Brand Portfolio Strategy: Mono- and Multi-Brand Strategies

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Parag Utekar
Student (MBA), India

Brand Portfolio Strategy: Mono- and Multi-Brand Strategies

Brand portfolio strategy involves designing, deploying and managing a number or a range of brands as a coordinated portfolio of multiple meaning-based assets that address the needs of a wide range of customers in a given marketplace to maximize returns and minimize risk. The portfolio is strategically designed to promote complementarity and minimize cannibalization. In this way, every brand can function as a component piece working in complete accordance and harmony with the company's other brands to maximize the value of the entire portfolio.

A study analysing 72 Fortune 500 companies indicated that cracking the right brand portfolio strategy can reap significant benefits for the organisation as it affects both its marketing function and finance function.

Mono-Brand Strategies
A mono-brand strategy is the simplest type of brand strategy which consists of a portfolio of only one single brand that is used on all the products and services which are offered by the company. Many companies which follow this strategy use their corporate name as the unifying, consumer-facing brand and concentrate all their brand-building efforts on it. This is also referred as a "Branded House". Pure mono-brand strategies benefit from the supply-side economics, like the supply chain is simplified, which leads to operation efficiencies. New products and services can be quickly integrated with the brand strategy. The demand side benefits include higher brand awareness, more clarity and consistency, synergy across the brand, easier brand extension etc. But there are also some high-level risks associated with this strategy which are as follows :
  • CORPORATE / BRAND REPUTATION RISK: At times when products share the same brand name, problems that take place in one area, quickly spread across all the other products. If a brand's reputation is hit because of negative publicity, a corporate scandal, product recall, all of the company's offerings risk losing their credibility with the customers. The risk might spread like wildfire throughout the entire product range.
  • BRAND DILUTION RISK: When a brand is stretched across multiple product categories, it has the potential of getting diffused. Its meaning becomes less precise, distinct, and clear; the diluted brand risks losing its competitive differentiation across product categories. Brand managers should consider creating a new brand rather than stretching the existing range too far.
Multi-Brand Portfolio Strategies
Often named as the "House of Brands", pure multi-brand portfolios normally don't use their corporate name as a consumer-facing brand. Instead, different names are given to mark various products, lines, or ranges, and the corporate name might be given minimised importance.
We can distinguish 2 types of multi-brand portfolio strategies: the Sub-Branding Strategy and the Endorsed Branding Strategy.
For example, Unilever and P&G maintain multiple laundry detergent and beauty and personal care brands across multiple categories. Here the brand-building efforts are diversified across various categories in the portfolio, keeping all the brands separate from each other. The demand-side advantages are that having many brands allows the company to directly and differently address multiple target groups, thus creating an opportunity for differentiation. Offering multiple brands in the same category also allows the firm to garner more purchases from brand-switchers or variety-seekers who might buy the same product from a competitor. On the supply side, these multi-brand portfolios can command a greater presence at the retail, taking more shelf, floor, store or digital space due to the wide variety of products present. But there are also risks due to the high-level of interactions between different brands, which can be of two types:
  • BRAND CANNIBALIZATION RISK: Companies with a multi-brand portfolio strategy must be careful to minimize the cross-brand cannibalization. P&G skilfully manages its value-priced Luvs diaper brand so that it can acquire customers from its competitor Kimberly Clark's Huggies brand, rather than P&G's own high-priced Pampers.
  • BRAND STRETCH RISK: Because every brand tells a different, specific story, the company loses its flexibility to extend its brands to a diverse product category which eventually limits its efficient growth opportunities.
Source: Avery, J. (2016), "Brand Portfolio Strategy and Architecture", Harvard Business School, 9-517-021.

  rajat baisya
Professor, India
 

Brand Cannibalisation and Stretch Risks

A multi-brands strategy is often followed when the (...)

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