As small businesses grow and become more complex, it’s not unusual for brand strategy to get lost in the mix. Rather than set an intentional model early in the game, companies commonly let years and decades of mergers, acquisitions, and product or service expansions dictate the shape of their brand portfolio. In other cases, a brand portfolio strategy has long been in place, but unforeseen business directions or circumstances have called its suitability into question; what may have worked for in the past is not always the best model into the future. In both cases, it’s important to a company’s long-term growth to reevaluate.
Types of Brand Portfolios
There are two primary brand portfolio models: family of brands and branded families.
Family of Brands/House of Brands
In this model, a company owns multiple brands—sometimes dozens—each with a completely distinct name, identity, value proposition, and set of attributes. Often, brands within a family even fall in the same product or service category. With product lines like Aveeno, Clean & Clear, Nicoderm, and Splenda, Johnson & Johnson is a classic example of a large family of brands.
Pros—A family of brands can be very appealing to companies with diverse product offerings because each brand stands completely on its own. In this scenario, a brand never has to be all things to all people; rather, it is marketed to a very specific audience segment without compromise. If a growth opportunity arises in another space, the company that owns a family of brands can launch a new brand rather than dilute an existing brand to compete. Further, if one brand in the family fails to do well, the other brands in that family are typically insulted from harm, posing less risk to the health of the company. Finally, a family of brands can leverage the equity of its distinct brands to gain market share through co-branding, just as Proctor & Gamble did when it created a line of Tide plus Febreze products.
Cons—On the flip side, families of brands can have elaborate structures and hierarchies, making them difficult and expensive to maintain. Each brand requires ongoing, disciplined, and focused maintenance by dedicated teams and senior staff to retain identity and meaning in the marketplace. When resources and marketing dollars are divided among a family of brands in this way, companies run the risk that each brand will lack the scale needed to drive substantial profits.
Branded Family/Branded House
Rather than silo its products into distinct brands, a branded family or branded house extends a single brand across many product lines. The company, in this case, is the brand. A textbook example of a branded family is FedEx and its portfolio of six brand extensions: FedEx Services, FedEx Express, FedEx Ground, FedEx Freight, FedEx Office, and FedEx Trade Networks.
Pros—Having a branded family portfolio means that a company can put all of its resources of time, money, and attention toward building and supporting a single, strong brand. It’s more cost-effective, which, in theory, should maximize scale and increase the likelihood of success.
Cons—Maintaining a classic branded family forces a company to fit all new products or services under a single umbrella brand. That can constrain growth if an opportunity presents itself but ultimately can’t be made to conform. Alternatively, a brand may weaken if ill-fitting expansions dilute its positioning and identity. Further, reliance on a single brand is riskier from a financial perspective. Should the brand reputation take a hit, every product is vulnerable.
Hybrid Brand Portfolios
Because neither model is without tradeoffs, many companies are family of brands/branded family hybrids. In these cases, certain product lines in the portfolio fall under the primary company brand while others take on distinct brands. Coca-Cola and PepsiCo are typical hybrids. Both have product lines that extend from the primary brand (Coca-Cola and Pepsi) and products that depart from the primary brand (Sprite, 7Up)
Signs You May Need to Revisit Your Brand Portfolio Strategy
Companies and the marketplaces they fill are complex and evolving. So, a portfolio model that may have been appropriate years ago can be rendered ill-suited over time. Reevaluating your brand strategy every now and then is, therefore, rarely a bad idea, but some symptoms and circumstances make the tasks more pressing. Here are a few of them:
- Your company never developed an official brand strategy. Your current portfolio is the result of ad hoc, short-term solutions to various acquisitions and expansions.
- Your company is a source of confusion, either internally or among consumers. People can’t figure out or clearly articulate what you do or offer or are surprised to learn your company does so much when you explain the full extent of your product lines or services.
- You plan to acquire a new company or launch a new product or service (or recently did either of those things).
Things to Consider When Designing Your Brand Portfolio
If you decided that it’s time to look at your portfolio with fresh eyes, you should come at the process with a few questions in mind.
- What are your short-term and long-term goals? That which is easy to implement now may not be your best move in the long run.
- What’s your vision for the future and where is the market heading? Do you want to expand nationally or even internationally? Ideally, a brand portfolio model will see you through your future phases of development.
- What resources do you have to devote to brand development and maintenance? Can you afford to divide your resources among multiple brands?
Of course, there is no perfect portfolio solution. But with a little foresight and planning, you can come up with a strategy to help you reach your business goal.