BRAND PORTFOLIO RATIONALIZATION
A firm may accumulate more and more brands as it grows and the product lines become longer. At some point, the firm recognizes that it has too many brands, which dissipate its resources and effort. The firm decides to cut short the product line and prune its brand portfolio by eliminating some of the brands.
We shall consider here a few examples to understand it better.
P&Gâ€™s Brand Portfolio Rationalization
Worldwide, P&G is known as the votary of brand proliferation. In every product line, P&G has been launching a number of individual brands. Of late P&G has been taking a re-look at its brand portfolio with a view to containing costs and enhancing brand productivity. The new strategy is to focus on a few successful global brands like Pantene and Head & Shoulders in hair care, Ariel in Laundry, Vicks in healthcare and Whisper in feminine protection. Local/regional brands are being taken up for strict evaluation.
P&G is not only dropping brands, it has also been cutting brand variants and line extensions. P&G is extending the strategy to all its markets. And in tune with this strategy, by the close of the 1990s, P&G India decided to drop/sellout some of its brands.
Dabur India is also pruning its brand portfolio consisting of around 30 brands spread over different product lines. Over the last two decades, Dabur has been going all out in expanding its brand portfolio. It also entered more and more product lines, moving away from its main businesses— foods, personal care and health care.
By the late 1990s, Dabur found that it had accumulated a huge collection of brands, which adversely affected its marketing efficiency. Dabur decided to trim its product mix and brand portfolio. Investors too had expressed fears that the company was plunging into too many peripheral business lines and scattering attention and resources on too many brands. The company hired the services of McKinsey & Co in 1996 to decide on an ideal blend of products and brands.
Dabur finally decided to stay with three product lines— foods, personal care and healthcare and with 12 to 15 brands overall. The other brands were to be offered for sale. The company has decided to concentrate only on brands, which have the potential to achieve a turnover of Rs 30 to 50 crore over the next five years. The chosen brands include Chyawanaparash, Hajmola, Pudin Hara, Hingoli, Restora, Amla hair oil, Vatika, Anmol coconut oil, and Real fruit juice. Dabur is also increasing the marketing and advertising spend by 50% on the selected brands.
The above ideas of rationalizing is to have manageable brand portfolio by shedding some of the brands, the company strives to make the remaining brands stronger by giving them more focused inputs.