A Decision Framework for Brand Portfolio Rationalization in Consumer Markets
Abstract
Firms operating in consumer markets accumulate brands the way enterprises accumulate any asset acquired one decision at a time: through acquisitions, line extensions, geographic entries, and defensive launches, each individually justified, none taken with the whole portfolio in view. The result is a brand portfolio that no single decision was ever taken to create, in which a minority of brands generates the great majority of profit while a long tail of weak brands absorbs management attention, marketing investment, and organizational complexity out of all proportion to its contribution. Brand portfolio rationalization—the deliberate reduction of a portfolio to the brands that earn their place, and the disposal of those that do not—is among the most consequential and most poorly executed decisions in brand management, because it is emotionally and organizationally difficult, because clumsy execution destroys the customer equity the brands embodied, and because firms lack an explicit framework for deciding which brands to keep and how to dispose of the rest. This paper develops such a framework. Organized as a decision architecture rather than a prescription, it comprises a portfolio audit that renders the portfolio legible; a brand-role classification that distinguishes the strategic contribution of each brand from its current financial performance; a set of rationalization decision rules that determine, for each brand, whether to retain, merge, milk, or eliminate it on the basis of financial contribution, strategic role, customer overlap, brand equity, and migration cost; a disposition and customer-migration logic that preserves equity through the transition; and a reinvestment discipline that redirects the resources freed by rationalization into the brands retained. Grounded in the brand-equity and brand-architecture literatures, the market-based- assets and resource-based views of the firm, and the established scholarship on brand deletion and portfolio strategy, the framework is developed as a practitioner-usable decision instrument and situated against the recurring finding that the value in rationalization is captured or destroyed in execution rather than in the decision to rationalize. The paper specifies decision rules, disposition options, and directions for empirical validation.
Keywords
brand portfoliobrand rationalizationbrand architecturebrand equitybrand deletionportfolio strategybrand managementcustomer migrationmarket-based assetsconsumer markets.www.iiardpu
References
Aaker, D. A. (1991). Managing brand equity: Capitalizing on the value of a brand name. Free Press. Aaker, D. A. (1996). Building strong brands. Free Press. Aaker, D. A. (2004). Brand portfolio strategy: Creating relevance, differentiation, energy, leverage, and clarity. Free Press. Aaker, D. A., & Joachimsthaler, E. (2000). Brand leadership. Free Press. Aaker, D. A., & Keller, K. L. (1990). Consumer evaluations of brand extensions. Journal of Marketing, 54(1), 27–41. Agbabiaka, J., Okonkwo, C. S., Ogunwole, O., Mayo, W., & Okeke, O. T. (2019). Supply chain risk management model for EPC and gas processing projects. IRE Journals, 3(2), 968– 980. https://doi.org/10.64388/IREV3I2-1713124 Akeju, B., Edivri, J., Ogbole, J. I., Okoruwa, P. O., Fadayomi, O., & Abolaji, T. O. (2018). Conceptual model for insider threat classification and risk modeling in complex digital systems. IRE Journals, 1(9), 476–492. https://doi.org/10.64388/IREV1I9-1713778 Anderson, E. W., Fornell, C., & Lehmann, D. R. (1994). Customer satisfaction, market share, and profitability: Findings from Sweden. Journal of Marketing, 58(3), 53–66. Anderson, J. C., & Gerbing, D. W. (1988). Structural equation modeling in practice: A review and recommended two-step approach. Psychological Bulletin, 103(3), 411–423. Anderson, J. C., & Narus, J. A. (1990). A model of distributor firm and manufacturer firm working partnerships. Journal of Marketing, 54(1), 42–58. Bagozzi, R. P., & Yi, Y. (1988). On the evaluation of structural equation models. Journal of the Academy of Marketing Science, 16(1), 74–94. