5 steps to a more effective brand portfolio

Morgan and Rego have studied how different brand portfolio characteristics influence the firm’s financial performance. Three dependent variables were used in the analysis*.

5 actions to maximize firm’s financial performance, ordered by relevance**:

1. Market portfolio to a limited number of consumer segments (demographical)
2. Optimize portfolio for high perceived quality
3. Optimize portfolio for low perceived price (relative to quality)
4. Increase the number of brands in portfolio
5. Position the brands differently on perceived quality x perceived price (x target group)

The authors also tested the complex dependencies between brand portfolio characteristics and several measures of marketing effectiveness. However, depending on the market goals to aim for (advertising efficiency, market share, etc) the preferred portfolio strategy varies considerably.

(*) Tobin’s q; cash flow; cash flow variability
(**) Number of significantly dependant financial metrics
Source: Morgan N A, Rego L L. 2009. Brand Portfolio Strategy and Firm Performance. JoM, Vol 73, Issue 1.