From Overload to Order: The Power of Brand Rationalization

We’re surrounded by brands, and B2B companies often find themselves managing unwieldy portfolios . Whether these brands were acquired or created over time, managing a complicated house of brands can be time-consuming and costly.

Strategically streamlining a company's brand portfolio, a process often known as brand rationalisation, can enhance clarity, operational efficiency, and market impact. A critical component of this process is the effective transfer of brand equity, ensuring that the value and trust associated with existing brands are preserved and leveraged.

Gather Insight and Get Strategic

Brand rationalisation involves evaluating and optimising a company's brand portfolio and may include merging, retiring, or repositioning brands to reduce complexity and focus resources on the most promising opportunities.  

Interviews with internal stakeholders, key customers and customer surveys can help provide a data-driven perspective that cuts through internal personal attachments to brand names and logos. 

Key topics to evaluate:

• Brand equity: Begin by evaluating the strength and value of each brand within the portfolio. Consider factors such as market share, customer loyalty, and brand recognition.  
• Market positioning: Assess how each brand fits within the company's overall market strategy and long-term plans. Determine whether brands complement each other or if overlaps exist that could confuse consumers or dilute brand messaging.
• Customer impact: Maintaining customer trust and loyalty is paramount, so strategies should be developed to communicate changes effectively and manage customer perceptions. For global brands, it is important to consider the impact and perception of any changes to brands – to this day, people “of a certain age” still lament the rebranding of the “Marathon bar” to “Snickers” by Mars in 1990, so much so that a limited “special Marathon retro edition” was announced 34 years later!

Architect For Success

When rationalising a portfolio, a well-defined brand architecture provides a clear framework for decision-making. It helps identify which brands align with the company's strategic objectives and which may be redundant or misaligned.

The goal is to create a cohesive brand architecture that resonates with target audiences and supports long-term growth.  

Your brand architecture is the strategic framework that defines the relationship between a company's overarching brand and its various sub-brands, products, or services. It serves as the brand blueprint, ensuring clarity and coherence in the market.  

There are four ways of organising brands:

• Branded House (Monolithic): In this model, a single master brand encompasses all products and services, creating a unified brand image. Apple exemplifies this approach, with products like the iPhone, iPad, and MacBook all reinforcing the Apple brand identity.
• House of Brands: This structure features a parent company that owns multiple distinct brands, each operating independently. Procter & Gamble (P&G) employs this strategy, managing brands such as Tide, Pampers, and Gillette, each with its own unique identity.  
• Endorsed Brands: Here, sub-brands maintain their own identities but are endorsed by the parent brand, lending credibility and leveraging the parent brand's reputation. An example is Marriott International, which endorses its various hotel brands like Courtyard by Marriott and Fairfield by Marriott.  
• Hybrid (Mixed): This approach combines elements from the other models, allowing flexibility in brand management. Microsoft utilises a hybrid architecture, with products like Windows and Office under the master brand, while Xbox operates as a distinct brand.  

Strategies For Successful Brand Rationalisation

Transferring brand equity is a delicate process that requires careful planning to preserve the value associated with existing brands. Key strategies include:

• Clear communication: Develop comprehensive communication plans to inform stakeholders - including customers, employees, and partners—about the reasons for brand changes and the benefits this will bring. Transparency fosters trust and acceptance.
• Honour legacy: When merging or retiring brands, invest in rebranding initiatives that honour the legacy of the original brands while establishing a refreshed identity. This may involve updating logos, taglines, and other brand elements to reflect the new direction.

• Loss of brand equity: Poorly executed rationalization can lead to the erosion of valuable brand equity. Handling brand transitions carefully is crucial to preserve customer trust and loyalty. Proceed with caution, GAP spent a reported $100 million on a rebrand that lasted a week, and the recent Jaguar rebrand has sparked furious online debate and risked  alienating its existing customer base.
• Customer confusion: Merging or retiring brands without clear communication can confuse customers, leading to dissatisfaction and potential loss of business.
• Cultural considerations: In global markets, cultural differences can impact the perception of brand changes. It's essential to consider these factors to ensure successful brand integration across diverse markets.

Rebrand Thoughtfully

Brand rationalisation and equity transfer are strategic initiatives that, when executed thoughtfully, can lead to a more focused, efficient, and competitive brand portfolio. By carefully assessing brand equity, considering market positioning, and engaging stakeholders, companies can streamline their brands while preserving the value and trust that customers associate with them- ensuring strategic clarity is essential for sustained brand success.