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. Barney, J. B., & Clark, D. N. (2007). Resource-based theory: Creating and sustaining competitive advantage. Oxford University Press. Bergkvist, L., & Bech-Larsen, T. (2010). Two studies of consequences and actionable antecedents of brand love. Journal of Brand Management, 17(7), 504–518. Berthon, P., Hulbert, J. M., & Pitt, L. F. (1999). Brand management prognostications. MIT Sloan Management Review, 40(2), 53–65. Bharadwaj, A. S. (2000). A resource-based perspective on information technology capability and firm performance. MIS Quarterly, 24(1), 169–196. Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & Venkatraman, N. (2013). Digital business strategy: Toward a next generation of insights. MIS Quarterly, 37(2), 471–482. Bola-Sadipe, D., Aliliele, C., & Eboh, E. E. (2019). Conceptual model for strategic accounting systems strengthening financial transparency and regulatory compliance. IRE Journals, 3(6), 535–564. https://doi.org/10.64388/IREV3I6-1715327 Bolton, R. N. (1998). A dynamic model of the duration of the customer’s relationship with a continuous service provider. Marketing Science, 17(1), 45–65. Bottomley, P. A., & Holden, S. J. S. (2001). Do we really know how consumers evaluate brand extensions? Empirical generalizations based on secondary analysis of eight studies. Journal of Marketing Research, 38(4), 494–500. Broniarczyk, S. M., & Alba, J. W. (1994). The importance of the brand in brand extension. Journal of Marketing Research, 31(2), 214–228. , www.iiardpub.org Burgess, S. M., & Steenkamp, J.-B. E. M. (2006). Marketing renaissance: How research in emerging markets advances marketing science and practice. International Journal of Research in Marketing, 23(4), 337–356. Chailan, C. (2008). Brands portfolios and competitive advantage: An empirical study. Journal of Product & Brand Management, 17(4), 254–264. Churchill, G. A., Jr. (1979). A paradigm for developing better measures of marketing constructs. Journal of Marketing Research, 16(1), 64–73. Coase, R. H. (1937). The nature of the firm. Economica, 4(16), 386–405. Cousins, P. D., Lawson, B., & Squire, B. (2008). Performance measurement in strategic buyer- supplier relationships: The mediating role of socialization mechanisms. International Journal of Operations & Production Management, 28(3), 238–258. Cronin, J. J., Jr., & Taylor, S. A. (1992). Measuring service quality: A reexamination and extension. Journal of Marketing, 56(3), 55–68. Dacin, P. A., & Smith, D. C. (1994). The effect of brand portfolio characteristics on consumer evaluations of brand extensions. Journal of Marketing Research, 31(2), 229–242. Day, G. S., & Wensley, R. (1988). Assessing advantage: A framework for diagnosing competitive superiority. Journal of Marketing, 52(2), 1–20. De Haes, S., & Van Grembergen, W. (2009). An exploratory study into IT governance implementations and its impact on business/IT alignment. Information Systems Management, 26(2), 123–137. DeLone, W. H., & McLean, E. R. (1992). Information systems success: The quest for the dependent variable. Information Systems Research, 3(1), 60–95. Deshpandé, R., Farley, J. U., & Webster, F. E., Jr. (1993). Corporate culture, customer orientation, and innovativeness in Japanese firms. Journal of Marketing, 57(1), 23–37. Devlin, J. (2003). Brand architecture in services: The example of retail financial services. Journal of Marketing Management, 19(9–10), 1043–1065. Dibbern, J., Goles, T., Hirschheim, R., & Jayatilaka, B. (2004). Information systems outsourcing: A survey and analysis of the literature. ACM SIGMIS Database, 