Marketing Strategy : Making Brand Portfolio Decisions

Brand portfolio decisions are strategic in nature. These decisions have very powerful impact on the entire brand architecture and marketing strategy of the firm. According to marketing theory, there are two basic brand portfolio models –House of Brands and Branded House.

Recently Rajiv Bajaj, CEO of Bajaj Auto announced a decision that the company will not be using the corporate brand Bajaj for any of the motorcycles produced by the company. Instead, the bikes will sport individual brand names and Bajaj Auto will be a garage of independent brands like Unilever and P&G. According to newspaper reports, the company will focus on four brands – Pulsar, Boxer, Discover and KTM and will not use the parent brand to endorse these individual brands. Bajaj Auto has made the decision to move from a Branded House portfolio model to House of Brands portfolio model.

House of Brands

House of Brands model refers to a brand portfolio where firms will choose different brand names for various products across categories. These brands will have own identity and personality. Different products in the same category will also have individual brand names. FMCG giants like Hindustan Unilever, P&G l follow the model of House of Brands. For example HUL has soap brands like Lux, Rexona, Hamam, Lifebuoy, Dove etc.

House of Brands portfolio model have many advantages. One of the biggest advantages is the focus that managers can give to individual brands. Since each brand will have separate identity, brand managers can devise focused strategies with regard to segmentation, positioning etc. Individual brands also give tremendous amount of freedom as far as strategies are concerned. Brand managers are not constrained in devising their strategies since the brand is not linked to any other brands in the portfolio.

Since the brands in the portfolio are independent, the failure of any one brand is not going to have an impact on other brands. Controversies affecting one brand will have minimal impact on other brands from the same company and brand managers can distance other brands from the brand which is facing the issue.

House of Brands model also have its fair share of disadvantages. Since the firm intent to have different brand names for various products, the cost of promotion of these multiple brands will be more compared to Branded House model.

In the case of House of Brands, the promotional budget has to be shared which will create internal competition among various brands for a larger share. While internal competition can be beneficial, there is also a chance of internal conflicts within the brand management teams.

Another potential disadvantage is the chances of brand cannibalization within a category. For example soap brands Rexona and Hamam from HUL compete with each other in some southern markets. Thums Up and Coca Cola compete with each other in markets where they co-exist.

If not done carefully, different brands in the portfolio can also create confusion in terms of positioning and segmentation. Overlaps in segments, cannibalization, same positioning, and clutter etc can occur if the firm is not careful about the individual brand strategy. At one point of time HLL (now HUL) found its brand portfolio with too many brands that overlapped with each other. The company had to undertake a brand rationalization exercise which reduced the number of brands from 110 to 30 power brands.

Branded House

Branded House portfolio model is where the firm chooses to have one brand name for all the products that is marketed by the company. Many firms use the corporate brand name for all the products that they sell in the market. Dell is often cited as a classic example of a Branded House.

The biggest advantage of Branded House is the economies of scale in terms of brand promotion activities. Since there is only one brand to promote, the firm can channel the entire resources more effectively.

Another advantage of Branded House is that the promotional cost of introducing new products into the market will be significantly lower compared to House of Brands. Since the new product will carry the common brand name, there is an increased chance of consumer acceptance because of the existing brand equity of the parent brand. The firm is thus spared of the task of building brand awareness from the scratch.

A major disadvantage of Branded House model is the possibility of brand dilution arising out of different products from the same brand. Unless carefully monitored, product proliferation within the brand portfolio can dilute the core positioning of the parent brand. It may not be possible for all products to have the same positioning theme and any deviation from parent brand’s positioning will dilute the core positioning them of the Branded House.

Firms strictly adhering to Branded House portfolio model may have to forego many market opportunities if those categories do not fit into the parent brand’s positioning. For example a Branded House marketing luxury product may have to forego the mass market opportunities because of the positioning constraints. That constraint is not applicable for House of Brands because the positioning of one brand may not affect another.

Another disadvantage of Branded House portfolio is the impact of product failures/controversies on entire portfolio. Since all products carry the same brand name, failure of one product can have a negative impact on the parent brand. Any controversy involving a single product can have devastating influence on the entire product range.

Although theoretically these two portfolio models exist, in practice firms tend to use various elements of both models together while devising their brand portfolio strategy.

(Reference: Tybout, A., & Calkins, T. (2006). Brand Portfolio Strategy. In Kellogg on Branding (pp. 104-129). Wiley India.)

Originally Published here at Adclubbombay.com

Savlon : Heals Without Hurting

Brand : Savlon
Company : Johnson & Johnson
Agency : Lowe Lintas


Brand Analysis Count : 369

Can a brand ,which was proved by laboratory tests as better than its competitor, backed by one of the most reputed business houses in the world, having many product advantages over its competitor, have any chance of failing in the market ?

If your answer is no , then think again ....


Savlon which was clinically proven to be a better antiseptic than Dettol ,backed by Johnson & Johnson ,having advantages like better scent and non-stinging properties miserably failed in the Indian market.

