Auditing the portfolio strategically

Companies regularly reassess the relevance of their brand portfolio. Numerous matrices have been devised to help them do this – all derived from matrices used for the evaluation of the activity portfolios created by consultants such as the Boston Consulting Group, McKinsey and Mercier.

These matrices incorporate profitability, the competitive situation and the potential for growth. But can matrices for the analysis of an activity portfolio be simply converted into matrices for the evaluation of a brand portfolio?

There are two possible levels of analysis. The first is the intra-brand level which evaluates the portfolio of brand products (subbrands or daughter brands) according to the criteria mentioned above – are they in declining or non-cash generating segments, what are the growth vectors for the future? The second level asks the same questions at multi-brand level, on the global chessboard of actual and predictable competition. The lines and columns of the matrix are growth and profitability.

The markets are then shown as circles whose size reflects the actual size of the market. Brands are represented as portions of these circles (markets) where the portions reflect their market share.

The most classic way of structuring a portfolio is to divide the brands into groups according to attractiveness and function. This makes it possible to identify:

  • Global brands, which should theoretically be the largest source of growth in the brand contribution, and as such should receive the lion’s share of investment in advertising and promotion.
  • Local or regional growth brands, which have the potential to one day become global brands.
  • Local or regional brands that can be qualified as ‘fortress’ brands and which are often the historic market leaders, ‘entrenched’, and therefore very profitable. There is therefore a strategic interest in maintaining these ‘fortress’ brands since they in fact finance the development of global brands in their own country. They are often brands in mainstream segments.
  • Local or regional ‘cash-cow’ brands, which have a low growth rate but a strong contribution margin.

Another form of audit consists of regularly evaluating the ability of the current portfolio to ensure the profitable coverage of future markets. Is the current portfolio the right response to market developments and competitive logic?

Thus, in the insurance sector, everyone is familiar with the growth of new distribution methods, like the telephone and the internet. An insurance company cannot afford not to be represented in this way. However, since the conditions offered are so very different from those offered by the network of general agents and brokers, they need to be represented by a specialist brand.

This is how UK insurer Aviva structured its brand portfolio. Eurofil was created to cover the growing segment of lowcost car insurance without creating conflict with Aviva’s other insurance distribution networks.

The segmentation of a market by user status (linking volumes, expectations and competitors to the use made of the product) also makes it possible to identify unexploited pockets of growth in the current portfolio. The first question to be asked is whether a range extension would offer an opportunity to gain a foothold in these areas. In this respect, all Nivea’s sub-brands reflect this determination to exploit all the potential sources of growth on the beauty-care market by capitalising on the single Nivea brand.

When this cannot be done, a company must have the courage to launch a new brand. For instance, in 2003, after trying everything under the global Barbie brand, Mattel decided to launch the new Flavas brand.

Auditing the portfolio can also reveal that it does not constitute enough of a barrier to prevent competitors entering the market, or even an incitement for them to leave. For example, it is impossible to find Orangina on the French TGV (high-speed train) network or in many airports and stations, even though it is the second largest soft-drinks brand in the country.

The logic of the operators of the caféhotel- restaurant network is to choose a soft- drinks distributor offering a complete portfolio – from cola to lime and fruit juice. So clients of the Coca-Cola Company receive Fanta (a fizzy orange drink) and Minute Maid (fresh orange juice) but not Orangina. This therefore creates a local monopoly and prevents free choice among end consumers.

