3/25/2013 1 Proprietary and Confidential ISBM ISBM Principles & Best Practices in Brand Portfolio Strategy & Architecture March 25, 2013 Proprietary and Confidential ISBM Common questions Background & Context Brand Definition/Requirements: What is the difference between a brand, a trademark and product name, and what are the implications for how they should be managed? What kind of financial investment is required to launch a brand and grow it over time? Brand Portfolio Strategy: What is the optimal number of brands for my company? When does it make sense to create a new brand versus launch a new product under an existing brand? How “elastic” is my brand? What is its ability to stretch horizontally (across categories and markets), and vertically (across price ranges)? Brand Architecture: Should brands within my portfolio be linked to one another? If yes, what is the optimal way to link brands (e.g., sub-branding, co-branding, endorsement)? When does it make sense for my corporate brand to endorse my product brands? Proprietary and Confidential ISBM Polling Question #1 Background & Context Which of the previous groups of questions are most pressing and/or pose the greatest challenges in your organization? A) Brand Definition/Requirements B) Brand Portfolio Strategy C) Brand Architecture D) All of the Above E) None of the Above
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3/25/2013
1
Proprietary and Confidential ISBM
ISBM
Principles & Best Practices in Brand
Portfolio Strategy & Architecture
March 25, 2013
Proprietary and Confidential ISBM
Common questions
Background & Context
Brand Definition/Requirements:
What is the difference between a brand, a trademark and product name, and what are the implications
for how they should be managed?
What kind of financial investment is required to launch a brand and grow it over time?
Brand Portfolio Strategy:
What is the optimal number of brands for my company?
When does it make sense to create a new brand versus launch a new product under an existing
brand?
How “elastic” is my brand? What is its ability to stretch horizontally (across categories and markets),
and vertically (across price ranges)?
Brand Architecture:
Should brands within my portfolio be linked to one another?
If yes, what is the optimal way to link brands (e.g., sub-branding, co-branding, endorsement)?
When does it make sense for my corporate brand to endorse my product brands?
Proprietary and Confidential ISBM
Polling Question #1
Background & Context
Which of the previous groups of questions are most pressing and/or pose the greatest
challenges in your organization?
A) Brand Definition/Requirements
B) Brand Portfolio Strategy
C) Brand Architecture
D) All of the Above
E) None of the Above
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Perspectives on Brand
Brand Portfolio Strategy
Brand Architecture
Process & Approach
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A brand is not just…
Perspectives on Brand
A Jingle
A Product A Spokesperson
A Symbol An Ad A Logo
A Slogan A Name
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A brand is…
Perspectives on Brand
A promise
A company’s most strategic asset
The reflection of a customer’s entire experience with a company
Built and protected by entire organization, not just the marketing department
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Powerful brands create significant economic value
Perspectives on Brand
Source: Interbrand, Brand Values 2011
• 1% increase in customer satisfaction leads to a 3% increase in market cap
• 2% increase in customer loyalty leads to a 10% cost reduction
• 5% increase in customer retention increases customer lifetime value by 25%
• 5% increase in customer loyalty can result in up to a 95% increase in profitability
• 50% of customers will pay 20–25% more for brands they are loyal to
Sources: Brandkey, Bain and Mainspring, Marketing News
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Perspectives on Brand
Brand Portfolio Strategy
Brand Architecture
Process & Approach
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Brand Portfolio Strategy vs. Brand Architecture
Brand Portfolio Strategy
Portfolio Strategy
• An articulation of how a
company should define its
portfolio to drive profitability
• Specifies the optimal number,
scope, and role for every
brand in the portfolio
Architecture
• A depiction of the optimal
relationship between any two
brands within the portfolio
• Dictates both whether and
how brands should be related
to on another
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Five indicators you may have a portfolio problem…or opportunity
Brand Portfolio Strategy
Revenue growth is slowing 1
2
3
4
5 Brands’ funding/support misaligned with profitability/potential
