Brand strategy is still an issue in many B2B companies. Eager product managers are all too keen to put a sexy brand name on their new inventions, and the typical growth-through-acquisition causes us to drag a host of brand names in our wake.
The brand proliferation that follows isn’t as innocent as it seems: it causes confusion to customers and puts pressure on your marketing budgets. Because each brand is like a little baby bird that needs constant feeding. And if you’ve got too many birds in the nest, you know you’ll end up exhausted and the chicks hungry.
But of course there’s a solution to this conundrum, and it’s called brand portfolio strategy. It gives you the means to reach your long term objectives, with the right amount of brands.
Each brand is like a little baby bird that needs constant feeding. And if you’ve got too many birds in the nest, you know you’ll end up exhausted and the chicks hungry.
Less brands, more impact
Wait a minute? Aren’t brands supposed to be a good thing? Don’t they help me differentiate from the competition? Isn’t this a case of ‘the more the better’? – Quite the contrary.
The consensus in brand portfolio strategy is that you should go for the least amount of brands necessary to reach your business goals. This enables
- Better budget spending
because you’re divvying up resources over less brands
- More clarity
because your customers have less brands to memorize and understand
- More leverage
because your stronger brands can contribute more in more contexts
Before you head off to chuck the bulk of your brands in the bin, always consider your business goals. If a brand can help you break through in a new market segment (like, say, green energy), then it might even be wise to move extra resources to that brand.
But when one brand’s role can easily be taken over by a larger, stronger brand, it’s better to get rid of the one in favor of the other.
In this way, brand portfolio strategy is a little bit like pruning a precious bonsai. Imagine how the tree should grow. In which direction and how widely. Then prune the bits that don’t contribute to that vision and preserve the ones that do.
All for one
Since we’ve just reached the world of garden metaphors, I’ve got another piece of advice: if you could start from scratch today, you should always go for a tree instead of a shrub.
What I mean by this is: go for a branded house instead of a house of brands.
- A house of brands
is a structure where you have many master brands: brands that function almost completely independently, and that determine their distinct brand identity and experience. Think of P&G or Unilever’s broad portfolio and you know what I mean. This is the shrub.
- A branded house
is the complete opposite. Here you have one master brand that determines the identity and experience in all markets – the trunk of the tree. To this master brand you can then add descriptors: descriptive labels to indicate a category or activity. These are the sub-brands, the tree’s branches.
Good examples here are GE Healthcare, GE Lighting and GE Energy, or FEDEX Freight, FEDEX Ground and FEDEX Express. Every euro invested in those sub-brands is also going to contribute to the master brands GE and FEDEX. At the same time, GE and FEDEX also chip in by driving recognition and trust for each (new) sub-brand.
Many brands today are moving intently to this kind of structure. One of them is Google, which is slowly consolidating the Google name by using Google Ads instead of AdWords, and even Google Workspace instead of Gmail (this is happening as we speak).
It’s one solid trunk carrying the weight. One name to invest in. One name to remember and recognize.
Take it slow
Alas, things aren’t as simple for most B2B companies.
They’ve gone through a host of acquisitions, with the acquired brands often continuing to use their name – even when that name’s reach is small. It can be a sensitive issue to change things here, both for that brand’s employees as well as their customers.
The path towards brand centralisation then includes several stages. For a brand structure, there are still several options between a branded house and a house of brands, that could either be a temporary step or a permanent compromise.
- Endorsed brand structure
Here, the parent brand (corporation, group) endorses the subsidiary brand (acquired company or product). The endorser signs their name and creates a subtle visual connection, showcasing the backing of a larger corporation to instill trust. This also allows customers and employees of the endorsed brand to ‘get accustomed’ to the endorser brand’s name. Endorsements can be strong or light, which determines which of the two brand identities will be dominant.
- Sub-brand structure
In this structure, the parent brand and subsidiary brand are more or less on equal footing. You either pronounce or write both names together, and the parent brand plays the dominant role in the sub-brand’s identity and experience. Examples are Amazon Prime or Randstad RiseSmart.
Sub-brands are typically products but can also be organizations. Or former organizations. An often seen strategy is to transform an acquired company into a product brand that sits under the parent brand. nVent serves as a good example here. The former company brands Raychem and Schroff have morphed into product brands that follow the sub-brand structure: nVent Raychem, nVent Schroff. Each sub-brand represents a separate product portfolio with its particular strengths, but the brand identity and purpose are driven by nVent.
Twigs and buds
Remember: brand portfolio strategy means having the least amount of brands required to reach your business goals.
One core stem, or at least a smaller number of solid branches. And yet, there are a number of compelling reasons to leave a twig to grow or a bud to develop.
- The subsidiary brand has high brand equity and a strong culture
Did you acquire a brand with a loyal fan base and a distinct personality that differs from the parent brand? Then it’s better to keep both separate (an endorsement could create a soft link between the two).
- Existing brand associations are incompatible with a new activity
An oil company would have trouble entering the green energy market in a credible way. A new, separate brand offers higher chances of success.
- The new activity creates a channel or partner conflict
Are your current competitors potential customers in a new activity? Or could partners feel threatened? Then launch that activity under a different brand name.
- A new product or service brings a remarkable novelty or innovation
Intel released the Intel Pentium brand because it meant a huge leap forward in the performance of computer chips. Does your solution deliver something remarkably new? A new product or service brand can put it in the spotlight.
- A new brand as a platform for future growth
You can create a brand around a product because it brings something new, or you can create a new brand because it represents a big and long-lasting opportunity within the market. Thinking about launching a cloud platform to get into the cloud space? A strong and differentiated brand can help it take off.
You can introduce new brands at the organizational level, product level and beyond. An ingredient brand, for example, lets you leverage a distinct product trait or technology to differentiate your product from the competition.
But never let that distract you from the biggest takeaway of this article. As a B2B company, chances are you’ve got too many brands to start with. The key is to prune thoughtfully, considering in which direction to grow in the future.
Eager to learn more about brand portfolio strategy? Be sure to check out Brand Portfolio Strategy by ‘the godfather of brand strategy’ David Aaker, who’s been a big inspiration for this article. Want to get to work with your own brand? Reach out here, or on LinkedIn.