To build strong brands, designing and maintaining a brand portfolio that supports them is essential. That requires evaluating all the brands in your company’s portfolio and ensuring each serves a strategic purpose.
“A well-executed brand portfolio strategy guides investment decisions, identifies brands that need improvement or removal, and spots opportunities for new brands to fill gaps in the market,” says Harvard Business School Professor Jill Avery, who teaches the online course Creating Brand Value.
First, you must understand what a brand portfolio strategy is and the architecture that defines it. Then, you can learn how to determine the right size for your portfolio and, ultimately, how to create and manage your own portfolio strategy.
What Is a Brand Portfolio Strategy?
A brand portfolio strategy identifies the optimal combination of brands to capture the market while overlapping as little as possible. You must clarify each brand’s role and scope within the portfolio, creating a brand architecture strategy that defines how they complement and strengthen each other.
Imagine it as a unified team working toward a common goal—every brand has a distinct role and shouldn’t internally compete for the same customers.
An important piece of your strategy is your brand architecture, or how you structure your portfolio with brands closely connected or distant in their identities. Does the parent brand play a visible, prominent role in sub-brands’ public identities? Are the brands connected or independent?
What Is Brand Architecture?
Brand architecture is the structure you assign to the relationships between your brands. If approached strategically, those relationships can enhance your brands by segmenting them for different customers and defining their positions. That, in turn, can simplify your marketing, support different categories’ growth with customized approaches, and support existing brands’ equity with newer value brands.
“The goal is to make the whole more valuable than the sum of its parts,” Avery says in Creating Brand Value.
Consider two types of brand architecture strategies that Creating Brand Value covers: mono-brand and multi-brand. Imagine the first as a branded house where you communicate the same identity across brands. This model is simple and efficient, but concentrates risk in a single brand.
The second is a house of brands where names and identities separate them. They may look like competitors, and consumers may not realize you’ve carefully curated them within your portfolio—or house—to complement and support one another while catering to different consumers. A multi-brand strategy can allow you to reach a broader market but comes at the cost of managing multiple brands.
Choosing between these “house” strategies can help determine how to approach your branding and marketing. If you opt for a multi-brand strategy, you can help consumers navigate your portfolio by connecting brands with sub-branding—allowing you to extend your parent brand’s equity and identity to different audience sub-segments. While the sub-brands fall under the parent brand, they have their own unique branding.
Related: Brand Equity Explained: How to Build and Measure Success
How to Determine the Right Portfolio Size
Another key decision in your brand portfolio strategy is size. Once you identify the sweet spot for the number of brands in your portfolio, it can be easier to define brands’ roles, differentiators, and scaling considerations.
For instance, when Marriott acquired Starwood Hotels in 2016, it had to manage a portfolio of 30 different hotel brands. In Creating Brand Value, President of Luxury at Marriott International Tina Edmundson offers insight into the experience of managing such an extensive portfolio.
“When I think about the number of brands, I actually don’t think the number of brands is important,” Edmundson says in the course. “What’s important is the positioning of the brand and the brand having a unique point of view that resonates with the audience.”
No magic number of brands will work for all portfolios.
“As a rule of thumb, brands should be added to a portfolio until the system provides appropriate coverage of consumers’ needs in the marketplace without unnecessary complexity or redundancy,” Avery says. “We want to maximize coverage to take advantage of the natural heterogeneity in customers’ needs and tastes while minimizing overlap that might lead to competition among the company’s brands.”
That requires enough scale to cover the market and customer needs. If you offer too few brands, you may not achieve that.
Alternatively, there are cost inefficiencies in a bloated brand portfolio—each has its own marketing, operations, and labor costs. If your brands overlap too much, they can compete.
To set yourself up for success, here are five steps to follow when developing your brand portfolio strategy.
Related: Listen to Professor Avery discuss how to build a winning brand portfolio strategy on The Parlor Room podcast, or watch the episode on YouTube.
How to Develop a Brand Portfolio Strategy: 5 Steps
1. Align Brand Roles & Scope
By differentiating and defining brands’ roles, you can avoid letting your portfolio become too big.
A brand’s role is its job. Think about its goal and how it supports other brands in your portfolio. Its scope delineates customer segments, needs, price points, and distribution channels.
Creating Brand Value explores the different roles brands can play in depth:
- Power brands drive profit and receive the most investment.
- Supporting brands may hold less value individually but help other brands succeed.
- Fighter brands have lower price points and balance out premium-priced brands.
- Flanker brands are more specific and may appeal to a smaller market, but they leave space for larger brands to target a broader demographic.
- Silver bullet brands are prestigious and may have one product perceived as a status symbol, but most of its revenue comes from other products.
- Branded differentiators are products, features, or services that help solidify brands’ identities.
You may not have the opportunity to include each in your portfolio, but you’ll likely have at least one power brand accompanied by supporting and fighter brands. Regardless of your portfolio’s size, defining each brand’s intended role is essential to successfully marketing and promoting it.
