Executive summary of “Perceived brand portfolios: how individual views hamper efficiency”

Citation

(2015), "Executive summary of “Perceived brand portfolios: how individual views hamper efficiency”", Journal of Product & Brand Management, Vol. 24 No. 6. https://doi.org/10.1108/JPBM-09-2015-942

Executive summary of “Perceived brand portfolios: how individual views hamper efficiency”

Article Type: Executive summary and implications for managers and executives From: Journal of Product & Brand Management, Volume 24, Issue 6

This summary has been provided to allow managers and executives a rapid appreciation of the content of this article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefits of the material present.

Managers in large corporations face the increasingly complex task of managing their brands in ways which maximize return on investment. Key to achieving such objectives is to optimize the number of brands in their portfolio and utilize resources more efficiently. A popular response has been to reduce portfolio size and focus on a smaller number of powerful brands. This strategy is seen as more attractive when a corporate brand links the brands involved.

Extant literature identified brand architecture and brand portfolios as core factors in brand management. Brand architecture is the firm’s strategy reflecting how its brands relate to one another. Factors including acquisition, heritage, alliances and market trends can determine the type of architecture adopted.

The number of brands and their purpose is the essence of a brand portfolio. Brands have previously been described as a “team” which works to achieve a “common goal” and are thus stronger together than as individual entities. A brand portfolio uses the image, target audience and financial situation as a means of defining each brand’s role.

The two overlap somewhat, but researchers insist that they are essentially different constructs:

1. Brand architecture serves to influence consumer perceptions of the different brands by managing how associations and equity are transferred between them. This function of determining whether and how brands connect is external in nature, and success is measured by appropriate linking or distancing of brands.

2. Brand portfolios are mainly formed to provide internal assistance to marketing teams by ascertaining to what extent the brands collectively address target markets. Any gaps can thus be identified. Coverage of markets and “image redundancy” are used to evaluate portfolio effectiveness.

Three structures of brand architecture are variously labeled but most commonly referred to as:

1. Monolithic: Where a corporate brand name is used in all categories. Virgin is cited as a perfect example. Trust in the corporate brand links different offerings and helps create synergy due to investment in one area having a spillover effect on others.

2. Fragmented: Unilever aptly illustrates a structure whereby products are not identified with the corporate brand, meaning that a weak association usually exists between portfolio members. Managers have greater autonomy to position their brands independently of others. Cost is an issue though because lack of synergy means that every brand demands its own resources.

3. Mixed: Combines the two other strategies. Managers can thus exploit both synergy effects and freedom for brand positioning purposes. With this architecture, corporate brand is used with a co-brand, sub-brand or endorsed brand.

Various roles performed by brands in a brand portfolio include “sleeper brands”, “cash cows” and “soldier brands”. However, the scope for different roles decreases as the strategy becomes more oriented toward the corporate brand. Industry-type and other firm dynamics should help identify most appropriate architecture and portfolio to use.

Mergers and acquisitions, partnerships and corporate history are among the factors that influence which brands are included in the portfolio. Meaning of each brand can be determined by aspects related to the company and/or its customers. All brands which impact on consumer purchase decisions can be included, even competitor brands. The sheer number of possibilities increases the complexity of the associated brand architecture.

Several researchers have pointed out that people form mental representations of brands based on subjective knowledge and experience of them. Through this “network of interconnected nodes”, each consumer or brand manager perceives the content and structure of the portfolio. Knowledge will differ between individuals, so views of the portfolio differ accordingly. Strength and influence of brands will increase in relation to the number of individual “personal brand maps” in which they appear.

This can identify which brands to delete if the portfolio is to be trimmed. Brands frequently mentioned are likelier to attract resources, which help to further improve visibility relative to others. But those with fewer resources or at the fringes of the portfolio are candidates for deletion, along with brands weak in growth, revenue generation or strategic significance.

Åsberg investigates the issues through semi-structured interviews with different marketing team members with responsibility for brand management. Participants represented two companies accordingly operating in FMCG yoghurt products and IT business applications. The firms, respectively, serve business-to-consumer and business-to-business customers.

Interviewees were asked to focus on their own perceptions of the brand architecture and portfolio during the two phases of discussion. The first involved “brand elicitation”, where subjects were encouraged to mention brands, firms, products and services they felt were connected to their own brand portfolio. Brand ownership was irrelevant and inclusion had to be based on participants’ own associations. How they viewed the brand image of each brand mentioned was then established.

In the “brand-mapping” stage, subjects described relationships that they detected between brands and their relative strength. Brand portfolio maps were subsequently created by the authors based on the frequency with which the different brands were mentioned. Brands were divided into three groups, labeled as “core”, “outlier” and “ghost”, to, respectively, indicate their declining prominence within the portfolio. Frequency of mention was used to assess links between brands. The nature of different relationships was investigated and efforts were made to ascertain why certain brands were or were not cited by all respondents. However, this was not clearly determined.

Analysis of the data revealed that, regardless of architecture type used:

• Perceptions of the brand portfolio and architecture varied among different marketing team members.

• Comparison of personal brand maps showed that certain brands have a higher number of connections than other portfolio brands and, therefore, have a stronger influence on the portfolio. Essentially, core brands exhibit greater connectivity than outlier brands, which in turn have more connections than ghost brands.

• Positioning of brands not referred to by all marketing personnel is likely to be less clear or desirable compared to the positioning of “unanimously mentioned brands”.

Results demonstrate how brand perceptions can vary even among those most knowledgeable about the firm’s marketing strategy. The author points out difficulties in addressing the issue and its impact on brand positioning goals. It is also noted that inconsistency in how the portfolio is viewed might impact on resource allocation. Members responsible for assigning funds will be less cognizant and thus prone to base their decisions on a “misaligned image” of brand portfolio and architecture.

Åsberg advises branding executives to address perception differences by engaging in brand-mapping exercises with employees. This is deemed a simpler and more cost-effective process than a complete brand audit but with the capacity to yield similar results. He suggests that ascertaining connection strengths could also help identify outlier brands with the potential to negatively impact on the portfolio. Brand-mapping also helps to recognize incongruous positioning, which the author believes should be addressed swiftly. If corrective action is not possible, immediately selling or deleting the brand may be the best option.

Future research using a larger sample from additional companies, industries and national contexts might enable firmer conclusions to be drawn. Longitudinal study is also recommended along with an investigation into the possibility that influential marketing executives might impact on individual perceptions of a brand’s importance and thus help determine its position within the portfolio.

To read the full article, enter 10.1108/JPBM-12-2014-0764 into your search engine.

(A précis of the article “Perceived brand portfolios: how individual views hamper efficiency”. Supplied by Marketing Consultants for Emerald.)