35(4), 6–102. Dick, A. S., & Basu, K. (1994). Customer loyalty: Toward an integrated conceptual framework. Journal of the Academy of Marketing Science, 22(2), 99–113. Doney, P. M., & Cannon, J. P. (1997). An examination of the nature of trust in buyer-seller relationships. Journal of Marketing, 61(2), 35–51. Douglas, S. P., Craig, C. S., & Nijssen, E. J. (2001). Integrating branding strategy across markets: Building international brand architecture. Journal of International Marketing, 9(2), 97–114. Dwyer, F. R., Schurr, P. H., & Oh, S. (1987). Developing buyer-seller relationships. Journal of Marketing, 51(2), 11–27. Dyer, J. H., & Singh, H. (1998). The relational view: Cooperative strategy and sources of interorganizational competitive advantage. Academy of Management Review, 23(4), 660– 679. Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of Management Review, 14(1), 57–74. Eisenhardt, K. M., & Martin, J. A. (2000). Dynamic capabilities: What are they? Strategic Management Journal, 21(10–11), 1105–1121. Erdem, T. (1998). An empirical analysis of umbrella branding. Journal of Marketing Research, 35(3), 339–351. , www.iiardpub.org Eyetsemitan, R. A., Ambali, K. B., Oyeleye, A. O., & Fadayomi, O. (2020). Multi-stakeholder governance alignment in joint venture operations: A conceptual framework for coordinating business processes in highly regulated environments. IRE Journals, 4(4), 418–441. https://doi.org/10.64388/IREV4I4-1716955 Feeny, D. F., & Willcocks, L. P. (1998). Core IS capabilities for exploiting information technology. Sloan Management Review, 39(3), 9–21. Fornell, C. (1992). A national customer satisfaction barometer: The Swedish experience. Journal of Marketing, 56(1), 6–21. Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50. Fournier, S. (1998). Consumers and their brands: Developing relationship theory in consumer research. Journal of Consumer Research, 24(4), 343–373. Ganesan, S. (1994). Determinants of long-term orientation in buyer-seller relationships. Journal of Marketing, 58(2), 1–19. Goodhue, D. L., & Thompson, R. L. (1995). Task-technology fit and individual performance. MIS Quarterly, 19(2), 213–236. Grant, R. M. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(S2), 109–122. Gupta, S., Lehmann, D. R., & Stuart, J. A. (2004). Valuing customers. Journal of Marketing Research, 41(1), 7–18. Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate data analysis (7th ed.). Pearson. Han, J. K., Kim, N., & Srivastava, R. K. (1998). Market orientation and organizational performance: Is innovation a missing link? Journal of Marketing, 62(4), 30–45. Hill, S., Ettenson, R., & Tyson, D. (2005). Achieving the ideal brand portfolio. MIT Sloan Management Review, 46(2), 85–90. Homburg, C., Workman, J. P., Jr., & Krohmer, H. (1999). Marketing’s influence within the firm. Journal of Marketing, 63(2), 1–17. Hsu, L., Fournier, S., & Srinivasan, S. (2016). Brand architecture strategy and firm value: How leveraging, separating, and distancing the corporate brand affects risk and returns. Journal of the Academy of Marketing Science, 44(2), 261–280. Hunt, S. D., & Morgan, R. M. (1995). The comparative advantage theory of competition. Journal of Marketing, 59(2), 1–15. Jaworski, B. J., & Kohli, A. K. (1993). Market orientation: Antecedents and consequences. Journal of Marketing, 57(3), 53–70. John, D. R., Loken, B., & Joiner, C. (1998). The negative impact of extensions: Can flagship products be diluted? Journal of Marketing, 62(1), 19–32. Kapferer, J.