Why ?

Frankly I am also clueless. That is why Marketing as a subject is so intriguing... it is full of surprises. Philip Kotler once said " Marketing is a subject that is easy to (pretend to )unders tand but difficult to practice ".

Looking at Savlon, I wonder whether the success of a brand is depended on sheer luck... Is luck the only reason why out of 100 brands launched, only 5 succeed ?

Is Savlon an unlucky brand ? or Did Johnson & Johnson failed in building this brand ?

Savlon was a brand owned by a pharmaceutical MNC ICI ltd. Later ICI's OTC brands was acquired by Johnson &Johnson . Savlon was relaunched in Indian market in 1993. The brand was expected to give the market leader Dettol, a run for its money. But even after millions of rupees spent , Dettol still rules the antiseptic lotion market.

Savlon had lot of advantages over Dettol. According to media reports, some lab tests indicated that Savlon is an effective germ killer than Dettol . Savlon is effective against both Gram Positive and Gram Negative germs.

Another advantage about Savlon was that it does not sting while being applied on wounds. Dettol used to give a stinging sensation while applied on wounds. Savlon also had a better scent compared to the more clinical smell of Dettol.

Armed with these properties, Savlon went into a direct attack on Dettol . The product was positioned as an antiseptic that does not hurt while healing. The main differentiators for the brand was its no-sting property and better smell. According to media reports, during the relaunch, J&J spent heavily on promoting the brand.
The relaunch was a success and consumers tried out the new product . But the story did not continue like that.

Dettol confronted the frontal attack from Savlon in a different manner. It tried to attack one of the most valuable brand of J&J - Band -Aid by launching Dettol plasters.

This move got J&J defensive. It never expected Dettol to attack another brand in retaliation. Dettol plasters had the potential to attract consumers because of the brand equity commanded by Dettol Antiseptic.

J&J scrambled to protect Band-Aid by launching a series of variants in the medicated plaster segment. In doing so, resources was spent on defending Band-Aid rather than in advancing Savlon.

Savlon suffered heavily because it lost the support interms of investment in brand building. Dettol had a brand equity built over more than 50 years (at that period of time) and it is not an easy task to break into that equity. It needed painful long term sustained investment.

How ever Savlon was pushed to a back burner after Dettol introduced the plaster. Savlon never re-emerged.

During 1998, a funny incident happened. I deliberately used the word funny because it is funny.
In 1998 HLL acquired the rights to launch Savlon Soaps from J&J. While the rights for antiseptic lotion remained with J&J, the marketing alliance was for soaps.

HLL was worried at the success of Dettol soaps. Armed with a strong association with antiseptic property , Dettol soap became a huge success and cornered a significant chunk of the premium medicated soap category. HLL, who wanted to rule the entire soap category ,wanted to arrest the rise of Dettol soap.

Instead of trying to develop its own brand of soap, HLL looked for an easy solution. Thus came the idea of marketing alliance with Savlon. With much fanfare, Savlon antiseptic soap was launched. J&J was happy because it got some cashflow by giving the rights of Savlon.The marketing alliance lasted only for 4 years.

According to reports, HLL put Savlon soap in dustbin in 2003 and repositioned its Lifebuoy brand to fight against Dettol.

So where did Savlon went wrong ?

There are marketing experts who say that the positioning of Savlon was not correct. No-stinging and sweet scent are not important for a consumer looking for an antiseptic lotion. What they look for is effectiveness. Hence Savlon was trying to differentiate on attributes which are not considered to be important by the consumers.

More over, consumers tend to believe that the stinging sensation is a side-effect of the effectiveness of the antiseptic.So if it does not hurt , it is not effective. Dettol has taught them that way.

I believe that Savlon did not achieve its desired success because J&J was not able to support it interms of investment. Somewhere along the way, the company disowned the brand. One reason can be that antiseptic lotion is a small market that does not warrant such heavy investment. But if that is so, the the company shouldn't have introduced a brand in such a category.

Savlon now occupies a negligible part of the market. It is a popular brand in the institutional market but in the consumer market, it is a no-brand.

Related brand
Dettol

Wishing All A Rocking 2008

Time to say good bye to 2007. A year that saw India shining and rising. 2007 was great for all marketing lovers. The year saw more consolidation than new launches. Marketers was busy concreting their own positions in the market place rather than setting the markets on fire with new product launches.Fireworks were in communicating rather than in new launches.

As usual HUL proved its marketing might with some ground breaking campaigns for Surf and Lifebuoy.HLL transformed itself to Hindustan Unilever Ltd this year.

The new product winner 2007 was Bingo which is giving Lays sleepless nights. Motorola gave jitters to Nokia with some cool commercials. 2007 also saw the rejuvenation of marketer's interest towards celebrities. Now ordinary models are replaced by celebrities and celebrities almost became commodities.2007 also saw the rise of retail. The impact on this will be seen in 2008 when these majors starts launching their private labels.
This year also saw an old icon reentering the scene. Reliance relaunched Vimal in 2007 as a part of their overall retail strategy.
2007 will be remembered as a year of confectioneries. The new launches and branding was like crazy in this category .

