Portfolio Management

Definition

The study and understanding of the management of brand portfolios (i.e., several brands owned by the same corporation) or product portfolios (i.e., SKUs or variants within a brand, ‘sub-brands’) and how they can relate to brand growth.

Key Findings

An audit by the Ehrenberg-Bass Institute of over 4,500 brands across 12 product categories in the UK in 2009 – 2011 (from Fabric Care, Instant Coffee, to Biscuits, Tea, and Cough Syrup) show that big brands typically have more products in their portfolio compared to small brands.
The study reveals that there is no universal recommendation of an optimal product portfolio size, as the norms of product portfolio size and composition (e.g. the number of flavours/scents, pack size options) are idiosyncratic to individual categories.
The top-selling single SKU within a product portfolio is typically purchased by four out of ten brand buyers and contributes one-third of the total unit sales and revenue for the brand — this shows how important the core product in the portfolio is.

Best Practice

Report 39: How Brands Compete
Report 53: Understanding How Brands Compete: A Guide to Duplication of Purchase Analysis

Merely having a bigger product portfolio is not the shortcut to brand growth. A broader focus on systematically managing Physical Availability and Mental Availability is still the route to sustainable brand growth.
Core products (the biggest sellers) need to be widely distributed and supported by advertising. This needs to remain the focus of marketing strategy, along with careful use of new product development.

Range extensions should be used judiciously where doing so can cater to a broader range of needs and potential purchase occasions.

Reports (4)

Reports

Showing 4 results

Brand extensions: does buying a brand in one category nudge your chances of buying it in another?

Report 95
August 2019

Are the users of a brand in one category more likely to purchase the same brand in other categories (i.e. brand extensions) ?

We analysed one year of household purchasing data for thousands of households to understand the level of cross-category purchasing brand extensions achieve. We investigate 99 extensions across 30 consumer packaged goods category pairings.

This report finds that users of a brand are more likely to purchase extensions than are non-users, showing that the branding facilitates the purchase of a product in a second category. However, this effect is not universal.

REPORT 90
July 2018

This report re-examines the common assertion that the vast majority of new products fail. We investigate whether claims of very high new product failure rates are true or not. We review past empirical research from peer-reviewed academic journals published over the past 26 years and provide a detailed analysis of failure rates for over 30,000 new product launches, from around 10,000 brands, across 25 consumer packaged goods categories (ranging from soft drinks to bath tissue) in the United States market. The findings show that new products do fail, but failure is not as high as is widely believed, or at very least not as fast as thought.

REPORT 80
APRIL 2018

Key Points
. Large brands have larger portfolios, but portfolio size norms depend on the category.
. The top-half of the product portfolio typically contributes eight out of ten brand buyers and 75% of the revenue.
. When deciding to add or remove SKUs, investigating how each SKU contributes incremental buyers along with sales to the overall brand is crucial.

Report 76
DECEMBER 2017

Physical Availability is about making the brand easy to find and easy to buy. Brands need to be available in [all] the places and at the times that consumers think about buying the category. While consumers are naturally loyal, there are often multiple brands that are salient for a category need. If one of the Mentally Available brands is less easy to find or more difficult to buy than a rival brand, the consumer will likely buy the rival.