Products increasingly seen as commoditized
Poor cross-sell or up-sell between brands
M&A activity has resulted in a bloated portfolio
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Portfolio organizing frameworks
Brand Portfolio Strategy
Customer
Segment
Need/
Benefit
Price
Tier
Industry/
Category
Channel/
Distribution
Loyal
Enthusiasts Speed Good
Financial
Services Direct
Bargain
Hunters Convenience Better
Consumer
Products Retail
Knowledge
Seekers Simplicity Best
Medical &
Healthcare Online
Thoughtful
Planners Performance Luxury
Federal
Government Wholesale
One-stop
Shoppers Productivity Value
Industrial &
Manufacturing Distributor
Attitudinal & Behavioral Demographic/Firmographic
(Most Powerful) (Most Common)
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Brand portfolio spectrum
Brand Portfolio Strategy
Branded House House of Brands
Customer Segments Few Many
Investment in Branding Low High
Business Make-up Homogenous Heterogeneous
Brand Mgmt. Capability Simplistic Sophisticated
Corporate Relevance High Low
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Brand Portfolio Strategy guiding principles
Brand Portfolio Strategy
1 Build & Leverage a Strong Corporate Brand
2 Define Strategic Objectives for Brands
5 Maximize the Extendibility of Brands
4 Build Relevance Across Value Tiers
3 Employ Simple & Clear Brand Architecture
• Strategic financial asset
• Primary point of reference
• Leveraged across portfolio
• Strategic roles
• Financial objectives
• Clear positioning
• Relatively flat hierarchy
• Easy navigation
• Consistent nomenclature
• Maximize customer reach
• Avoid premium dilution
• Avoid value cannibalization
• Across markets & regions
• Across categories & segments
• Across offer dimensions
Overarching Goal: Fewer, stronger global brands
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Components of a Brand Portfolio Strategy
Brand Portfolio Strategy
Strategic Role/Business Objectives
Price/Value Relationship
Brand Positioning/Identity
Brand Relationship to Master Brand Positioning
Brand Architecture/Linkage
Brand Extendibility/Elasticity
• What specifically is the brand charged with doing for the Company? What objectives should be set for the brand from a
volume and financial perspective? What role does/should the brand serve from a channel perspective?
• What are the optimal pricing structures and price points for the brand? What sort of price differential should exist between it
and its most direct competitors? What sort of promotional support should the brand receive?
• How should the brand be positioned to the consumer, taking into consideration its strategic role within the portfolio, consumer
wants/needs, and its current equities? What is (or should be) its unique point of difference?
• What is the brand’s contribution to the Master Brand proposition? To what extent does it help the Company deliver on its
brand promises? Does the brand help the Company reinforce desirable equities?
• What is the optimal relationship between the brand and the Company brand? Should there be an explicit relationship between
it and other brands within the brand portfolio? If yes, what is the best way to establish this linkage?
• What is the brand’s “bounds of extendibility?” From a category perspective, where can the brand credibly go today, or in the
near or intermediate future? What should be considered off-limits for the brand?
Brand 2 Brand 3 Brand 4 Brand 5 Brand 6 Brand 1
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Perspectives on Brand
Brand Portfolio Strategy
Brand Architecture
Process & Approach
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Five indicators you may have an architecture problem…or opportunity
Brand Architecture
Brands are cluttered and confusing to both customers and employees 1
2
3
4
5
There is no internal system for managing how new brands are developed
Not getting enough leverage from key brands such as the corporate brand
Brand architecture is not aligned with business strategy
No plan for integrating recently acquired brands into existing architecture
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A common B2B brand architecture hierarchy
Brand Architecture
Business
Unit Level
Corporate
Level
Group/Soluti
on Level
Product/Of
fering
Level
The name of the company; often but not always the legal entity
The name of a BU/subsidiary. May or may not be a derivative of corporate brand
The name of a group of product lines that share a common benefit or solution
The lowest level in the hierarchy – may not warrant “branding” (i.e., name only)
(Johnson &
Johnson)
WorkCentre™ 6505 (Xerox)
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Polling Question #3
Brand Architecture
At which level of the hierarchy would you say the majority of brand equity resides within