Brand portfolio strategy
Why publicize the house when you are a house of brands ?
EXECUTIVE SUMMARY: (for the lazy or time-challenged):
It might actually be a rather sensible strategic choice for some corporations to engage in the branding of the house even when you have been established as a house of brands in terms of portfolio organization...
That candid question formulated at a recent Brand forum sounds interesting and touches on much deeper elements...whilst already carrying a bias as it seems to suggest that there would have to be some inconstancy if a corporation chose one strategy or the other : I would actually argue that this is an innate/ old conundrum and has always been a back & forth cycle or sort of balancing act between building brands & nurturing a master brand: from G.M. to Pernod Ricard or Tata , like it or not , the profile of the master brand has at times been more emblematic or recognized than it’s brand portfolio: at the time when iconic companies were established in the 60 & 70’s, L’Oreal, Dupont or Procter actually meant as much to the general public than the Ellnet, Lycra or any of the “soap” brands Procter would launch through radio & TV early days sponsorship, these corporate names being emblematic of their product’s quality & reputation and often prominently signing vintage ads… Then, a massive , natural brand extension phase ensued in the 80-90’s consisting of multiple launching of brands across many product categories...at some point amidst that brand boom, marketers started rediscovering the virtues of central/common initiatives: cross-selling synergies (the Danone company, Nestle or G.M. initiated cross-brands promotional programs with Retail chains or dealerships), consolidation /economies of scale (Media buying, packaging, vendors, guidelines etc…); and more importantly, new rising categories/themes that were steming from evolving consumer needs & attitudes: those can become wider than what a single brand's perceived expertise would reasonably cover (ex. from breakfast Cereal/ fiber to healthy diet and energy supplements) and, if pre-empted, can offer much more long term growth potential (new brands in wider categories or existing brand extension etc…): hence the “Let’s Make Today Great,” from Kelloggs , G.E.’s “Imagination at work” or a more complex “help farmers grow yield sustainably so they can be successful, produce healthier foods, better animal feeds and more fiber, while also reducing agriculture's impact on our environment…” from Monsanto. In the early 21st century & through the downturn, marketers had to revert to more vertically-focused investments under the pressure of their board for more immediate, tangible/accountable top line growth & R.O.I.: keeping behind-the-scenes, centralized resources, exit the active/ direct corporate value proposition to consumers… I am therefore not so surprised that top marketers are now rediscovering the virtues of nurturing a master brand:
A. LONG TERM GUARANTEE: Obviously, the investment made towards the masterbrand generally pays off one day or another, preparing to take a punch for the team, lend support to the brand in a given category when it needs back-up for awareness, differentiation or reputation through a less product-centric, more inspiring (credible ?) dimension or mission statement: this makes the brands less dependent on a narrow value proposition or just a single product crisis (i.e. Mattel (2005) or Toyota (2010) recalls) by throwing the weight & support of a higher figure, the go-to school principal, the mission statement that, as Kotler says “acts as an invisible hand” more accountable to shareholders, regulatory bodies, media & consumer scrutiny…Sub-brands fade or die , their giant corporate parents still stand perennial…
A WHOLE NEW HOLISTIC MARKETING: deeper sign of the times, the advent of Digital and the direct consumer behavioral data that it allows has opened the door for much more powerful, consumer centric cross-selling & promotional branding opportunities: you can now associate a buyer pattern & attitudinal profile across several categories & design much deeper/ more targeted value propositions in terms of demographics but also in regards with purchase pattern & loyalty across categories, promotional drivers or in terms of affinity with the channel, the content of the message, its context & attached geo-location services etc…Opening this new scope of shared/ single-source resources opens more applications beyond the richer needs-driven / Lifetime Value potential management such as: multichannel communications planning, wider integration of Digital as a driving force in the conversation with the consumer, consistent benchmark of marketing effectiveness, R.O.I. and budget allocation optimization across the portfolio etc…This IS the real REVOLUTION that a masterbrand revival brings…Let’s also not forget that some times, within the world of corporate politics, getting high-profile, strategic consumer-centric status for these otherwise behind-the-scenes/cross functional logistics helps a lot to get appropriate sign-off & cross-funding … It is indeed a powerful transformational theme and a new holistic marketing culture more in line with the natural perspective that Retailers always got right with their single view of shoppers, beyond category management, pricing & shelving organization …so, if it make sense and adds relevance, why ignore these fundamentals ?
THEY ACT AS BRANDS ANYWAY: I would finally point out that, as BrandZ top 100 shows, some of these quiet masterbrands G.E. (15th), Chrysler (never only a sub brand) or Volkswagen (which aggregates Porsche & VW in the study) are actually resilient enough in terms of reputation & equity as to rank in the brandZ top 50, among "pure concentrate" brands ! (I would even argue that a special ranking for “conglomerate” masterbrands should be now created & allow for tracking & valorization…).This is probably no stranger to the fact that, as BrandZ points out “Consumers have little patience with brands—and corporations—that violate trust. They publicize transgressions immediately and widely on social media…”: yes, the new consumer is much more knowledgeable & empowered, has easier access to information and exerts more influence on a corporate governance that, after the Enron, BP or Mattel incidents has become more top of mind for consumers… so why not acknowledge that new order of transparency, take charge & manage this new dimension as a real asset rather than just have it putting up fires and only endure liabilities in P.R. hardships… ?Somebody said “Trust is the new black”: corporate reputation is no longer about creating a vague, warm glow around a brand. It has become an integral part of the customer consideration, acquisition & retention value chain. We now recognize that corporate reputation helps convince customers that a company is relevant to them in an approachable, personal way which can directly affects purchase behaviors: it is an essential strategic asset.
So, why publicize the house when you are a house of brands ? Well, because -not much less than for a branded house- the reputation of the house, its “brand" still has a life of its own, has much deeper repercussions than the simple sum of personalities /lives of the various family members that it harbors -children misbehaving , just growing up or leaving the nest, parents moving on to a new “empty nest” lifestyle or just seniors gently fading out of the picture: the house /family values (governance, corporate business principles) has to exist & stand strong for family members to gather, seek shelter in time of a crisis, help fund some of the kid’s misadventures… In short: providing a guiding marketing culture and support system that remains relevant, alive & strong as the “pater noster” that once stood for the clan , well on top of the commerce stuff…