-N. (2012). The new strategic brand management: Advanced insights and strategic thinking (5th ed.). Kogan Page. Kaplan, R. S., & Norton, D. P. (1992). The balanced scorecard: Measures that drive performance. Harvard Business Review, 70(1), 71–79. Kaplan, R. S., & Norton, D. P. (1996). The balanced scorecard: Translating strategy into action. Harvard Business School Press. Keller, K. L. (1993). Conceptualizing, measuring, and managing customer-based brand equity. Journal of Marketing, 57(1), 1–22. , www.iiardpub.org Keller, K. L. (2003). Strategic brand management: Building, measuring, and managing brand equity (2nd ed.). Prentice Hall. Keller, K. L., & Aaker, D. A. (1992). The effects of sequential introduction of brand extensions. Journal of Marketing Research, 29(1), 35–50. Keller, K. L., & Lehmann, D. R. (2006). Brands and branding: Research findings and future priorities. Marketing Science, 25(6), 740–759. Keller, K. L., Sternthal, B., & Tybout, A. (2002). Three questions you need to ask about your brand. Harvard Business Review, 80(9), 80–89. Khanna, T., & Palepu, K. (1997). Why focused strategies may be wrong for emerging markets. Harvard Business Review, 75(4), 41–51. Kirca, A. H., Jayachandran, S., & Bearden, W. O. (2005). Market orientation: A meta-analytic review and assessment of its antecedents and impact on performance. Journal of Marketing, 69(2), 24–41. Kirmani, A., Sood, S., & Bridges, S. (1999). The ownership effect in consumer responses to brand line stretches. Journal of Marketing, 63(1), 88–101. Kohli, A. K., Jaworski, B. J., & Kumar, A. (1993). MARKOR: A measure of market orientation. Journal of Marketing Research, 30(4), 467–477. Kotler, P. (1965). Phasing out weak products. Harvard Business Review, 43(2), 107–118. Kotler, P., & Keller, K. L. (2016). Marketing management (15th ed.). Pearson. Krasnikov, A., & Jayachandran, S. (2008). The relative impact of marketing, research-and- development, and operations capabilities on firm performance. Journal of Marketing, 72(4), 1–11. Kumar, N. (2003). Kill a brand, keep a customer. Harvard Business Review, 81(12), 86–95. Laforet, S., & Saunders, J. (1994). Managing brand portfolios: How the leaders do it. Journal of Advertising Research, 34(5), 64–76. Laforet, S., & Saunders, J. (1999). Managing brand portfolios: Why leaders do what they do. Journal of Advertising Research, 39(1), 51–66. Levitt, T. (1960). Marketing myopia. Harvard Business Review, 38(4), 45–56. Loken, B., & John, D. R. (1993). Diluting brand beliefs: When do brand extensions have a negative impact? Journal of Marketing, 57(3), 71–84. London, T., & Hart, S. L. (2004). Reinventing strategies for emerging markets: Beyond the transnational model. Journal of International Business Studies, 35(5), 350–370. Melville, N., Kraemer, K., & Gurbaxani, V. (2004). Information technology and organizational performance: An integrative model of IT business value. MIS Quarterly, 28(2), 283–322. Milberg, S. J., Park, C. W., & McCarthy, M. S. (1997). Managing negative feedback effects associated with brand extensions: The impact of alternative branding strategies. Journal of Consumer Psychology, 6(2), 119–140. Mintzberg, H. (1978). Patterns in strategy formation. Management Science, 24(9), 934–948. Moorman, C., & Rust, R. T. (1999). The role of marketing. Journal of Marketing, 63(4_suppl1), 180–197. Moorman, C., Zaltman, G., & Deshpandé, R. (1992). Relationships between providers and users of market research: The dynamics of trust within and between organizations. Journal of Marketing Research, 29(3), 314–328. Morgan, N. A., & Rego, L. L. (2009). Brand portfolio strategy and firm performance. Journal of Marketing, 73(1), 59–74. https://doi.org/10.1509/jmkg.73.1.059 , www.iiardpub.org Morrin, M. (1999). The impact of brand extensions on parent brand memory structures and retrieval processes. Journal of Marketing Research, 36(4), 517–525. Muniz, A. M., & O’Guinn, T. C. (2001). Brand community. Journal of Consumer Research, 27(4), 412–432. Muzellec, L., & Lambkin, M. (2006). Corporate rebranding: Destroying, transferring or creating brand equity? European Journal of Marketing, 40(7/8), 803–824. Narver, J. C., Slater, S. F., & MacLachlan, D. L. (2004). Responsive and proactive market orientation and new-product success. Journal