As businesses introduce or acquire more and more divisions, managing these seemingly separate entities can become a challenge. By gathering each business unit into a brand portfolio, business leaders can more easily manage the strategy and operation of the individual brands from a bird’s eye view.
A brand portfolio is simply the collection of brands under a company’s control. Small businesses with just one shop may have only a single brand, but large and multinational corporations may have dozens of distinct brands in their portfolios. In some cases, a business may present the same product or line under different brands in different markets; each of these brands is a component of the company’s brand portfolio.
Examples of Brand Portfolio
As of publication, General Motors has 14 brands in its portfolio. These brands include Buick, Cadillac, Chevrolet and OnStar in the United States. International brands include Baojun, Holden, Jiefang, Vauxhall and Wuling. GM also sells adapted versions of many of the cars sold as Chevrolets in the United States under the Opel brand in international markets.
Types of Brand Portfolio
Large brand portfolios consist of up to three types of brands. A sub-brand maintains the greatest distance from the parent company and may present itself to the public as a somewhat separate organization. An endorsed brand is presented as an offering of the parent company rather than as a distinctly different line of products. If an organization introduces an entirely new brand, it may use some of the parent company’s marketing heft and recognition to help the new line gain momentum; these introductions are known as new brands.
Advantage of Brand Portfolio
Brand portfolios allow businesses to compete in many different marketplaces with an array of product lines. The different brands under which the company presents its products and services allow the organization to differentiate its products from its other lines. GM, for example, uses its Cadillac brand to compete in the luxury market, participates in the work truck arena under the GMC brand and operates under the OnStar brand in the in-car services marketplace. An active brand portfolio can use energy and momentum from one brand to energize others that may be slowing. In addition, organizations can help reduce costs by centralizing strategy, administrative and operational support and even manufacturing processes, across brands. If one brand fails to perform, the organization can often sell or discontinue that brand with minimal impact on other aspects of its portfolio.
The size of an organization’s brand portfolio can vary significantly from industry to industry and even from business to business. While there is no ideal number of brands, professional business consultants at McKinsey & Company recommend keeping brand portfolios as small as possible to minimize administrative expenses associated with operating multiple brands.