Strategic Brand Management Related Practice Tests

Strategic Management Practice Tests
Brand Equity In Question What Is A Brand? Differentiating Between Brandassets, Strength And Value Tracking Brand Equity Goodwill: The Convergence Of Finance And Marketing How Brands Create Value For The Customer How Brands Create Value For The Company Corporate Reputation And The Corporate Brand Strategic Implications Of Branding What Does Branding Really Mean? Permanently Nurturing The Difference Brands Act As A Genetic Programme Respect The Brand ‘contract’ The Product And The Brand Each Brand Needs A Flagship Product Advertising Products Through The Brand Prism Brands And Other Signs Of Quality Obstacles To The Implications Of Branding Brand And Business Building Are Brands For All Companies? Building A Market Leader Without Advertising Brand Building: From Product To Values, And Vice Versa Are Leading Brands The Best Products Or The Best Value? Understanding The Value Curve Of The Target Breaking The Rule And Acting Fast Comparing Brand And Business Models: Cola Drinks From Private Labels To Store Brands Evolution Of The Distributor’s Brand Are They Brands Like The Others? Why Have Distributor's Brands? The Financial Equation Of The Distributor’s Brand The Three Stages Of The Distributor’s Brand The Case Of Decathlon Factors In The Success Of Distributor's Brands Optimising The Dob Marketing Mix The Real Brand Issue For Distributors Competing Against Distributor's Brands Facing The Low-cost Revolution Should Manufacturers Produce Goods For Dob's? Brand Diversity: The Types Of Brands Luxury, Brand And Griffe Service Brands Brand And Nature: Fresh Produce Pharmaceutical Brands The Business-to-business Brand The Internet Brand Country Brands Thinking Of Towns As Brands Universities And Business Schools Are Brands Thinking Of Celebrities As Brands The New Rules Of Brand Management The Limits Of A Certain Type Of Marketing About Brand Equity The New Brand Realities We Have Entered The B To B To C Phase Brand Or Business Model Power? Building The Brand In Reverse? The Power Of Passions Beginning With The Strong 360° Experience Beginning With The Shop The Company Must Be More Human, More Open Experimenting For More Efficiency The Enlarged Scope Of Brand Management Licensing: A Strategic Lever How Co-branding Grows The Business Brand Identity And Positioning Brand Identity: A Necessary Concept Identity And Positioning Why Brands Need Identity And Positioning The Six Facets Of Brand Identity Sources Of Identity: Brand Dna Brand Essence Launching The Brand Launching A Brand And Launching A Product Are Not The Same Defining The Brand’s Platform The Process Of Brand Positioning Determining The Flagship Product Brand Campaign Or Product Campaign? Brand Language And Territory Of Communication Choosing A Name For A Strong Brand Making Creative 360° Communications Work For The Brand Building Brand Foundations Through Opinion Leaders And Communities The Challenge Of Growth In Mature Markets Growth Through Existing Customers Line Extensions: Necessity And Limits Growth Through Innovation Disrupting Markets Through Value Innovation Managing Fragmented Markets Growth Through Cross-selling Between Brands Growth Through Internationalisation Sustaining A Brand Long Term Is There A Brand Life Cycle? Nurturing A Perceived Difference Investing In Communication No One Is Free From Price Comparisons Branding Is An Art At Retail Creating Entry Barriers Defending Against Brand Counterfeiting Brand Equity Versus Customer Equity: One Needs The Other Sustaining Proximity With Influencers Should All Brands Follow Their Customers? Reinventing The Brand: Salomon Adapting To The Market: Identity And Change Bigger Or Better Brands? From Reassurance To Stimulation Consistency Is Not Mere Repetition Brand And Products: Integration And Differentiation Specialist Brands And Generalist Brands Building The Brand Through Coherence Defining The Core Identity Of The Brand Confirming The Presence Of Brand Core Facets In Each Product Identifying The Role Of Each Product Line In The Construction Of The Brand Graphically Representing The Overall System Of The Brand Checking The Coherence Worldwide The Three Layers Of A Brand: Kernel, Codes And Promises Respecting The Brand Dna Managing Two Levels Of Branding Growth Through Brand Extensions What Is New About Brand Extensions? Brand Or Line Extensions? The Limits Of The Classical Conception Of A Brand Why Are Brand Extensions Necessary? Building The Brand Through Systematic Extensions: Nivea Extending The Brand To Internationalize It Identifying Potential Extensions The Economics Of Brand Extension What Research Tells Us About Brand Extensions Avoiding The Risk Of Dilution Balancing Identity And Adaptation To The Extension Market Segments Assessing What Should Not Change: The Brand Kernel Preparing The Brand For Remote Extensions Keys To Successful Brand Extensions Is The Market Really Attractive? An Extension-based Business Model: Virgin How Execution Kills A Good Idea: Easycar Brand Architecture The Key Questions Of Brand Architecture Type And Role Of Brands The Main Types Of Brand Architecture The Flexible Umbrella Brand The Aligning Umbrella Brand (masterbrand) Choosing The Appropriate Branding Strategy New Trends In Branding Strategies Internationalising The Architecture Of The Brand Some Classic Dysfunctions What Name For New Products? Group And Corporate Brands Corporate Brands And Product Brands Multi-brand Portfolios Inherited Complex Portfolios From Single To Multiple Brands: Michelin The Benefits Of Multiple Entries Linking The Portfolio To Segmentation Global Portfolio Strategy The Case Of Industrial Brand Portfolios Linking The Brand Portfolio To The Corporate Strategy Key Rules To Manage A Multibrand Portfolio The Growing Role Of Design In Portfolio Management Does The Corporate Organization Match The Brand Portfolio? Auditing the portfolio strategically A Local And Global Portfolio – Nestlé Handling Name Changes And Brand Transfers Brand Transfers Are More Than A Name Change Reasons For Brand Transfers The Challenge Of Brand Transfers When One Should Not Switch Analysing Best Practices Transferring A Service Brand How Soon After An Acquisition Should Transfer Take Place? Managing Resistance To Change Factors Of Successful Brand Transfers Brand Turnaround And Rejuvenation The Decay Of Brand Equity The Factors Of Decline Distribution Factors When The Brand Becomes Generic Preventing The Brand From Ageing Rejuvenating A Brand Growing Older But Not Ageing Managing Global Brands The Latest On Globalisation Patterns Of Brand Globalisation Why Globalise? The Benefits Of A Global Image Conditions Favouring Global Brands The Excess Of Globalisation Barriers To Globalisation Coping With Local Diversity Building The Brand In Emerging Countries Naming Problems Achieving The Delicate Local–global Balance Being Perceived As Local: The New Ideal Of Global Brands? Local Brands Can Strike Back The Process Of Brand Globalisation Globalising Communications: Processes And Problems Making Local Brands Converge Financial Valuation And Accounting For Brands Accounting For Brands: The Debate What Is Financial Brand Equity? Evaluating Brand Valuation Methods Brand Valuation In Practice The Evaluation Of Complex Cases What About The Brand Values Published Annually In The Press? Strategic Brand Management Interview Questions