of Product Innovation Management, 21(5), 334–347. Nelson, R. R., & Winter, S. G. (1982). An evolutionary theory of economic change. Harvard University Press. Nunnally, J. C. (1978). Psychometric theory (2nd ed.). McGraw-Hill. Oliver, R. L. (1980). A cognitive model of the antecedents and consequences of satisfaction decisions. Journal of Marketing Research, 17(4), 460–469. Oziri, S. T., Arowogbadamu, A. A. G., & Seyi-Lande, O. B. (2020). Predictive analytics applications in reducing customer churn and enhancing lifecycle value in telecommunications markets. International Journal of Multidisciplinary Futuristic Development, 1(2), 40–49. Palmatier, R. W., Dant, R. P., Grewal, D., & Evans, K. R. (2006). Factors influencing the effectiveness of relationship marketing: A meta-analysis. Journal of Marketing, 70(4), 136–153. Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1985). A conceptual model of service quality and its implications for future research. Journal of Marketing, 49(4), 41–50. Park, C. W., Milberg, S., & Lawson, R. (1991). Evaluation of brand extensions: The role of product feature similarity and brand concept consistency. Journal of Consumer Research, 18(2), 185–193. Peteraf, M. A. (1993). The cornerstones of competitive advantage: A resource-based view. Strategic Management Journal, 14(3), 179–191. Petromilli, M., Morrison, D., & Million, M. (2002). Brand architecture: Building brand portfolio value. Strategy & Leadership, 30(5), 22–28. Podsakoff, P. M., MacKenzie, S. B., Lee, J.-Y., & Podsakoff, N. P. (2003). Common method biases in behavioral research: A critical review of the literature and recommended remedies. Journal of Applied Psychology, 88(5), 879–903. Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. Free Press. Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. Free Press. Prahalad, C. K. (2004). The fortune at the bottom of the pyramid: Eradicating poverty through profits. Wharton School Publishing. Prahalad, C. K., & Hamel, G. (1990). The core competence of the corporation. Harvard Business Review, 68(3), 79–91. Rajagopal, & Sanchez, R. (2004). Conceptual analysis of brand architecture and relationships within product categories. Journal of Brand Management, 11(3), 233–247. Rao, V. R., Agarwal, M. K., & Dahlhoff, D. (2004). How is manifest branding strategy related to the intangible value of a corporation? Journal of Marketing, 68(4), 126–141. , www.iiardpub.org Reichheld, F. F. (1996). The loyalty effect: The hidden force behind growth, profits, and lasting value. Harvard Business School Press. Reichheld, F. F. (2003). The one number you need to grow. Harvard Business Review, 81(12), 46–54. Reinartz, W. J., & Kumar, V. (2000). On the profitability of long-life customers in a noncontractual setting: An empirical investigation and implications for marketing. Journal of Marketing, 64(4), 17–35. Riezebos, R. (2003). Brand management: A theoretical and practical approach. Prentice Hall. Rumelt, R. P. (1991). How much does industry matter? Strategic Management Journal, 12(3), 167–185. Rust, R. T., Zahorik, A. J., & Keiningham, T. L. (1995). Return on quality : Making service quality financially accountable. Journal of Marketing, 59(2), 58–70. Sanni, J. O., Ajiga, D., & Atima, M. E. (2020a). Data driven brand positioning frameworks resolving differentiation challenges in regulated professional markets. International Journal of Multidisciplinary Research and Growth Evaluation, 1(5), 649–660. Sanni, J. O., Ajiga, D., & Atima, M. E. (2020b). Analytical models addressing measurement challenges of marketing return on investment. International Journal of Multidisciplinary Research and Growth Evaluation, 1(5), 636–648. Sanni, J. O., Ajiga, D., & Atima, M. E. (2020c). Systematic review of product management strategies in mobile network rollouts across emerging markets. International Journal of Multidisciplinary Research