[h=2]Brand Portfolios and the Need of Multiple Brands[/h]A brand can only be stretched so far, and all the segments the firm would like to target may not view the same brand equally favorably. Marketers often need multiple brands in order to pursue these multiple segments. Some other reasons for introducing multiple brands in a category include:
1. Increasing shelf presence and retailer dependence in the store
2. Attracting consumers seeking variety who may otherwise have switched to another brand
3. Increasing internal competition within the firm
4. Yielding economies of scale in advertising, sales, merchandising, and physical distribution
The brand portfolio is the set of all brands and brand lines a particular firm offers for sale in a particular category or market segment. The hallmark of an optimal brand portfolio is the ability of each brand in it to maximize equity in combination with all the other brands in it.
Marketers generally need to trade off market coverage with costs and profitability. If they can increase profits by dropping brands, a portfolio is too big; if they can increase profits by adding brands, it’s not big enough. The basic principle in designing a brand portfolio is to maximize market coverage so no potential customers are being ignored, but minimize brand overlap so brands are not competing for customer approval. Each brand should be clearly differentiated and appealing to a sizable enough marketing segment to justify its marketing and production costs.
Marketers carefully monitor brand portfolios over time to identify weak brands and kill unprofitable ones. Brand lines with poorly differentiated brands are likely to be characterized by much cannibalization and require pruning.There are scores of cereals, beverages, and snacks and thousands of mutual funds. Students can choose among hundreds of business schools. For the seller, this spells hyper competition. For the buyer, it may mean too much choice.
Brands can also play a number of specific roles as part of a portfolio.
[h=3]FLANKERS[/h]Flanker or “fighter” brands are positioned with respect to competitors’ brands so that more important (and more profitable) flagship brands can retain their desired positioning.Busch Bavarian is priced and marketed to protect Anheuser-Busch’s premium Budweiser; and after a difficult product launch, Celeron helped thwart AMD’s competitive challenge to Intel’s premium Pentium microprocessor.Marketers walk a fine line in designing fighter brands, which must be neither so attractive that they take sales away from their higher-priced comparison brands nor designed so cheaply that they reflect poorly on them.
[h=3]CASH COWS[/h]Some brands may be kept around despite dwindling sales because they manage to maintain their profitability with virtually no marketing support. Companies can effectively “milk” these “cash cow” brands by capitalizing on their reservoir of brand equity. Gillette still sells the older Trac II, Atra, Sensor, and Mach III brands because withdrawing them may not necessarily move customers to another Gillette brand.
[h=3]LOW-END ENTRY LEVEL[/h]The role of a relatively low-priced brand in the portfolio often may be to attract customers to the brand franchise. Retailers like to feature these “traffic builders” because they are able to “trade up” customers to a higher-priced brand. BMW introduced certain models in its 3 Series automobiles in part as a means of bringing new customers into the brand franchise, with the hope of later moving them to higher-priced models when they decided to trade in their cars.
[h=3]HIGH-END PRESTIGE[/h]The role of a relatively high-priced brand often is to add prestige and credibility to the entire portfolio. One analyst argued that the real value to Chevrolet of its high performance Corvette sports car was “its ability to lure curious customers into showrooms and at the same time help improve the image of other Chevrolet cars. It does not mean a hell of a lot for GM profitability, but there is no question that it is a traffic builder.” Corvette’s technological image and prestige cast a halo over the entire Chevrolet line.
1. Increasing shelf presence and retailer dependence in the store
2. Attracting consumers seeking variety who may otherwise have switched to another brand
3. Increasing internal competition within the firm
4. Yielding economies of scale in advertising, sales, merchandising, and physical distribution
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| Brand Portfolio |
Marketers generally need to trade off market coverage with costs and profitability. If they can increase profits by dropping brands, a portfolio is too big; if they can increase profits by adding brands, it’s not big enough. The basic principle in designing a brand portfolio is to maximize market coverage so no potential customers are being ignored, but minimize brand overlap so brands are not competing for customer approval. Each brand should be clearly differentiated and appealing to a sizable enough marketing segment to justify its marketing and production costs.
Marketers carefully monitor brand portfolios over time to identify weak brands and kill unprofitable ones. Brand lines with poorly differentiated brands are likely to be characterized by much cannibalization and require pruning.There are scores of cereals, beverages, and snacks and thousands of mutual funds. Students can choose among hundreds of business schools. For the seller, this spells hyper competition. For the buyer, it may mean too much choice.
Brands can also play a number of specific roles as part of a portfolio.
[h=3]FLANKERS[/h]Flanker or “fighter” brands are positioned with respect to competitors’ brands so that more important (and more profitable) flagship brands can retain their desired positioning.Busch Bavarian is priced and marketed to protect Anheuser-Busch’s premium Budweiser; and after a difficult product launch, Celeron helped thwart AMD’s competitive challenge to Intel’s premium Pentium microprocessor.Marketers walk a fine line in designing fighter brands, which must be neither so attractive that they take sales away from their higher-priced comparison brands nor designed so cheaply that they reflect poorly on them.
[h=3]CASH COWS[/h]Some brands may be kept around despite dwindling sales because they manage to maintain their profitability with virtually no marketing support. Companies can effectively “milk” these “cash cow” brands by capitalizing on their reservoir of brand equity. Gillette still sells the older Trac II, Atra, Sensor, and Mach III brands because withdrawing them may not necessarily move customers to another Gillette brand.
[h=3]LOW-END ENTRY LEVEL[/h]The role of a relatively low-priced brand in the portfolio often may be to attract customers to the brand franchise. Retailers like to feature these “traffic builders” because they are able to “trade up” customers to a higher-priced brand. BMW introduced certain models in its 3 Series automobiles in part as a means of bringing new customers into the brand franchise, with the hope of later moving them to higher-priced models when they decided to trade in their cars.
[h=3]HIGH-END PRESTIGE[/h]The role of a relatively high-priced brand often is to add prestige and credibility to the entire portfolio. One analyst argued that the real value to Chevrolet of its high performance Corvette sports car was “its ability to lure curious customers into showrooms and at the same time help improve the image of other Chevrolet cars. It does not mean a hell of a lot for GM profitability, but there is no question that it is a traffic builder.” Corvette’s technological image and prestige cast a halo over the entire Chevrolet line.
