Brand portfolio

What is a brand portfolio?
Why is a brand portfolio needed?
Methods for forming a brand portfolio
How to systematize brands in the portfolio?
How to choose a brand portfolio structure?
Conclusion

What is a brand portfolio?

A brand portfolio refers to the collection of all trademarks managed by a single company, operating under a unified business strategy. Economically, the brand portfolio is an important part of intangible assets that influence the market value of a business. Each brand can operate independently, but all are aimed at achieving the company's overall goals. For example, Xiaomi releases smartphones under three brands: Xiaomi for flagship models, POCO for mid-range, and RedMi for budget devices. Although each of these brands is managed separately, they collectively help Xiaomi cover various segments of the smartphone market.

On the global market, only 11 companies hold the majority share of consumer segments, and for instance, Unilever's portfolio includes over 400 trademarks. Thus, for brand managers, portfolio management becomes an essential tool within a unified marketing strategy.

Why is a brand portfolio needed?

A brand portfolio offers a range of advantages that contribute to the stability and growth of a company:

Diversification of risks: A brand portfolio allows a company to operate in various markets, helping to distribute assets and minimize risks. For instance, Procter & Gamble offers products for children (Pampers), women's hygiene (Always), and laundry detergents (Tide, Ariel). If one segment loses profitability, the company can redirect resources to other segments.
Market expansion: Having multiple brands allows capturing a larger market share and pushing out competitors. Coca-Cola, Sprite, Fanta, and other brands of the company account for over 40% of the global soft drink market.
Growth in business value: Each brand is an intangible asset. The more brands in the portfolio, the higher the company's value, which also attracts investors.
Cost savings on promotion: Loyal consumers of one brand are more likely to accept new products from the same manufacturer. For example, iPhone fans are likely to choose AirPods over products from other brands.
Cross-marketing: A new brand can support the sales of existing ones through mutual advertising and collaborations. PepsiCo actively leverages joint advertising campaigns for Lay’s and Pepsi.

Methods for forming a brand portfolio

When a company decides to expand its brand portfolio, it has several strategies:

Creating a new brand: Developing new positioning, name, and design from scratch. Advantages include complete alignment with company values, but it requires significant costs and time.
Acquiring an established brand: Purchasing an existing trademark, allowing for quick market entry and minimizing risks. However, this can be costly and does not always guarantee loyalty from the previous audience.
Expanding an existing brand: Launching new products under a well-known name. This saves on promotion costs, but there is a risk of diluting brand identity.

How to systematize brands in the portfolio?

The choice of brand organization structure in the portfolio depends on the company's strategy. Several main approaches are distinguished:

Brand hierarchy: A simple system represented as a tree, with the corporate brand at the top and individual brands at the bottom.
Brand systems: Based on finding connections between brands, highlighting systems such as house of brands and branded house.
Molecular structures: Consider the portfolio from the consumers' perspective, where brands are depicted as connected atoms, reflecting consumer associations.

How to choose a brand portfolio structure?

Creating a brand portfolio is an individual process that depends on the current state of the business, market trends, plans, and available resources. For example, if several brands are cannibalizing each other, it may be advisable to move to a mono-brand system. In the case of active expansion, hybrid or umbrella models should be considered. Branding agencies can assist in creating a portfolio by conducting analysis and developing management strategies.

Conclusion