and Growth Evaluation, 1(5), 661–673. Sattler, H., Völckner, F., Riediger, C., & Ringle, C. M. (2010). The impact of brand extension success drivers on brand extension price premiums. International Journal of Research in Marketing, 27(4), 319–328. Seyi-Lande, O. B., Arowogbadamu, A. A. G., & Oziri, S. T. (2020). Geomarketing analytics for driving strategic retail expansion and improving market penetration in telecommunications. International Journal of Multidisciplinary Futuristic Development, 1(2), 50–60. Sirdeshmukh, D., Singh, J., & Sabol, B. (2002). Consumer trust, value, and loyalty in relational exchanges. Journal of Marketing, 66(1), 15–37. Slater, S. F., & Narver, J. C. (1995). Market orientation and the learning organization. Journal of Marketing, 59(3), 63–74. Srivastava, R. K., Shervani, T. A., & Fahey, L. (1998). Market-based assets and shareholder value: A framework for analysis. Journal of Marketing, 62(1), 2–18. Strebinger, A. (2014). Rethinking brand architecture: A study on industry-, company- and product-level drivers of brand disposition. European Journal of Marketing, 48(9/10), 1782–1804. Sullivan, M. (1990). Measuring image spillovers in umbrella-branded products. Journal of Business, 63(3), 309–329. Teece, D. J. (2007). Explicating dynamic capabilities: The nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal, 28(13), 1319–1350. Uggla, H. (2004). The brand association base: A conceptual model for strategically leveraging partner brand equity. Journal of Brand Management, 12(2), 105–123. Varadarajan, R., DeFanti, M. P., & Busch, P. S. (2006). Brand portfolio, corporate image, and reputation: Managing brand deletions. Journal of the Academy of Marketing Science, 34(2), 195–205. , www.iiardpub.org Vargo, S. L., & Lusch, R. F. (2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68(1), 1–17. Verhoef, P. C., & Leeflang, P. S. H. (2009). Understanding the marketing department’s influence within the firm. Journal of Marketing, 73(2), 14–37. Verhoef, P. C., Reinartz, W. J., & Krafft, M. (2010). Customer engagement as a new perspective in customer management. Journal of Service Research, 13(3), 247–252. Völckner, F., & Sattler, H. (2006). Drivers of brand extension success. Journal of Marketing, 70(2), 18–34. Webster, F. E., Jr. (1992). The changing role of marketing in the corporation. Journal of Marketing, 56(4), 1–17. Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171–180. Wernerfelt, B. (1988). Umbrella branding as a signal of new product quality: An example of signalling by posting a bond. RAND Journal of Economics, 19(3), 458–466. Yin, R. K. (2009). Case study research: Design and methods (4th ed.). Sage. Yoo, B., & Donthu, N. (2001). Developing and validating a multidimensional consumer-based brand equity scale. Journal of Business Research, 52(1), 1–14. Zeithaml, V. A. (1988). Consumer perceptions of price, quality, and value: A means-end model and synthesis of evidence. Journal of Marketing, 52(3), 2–22.
More Articles from IIARD INTERNATIONAL JOURNAL OF ECONOMICS AND BUSINESS MANAGEMENT
Integrating Plan for Every Part Analysis with Bill of Materials Readiness to Mitigate Long Lead-Time Risk in New Product Introduction
Author: Chidera A. Ebisi, Ngodoo Joy Sam-Bulya
Reverse Logistics in E-Commerce Returns Management: A Review of Advances, Practices, and Emerging Challenges
Author: Priscilla Agboada, Rosalyn Ezeako, Ifeoma E. Okoli, Chikodiri Scholastica Uzondu
Digital Ethics and Middle-Level Manager Productivity in Mobile Telecommunication Firms in Rivers State
Author: George Ordua PhD, Orluwene, Ugochi Chituru
Impact of Strategic Management Practices on Employees Performances in Selected Universities in Lagos State
Author: Oluwarounfola, S.A. NELSON M.Sc, MANUPA, Professor Paul A. AKANBI PhD
Environmental Reporting and Firm Value in the Manufacturing Firms in Nigeria
Author: Umanah Nsikan John, Iboro Paul Ibara