The dampeners of 2007 are clearly the Cola majors Pepsi and Coke. Both these brands could not impress either the consumers or the media.

2008 is going to be exciting with lot of marketing fireworks across domains. This blog will be there tracking all the happenings.

Wishing all readers a very happy new year

Brand Update :Surf Excel

Surf Excel has come out with a new campaign 10/10 ( pronounced 10 on 10). The campaign is aimed at raising fund for the educationally challenged poor kids. Every Surf Excel will have a piece of stained cloth. When washed, this cloth will reveal a number out of 10. SMS this number to 455 and that amount goes to a NGO that works in the field of education for poor. The campaign is set to collect Rs 25 lakh for the underprivileged..

These type of campaigns are aimed at making the brand more humane. The brand gains from the positive attitude created by such campaigns. Some theorist calls this Corporate Social Responsibility. But as Drucker said “ The main purpose of business is to make profit” and as we say to create wealth for stakeholders. The problem is that only a management student understands such concept. An ordinary person will view business as some thing that makes profit for a select few. Hence corporate are forced to display some actions to justify that they mean good to the society.

The latest Surf campaign also intends to do that. The brand is trying to ladder up to a higher level than just the Cleaning ability. Lifebuoy also has successfully taken up the cause of preventing diarrhea thorough its Swasth Chetana campaign. The brands like Surf and Lifebuoy uses children in the advertisements. There are some people who consider themselves as “ Moral Policemen” whose main job is to make the life of marketers difficult. These campaigns act as a Preemptive measure to silence those critics.

It is a laudable effort from HLL to take such initiatives for the brand. The brands benefits immensely by associating with such activities through the positive vibes created by such campaigns. Another brand from HLL , Fair and Lovely also has taken up such initiatives to contribute to the cause of women empowerment.

Image Source : agencyfaqs.com

Related Brands

Surf Excel
Lifebuoy
Rin
Fair & Lovely

Brand Update : Lifebuoy

Lifebuoy has extended its positioning from " Protection from germs" to Continuous protection from germs even hours after bath. Like the earlier award winning campaign of Little Gandhi, this time also Hll rightly uses kids to the brand's advantage. The new concept take a cue from the Surf's campaign 'Dirt is good". The new campaign of Lifebuoy assure mothers that the child gets protection even hours after bath. Traditionally soap ads used the concept of washing away dirt and germs during bath.
But no one thought about protection after bath. Toothpaste ads showed protection after brushing but not bathing soaps. Lifebuoy effectively takes advantage of this twist. Great work from a Great brand.

Lifebuoy: Thandurusti hain vaham

Brand : Lifebuoy
Company ; HLL
Agency : Lowe


This is a brand that was launched in 1895. Well that is pretty old isn't it? Looking at the life of Lifebuoy is interesting for a marketing person.The brand has reinvented itself and that too successfully.

The brand was initially positioned in the health and value platform. Targeted at the male with a unique jingle " thandurusti ki raksha kartha hai lifebuoy, lifebuoy hai jahan thandurusti hai vaham". The campaigns showed footballer players and athletes using the soap and the jingle followed made it a soap for the male. The soap was brick red and carbolic ingredient with a unique smell (chryselic perfume) that distinguished itself from other feminine brands and making it the largest selling soap brand in the world

In the year 2002 the company changed the positioning and I would say a historic decision. The brand was no longer a masculine brand. The brand was repositioned as a family brand.The brand was no more carbolic, the perfume changed and new ingredient Active B which eliminate harmful germs was introduced. The campaign was " a pretty girl who was teased for having a pimple then after using Lifebuoy Gold, retorts I don't care" was an instant hit among the public. The company maintained the health platform but targeted at the family so that the brand usage goes up. It was a risk that no marketer will take for a brand that was there for 100 years. HLL have to thank god for surviving that repositioning.

2004 also saw another repositioning for the brand. The target was the "discerning housewife" and the positioning was " health protection for family and me".
The new campaign by Lowe was right on target and still does not dilute the age old positioning of Health and freedom from germs.

The brand personality also changed from health to warmer , versatile and socially responsible. Hll have also given this brand a rural thrust through its CSR initiative " Lifebuoy Swasth chetana". UNICEF under its health initiative have found that the habit of using soaps to wash hands can reduce the chance of diarrhea among the kids dramatically. UNICEF needed 150256 soaps and HLL agreed to supply it. Now 70mn families and 18000 villages are covered under this initiative.

This is a unique brand that have survived the test of time and "ideas of marketing professionals". Still when I see lifebuoy, that jingle keeps singing in my mind
" Thandurusti ki raksha kartha hai Lifebuoy,
Lifebuoy hai jaham
Thandursty hai vaham
Lifebuoy........."