2. Define Brand Categories & KPIs
Carving out your portfolio’s different categories is critical to distinguishing your brands for consumers. Categorization also helps you manage your portfolio by creating smaller, similar sub-sections. For instance, you can categorize your brands by price and accessibility or broad appeal versus boutique.
Once you group your brands, you can identify the key performance indicators (KPIs) for each. Returning to the Marriott example, Edmundson explains how KPIs vary for different categories.
“A group of brands like, let’s say, Courtyard, and Fairfield, and SpringHill Suites, the KPI there is distribution,” Edmundson says in Creating Brand Value. “We want to make sure that we’re able to grow and scale these brands. Therefore, we’re looking for things like return on investment—making sure the cost to build those hotels is in line—so that we can attract developers. And we want to make sure that these hotels have a great guest satisfaction so that you get the repeat customer.”
The group, including the St. Regis and Ritz-Carlton—which Edmundson refers to as a “global icon” archetype—came with a different set of KPIs.
“What’s important for those brands is really prestige to the portfolio,” Edmundson says. “That’s what we’re trying to achieve, and therefore, the KPIs there are things like net promoter score, or PR and share of voice, or advertising that really has an emotional resonance.”
3. Design Your Brand Architecture
Differentiating brands by roles and scopes is an important first step. It's also crucial to use your brand architecture to clearly position each within your portfolio, making it easier for consumers to navigate and understand them.
The next step is marketing your brands to your target audience. That can enable customers to easily understand your offerings and make choices.
4. Plan for Scaling
To position your brands for long-term, profitable growth, invest in marketing to increase positive brand equity. Regularly monitor your brands’ health to ensure they remain relevant, differ from other brands, are easily understood, and hold meaning for consumers.
In the Marriott example, consumer insights drove the brand positioning for the Westin and Sheraton hotel chains, which set them up for growth. Both were already healthy brands, but they needed to better deliver on consumer needs.
Westin, for example, was repositioned around the need for well-being when traveling. Sheraton, meanwhile, was a direct competitor of Marriott before the merger and needed to be differentiated.
Consumer insights pointed to Sheraton’s importance as a gathering place for meaningful events and milestones, so executives leaned into that. Once Westin and Sheraton did the work of clearly delivering on their brand positioning in their guest experiences, they were better poised for expansion.
5. Invest Long Term
Another strategic portfolio consideration is your long-term investment. In hospitality, one method for retaining customers is loyalty programs. In other industries, it’s product subscriptions.
For instance, luxury coffee brand Nespresso sells at-home coffee machines, but it makes most of its money through the coffee pods it produces exclusively for them. It affordably prices the coffee machines but sells the coffee at a premium. With relatively few alternatives, customers must return to Nespresso to purchase their coffee or sign up for a monthly subscription.
3 Successful Brand Portfolio Examples
To illustrate these concepts and strategies, here are examples of successful brand portfolios. In addition to Marriott, Creating Brand Value explores these and others.
1. Dove
Dove’s brand portfolio success has come from its brand identity’s strength and continuity, which, after repositioning, promotes real beauty and self-confidence.
Products run the gamut from skin and hair care to personal hygiene. The unifying message across all its products emotionally engages its consumers. Dove's advertising—as reflected in the "Real Beauty Pledge"—has forged strong brand loyalty and been a differentiator.
By using real women rather than professional models in its advertising, Dove has challenged norms, put itself at the center of a modern conversation around the definition of “real beauty,” and grown in a competitive market.
2. Mavi
Mavi is a well-known international denim and clothing company that combines top-quality jeans with a strong fit, style, and customer experience. Headquartered in Turkey, Mavi expanded its business to overseas markets after positioning its brand identity with a blend of Eastern and Western flair. Strategic partnerships, sustainable practices, and influencer collaborations helped it compete with a loyal customer base.
Mavi leveraged its healthy brand awareness to expand into premium lines while continuing to offer products at affordable prices—propelling growth in and outside of its home market.
3. Budweiser
Anheuser-Busch InBev (AB InBev) is a beverage and brewing company with a large brand portfolio headquartered in Leuven, Belgium. To manage over 500 trademarks in beer, it focuses on efficiencies it can manage globally. Budweiser is one example: A recognizable brand steeped in tradition with some of history's most iconic marketing campaigns.
Budweiser has not only created a stronghold in the United States but achieved worldwide distribution by pairing major sponsorships with local marketing strategies.
Managing a Successful Brand Portfolio
Considerations for building a brand portfolio are nuanced. There are many types of brands and ways to grow your portfolio.
One avenue for creating strong brand architecture and driving your brands’ sustainability is by taking an online business course, such as Creating Brand Value. By learning about the real-world branding challenges industry leaders have faced, you can gain insights that enable you to bolster your portfolio’s value.
Are you ready to take your branding knowledge to the next level? Explore Creating Brand Value–one of our marketing courses—and download our interactive online learning success guide to unlock online learning’s benefits.
