How Contradictory Brands Impact Brand Portfolios

Niraj DawarMarch 15, 20193 min

There are practically no single-brand companies anymore, and very few stand-alone brands. What you have instead are portfolios of brands. Consumer goods companies such as Coca-cola, The Kraft Heinz Company, Procter & Gamble, Nestle, and Unilever each manage collections of hundreds of brands. In financial services, the corporate brand is often supported by dozens of product brands, and in the hospitality and retail sectors multi-banner strategies are common. In the automobile industry too, market segmentation imperatives drive companies to a multi-brand strategy: Volskwagen, Audi, Bentley, Skoda, SEAT, and Lamborghini are from the same stable; just as BMW, MINI, and Rolls Royce are owned by the same company.

So here’s a question: can a company hold two contradictory brands in its portfolio at the same time?

And should it?

Consider Toyota with its fuel-sipping hybrid Prius. And the company’s gas guzzling, decidedly environmentally unfriendly Land Cruiser.

Are the two brands delivering conflicting messages? Is that a problem? What kind of problem?

Obviously, the brands are not targeting the same consumers. They are aimed at very different segments, with different needs, tastes, beliefs, and preferences.

Companies see themselves as being in the business of serving customer needs. There are many different customer segments out there, with very different needs.

In the automobile market, there is the environmentally conscious segment that wants to buy a Prius, and then there is the segment that wants the power and roominess of the Land Cruiser. Toyota is simply responding to each segment by designing and delivering products (and brands) that meet their needs, just as Unilever is with its personal care brands Dove and AXE. Should these companies neglect one segment simply because they serve the other?

Isn’t market coverage kind of the point of having a portfolio of brands rather than a single brand?

A few years ago, a couple of colleagues and I ran a series of studies to understand how consumers see portfolios of brands. Our goal was to examine the extent to which beliefs about one brand spillover to other brands in the portfolio.

I’ll spare you the details of the studies though we learned that yes, beliefs do spill over, but the extent of spillover depends on how closely the brands are associated in the consumer’s mind.

So if two brands are not closely related such as Dove and AXE (and I’d bet most consumers do not know they are from the same company), then beliefs about one are unlikely to spill over to the other brand. In other words, the company can continue to speak to each segment independently.

On the other hand, when the brands are linked by a common parent brand, such as Toyota for the Prius and Land Cruiser, then consumers cannot help but see the connection.

So companies can connect brands or separate them in the consumers’ minds by the brand architecture they use. And separating brands allows companies the possibility of holding “contradictory” brands in the portfolio.

But remember the old line from Groucho Marx: “Those are my principles…and if you don’t like them, I have others.”

Just because they can, does not mean companies should have contradictory brand positions in their portfolios. Do consumers expect consistency in the brand portfolios of companies?

How far does this desire for consistency extend? It seems consumers are okay with companies that sell diet cola also selling regular cola. But at some point they may begin to interpret segmentation as hypocrisy. Prius and Land Cruiser? But where is that line? Who decides? Your thoughts?

Contributed to Branding Strategy Insider by: Niraj Dawar, Author of TILT: Shifting Your Strategy From Products To Customers

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