packaging for brand B. Our plan is to use the same brand (brand B) in every country so we can take advantage of the economy of scale and manage only one brand.
The problem is that brand B (the same goes for the others) is only known in their country. Business-wise, the decision makes sense as we would only manage one brand. Branding-wise, it doesn’t make sense to replace a well-known leading brand with a unknown brand. What implications should we consider in this transition?”
Thanks for your question Diego, there are several strategic considerations that come into play when making a decision to move to a one-brand-strategy. I’ve asked a few colleagues to offer their thoughts as well.
When considering going from multiple brands to one, it is important to understand the awareness levels and associations for each of the brands for each of your target audiences. You will need to quantify this to determine which brand will be the most advantageous to use as the single brand.
Sometimes one of the sub-brands has higher awareness and more positive associations than the parent brand and ultimately is the best candidate to become the singular brand. It is important that the brand that is chosen has positive associations (or at least does not have negative associations) in the product category and with all target audiences. You will need to communicate heavily that the brands that people previously knew (that are going away) have taken on a new brand identity. This is no trivial matter. People will need to hear this message at least seven to twelve times for it to encode in the mind.
This can be accomplished through marketing communication alone or through that and a transitional brand identity system that signals the change. You might consider a parent brand/sub-brand architecture or even an endorsed brand strategy (in which the sub-brand is endorsed by the parent brand).
Once you have decided on the brand portfolio and architecture, then you must decide how you will transition from your current brand structure to the post merger structure. It can be a one-or two-step process and the steps might be triggered by external benchmarks such as degree of brand equity transfer. Finally, you must decide if everything will change at once for each transition step or if it will happen gradually based on budget constraints, depletion of inventories and natural obsolescence.
There are financial and practical considerations like the cost of new signage and the cost of discarding existing packaging versus waiting for the brand change until you have sold all of the products using the old packaging. There is also the necessity of transferring equity from one brand to another before the first brand is eliminated. Finally, there is the required communication campaign, which is not insignificant, so that customers understand the changes that are being made.
Changes in a brand portfolio can be complicated, however the end result is greater marketing efficiency and effectiveness and greater customer clarity. Brand rationalization can also result in making the remaining brand stronger.
A Question Of Brand Equity: Ashley Konson
The key issue here is the “Brand equity”of these brands in their home markets. How well are they known/how strongly embraced by consumers?
Brand Equity likely comprises awareness of the “branding” of these products…awareness of the brand name and visual identity of these brands rather than deeper equities such as “meaning/differences” based on associations.
One practical way to create a single brand over time requires brand equity transfer…a process of step change/changes in branding/visual identity.
Kinkos –>Fedex/Kinkos –>Fedex
This strategy is usually employed when a branded manufacturer sells a brand in a product category to another manufacturer and the sale requires the new owner to cease using the brand and replace it with a new one after a period of time.
Make Your Decision With A Focus On Sources Of Value: Martin Bishop
In the sometimes tangled world of brand architecture, marketers can apply the principle of net benefit to resolve key questions. Often brand architecture comes down to a trade-off between focus and efficiency. Should we maintain our portfolio of brands that allows us to really focus on key product categories/consumer groups or should we consolidate our portfolio, sacrifice some of our focus but save money?
In a typical scenario, a business will have grown organically or by acquisition and have more brands in its portfolio than it can manage or support. The principle of net benefit provides a framework for evaluating the portfolio. Which brands are pulling their weight? Which are not? Could a streamlined portfolio widen the gap between differentiated-driven revenue and costs?
Net benefit creates a bias towards simplification and puts the focus on sources of value. Often it turns out that less is more, even when portfolios are made up of well-known brands. The same applies to branded features—while each feature may provide some source of value and differentiation, there’s not enough marketing money for consumer attention to support every feature that could be branded. The net benefit principle helps evaluate which features (if any) deserve branding status.
Some common drivers of the benefits and costs of brand architecture initiatives are:
1. Targeting the drivers of specific product categories
2. Targeting the needs of specific consumer groups
3. Focusing attention on product innovation or other areas of competitive advantage
1. Reducing marketing costs necessary to support multiple brands
2. Reducing the management costs of running a complex brand portfolio
3. Reducing buying costs by giving customers fewer options so that they can find what they’re looking for more quickly
Why More Organizations Are Adopting A One-Brand-Strategy: Mark Ritson
The main reasons for this migration include financial savings, geographical similarities, the rise of CSR, the power of digital communications and the rise of retailer power. Unless brand research proves otherwise, it would be better for you to focus on one brand. I would choose a brand that had some meaning across all of your product categories and uses. I would also craft a tagline that alludes to the benefits offered by your brand. Regarding your brand’s Internet presence, I would focus on one website, with separate navigation (and pages, if necessary) for different customer groups with different needs. Your marketing dollars will go further if you are only supporting one brand. And, brand awareness, a key driver of customer brand insistence, should increase.
Additional Considerations: Mark Di Somma
- What do we bring to this market that our customers are looking for? (and that wouldn’t be here if we weren’t?)
- Why will our customers stay with us? What do they want more of?
- What are we all agreed on as a leadership team? Company?
- What will take them by surprise? What will we bring to market that they weren’t ready for (but were glad to see?) What will they not miss once it’s gone?
- What does our willingness to change the brand say about us to our customers and what does it signal to our competitors?
1. Measure the equities of the brands in question.
A brand equity measurement study will be instrumental in understanding the customer perceptions of the brands’ in question and each of its key competitors. The Blake Project’s BrandElevation system has as its underpinning the five drivers of customer brand insistence – awareness, relevant differentiation, value, accessibility and emotional connection. But it also measures the importance of and brand delivery against up to 24 brand or category benefits or shared values.
2. Think through your brand architecture strategy.
Brand architecture design is one of the most difficult of all the brand management tasks, not only because of the egos and the politics but also because of its complexity and the need for it to anticipate a wide range of future scenarios. Never underestimate the value of taking the time to think through your brand architecture strategy. Your brands’ position in the mind may depend on it.
3. Think through the brand strategy of the chosen brand.
What value will this brand represent in the minds of those most important to its future? Consider the following: A brand culture program designed to rally all employees around the chosen brand. Brand positioning, Brand growth and storytelling workshops with the senior leadership team will provide clarity and confidence in the strategic direction of the chosen brand. The entire process should be based on the organization’s strategic intent informed by market research.
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