Goal of the analysis:
The goal of a Brand Portfolio Analysis is to assess the performance, alignment, and strategic positioning of all brands within a consumer packaged goods (CPG) company’s portfolio. This analysis helps determine how each brand contributes to the overall business objectives, whether certain brands are cannibalizing each other, and if there are opportunities to streamline or expand the portfolio. It is critical for identifying underperforming brands, brand growth opportunities, and ensuring the portfolio aligns with consumer trends and company goals.
Data required:
- Brand revenue data (e.g., sales by brand, profit margins)
- Brand market share data (e.g., share of voice in key markets or categories)
- Consumer segment data for each brand (e.g., demographics, psychographics)
- Marketing spend per brand (e.g., advertising, promotions, sponsorships)
- Brand equity metrics (e.g., brand awareness, brand loyalty, brand perception)
- Competitor benchmarking (e.g., how competing brands are performing in similar categories)
- Product and SKU data (e.g., number of SKUs per brand, distribution coverage)
Detailed step-by-step instruction on how to conduct the analysis:
1. Determine the time period for analysis.
Select a time period (e.g., the last 12 months or most recent fiscal year) to evaluate the performance of each brand within the portfolio.
2. Gather brand performance data.
Collect revenue, market share, profit margins, and marketing spend for each brand. This data will serve as the foundation for assessing the financial contribution and cost efficiency of each brand in the portfolio.
3. Assess brand equity.
Analyze metrics such as brand awareness, consumer perception, and loyalty for each brand. Survey data, market research, and social media sentiment can be useful in understanding how each brand is perceived in the marketplace and among its target audience.
4. Map consumer segments.
Identify the target consumer segments for each brand and map out overlaps and distinctions between brands in the portfolio. If multiple brands are targeting the same segment with similar value propositions, this could indicate cannibalization.
5. Evaluate brand performance vs. competition.
Conduct a competitive analysis for each brand by comparing their market share, pricing strategy, and consumer perception with competitors’ brands in the same category. Look for gaps where the company’s brands underperform relative to competitors.
6. Identify gaps and overlaps.
Using the data from previous steps, determine if any brands are underperforming in terms of revenue or consumer perception.
Also, identify if multiple brands are competing against each other in similar categories, which may cause internal competition or brand dilution.
7. Calculate brand contribution.
Determine each brand’s contribution to overall portfolio performance. This can be done using the formula:
Brand Contribution = (Brand Revenue / Total Portfolio Revenue) x 100
For example, if Brand A generates $50 million in revenue, and the total portfolio revenue is $250 million, the contribution of Brand A would be:
Brand Contribution = ($50 million / $250 million) x 100 = 20%
8. Analyze profitability and marketing efficiency.
Compare each brand’s profit margins against marketing and promotional spending to identify whether any brands are over-invested or under-invested.
The formula for Return on Marketing Investment (ROMI) can be calculated as:
ROMI = (Brand Revenue – Marketing Spend) / Marketing Spend x 100
For example, if Brand B generates $30 million in revenue and spends $5 million on marketing, ROMI would be:
ROMI = ($30 million – $5 million) / $5 million x 100 = 500%
9. Summarize strategic insights.
Based on the findings, summarize key insights regarding underperforming brands, potential for portfolio consolidation, areas for brand growth, and market opportunities for brand repositioning or expansion.
Format of the output of analysis:
The output of the Brand Portfolio Analysis will typically include:
- A table showing each brand’s revenue, market share, profit margin, marketing spend, and consumer equity metrics.
- A portfolio map showing brand positioning across target consumer segments and competitive categories.
- Insights into potential portfolio realignment, investment recommendations, and opportunities for brand extensions or divestitures.
How to interpret results:
- High contribution, high brand equity: Brands with strong financial performance and brand perception should be considered core brands, and further investment in growth and innovation is recommended.
- Low contribution, high brand equity: These brands may have strong potential and could benefit from increased marketing and distribution to drive growth.
- High contribution, low brand equity: These brands may generate significant revenue but suffer from poor consumer perception. Consider repositioning or improving brand equity through marketing and product innovation.
- Low contribution, low brand equity: These brands are likely candidates for divestiture or retirement. They do not contribute meaningfully to the portfolio and have limited potential for growth.
Steps a company can take to improve on this measure:
- Streamline the portfolio: Consider eliminating or consolidating underperforming brands, especially those that cause cannibalization within the portfolio.
- Increase investment in high-growth brands: Allocate more resources to brands with high brand equity and strong market potential to accelerate growth.
- Reposition struggling brands: For brands with low consumer perception, repositioning through targeted marketing campaigns, product innovations, or new distribution channels may help revive them.
- Expand into new categories: Look for opportunities to introduce existing brands into new product categories or geographic markets where consumer demand aligns with the brand’s positioning.
- Enhance consumer insights: Regularly conduct brand health surveys and consumer sentiment analysis to stay aligned with consumer preferences and trends.
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