y, at least, most marketers recognize that they should run their brands as a portfolio. Managing brands in a coordinated way helps a company to avoid confusing its consumers, investing in overlapping product-development and marketing efforts, and multiplying its brands at its own rather than its competitors' expense. Moreover, killing off weaker or ill-fitting parts of the product range—an important tenet of brand-portfolio management, though not one that should be applied at all times—frees marketers to focus resources on the stronger remaining brands and to position them distinctively. It thus reduces the complexity of the marketing effort and counteracts the decreasing efficiency and effectiveness of traditional media and distribution channels.
Theory, however, is one thing, practice another. Marketers today face heavy pressure to produce growth in an era of fragmenting customer needs. Understandably, they often react by expanding rather than pruning their brand offerings. After all, killing tired brands and curbing the launch of new ones isn't easy when the remaining portfolio must capture nearly half of a discontinued brand's volume merely to break even. Marketers also worry about the repercussions of using a portfolio approach and making the wrong call. Companies today are more likely to punish brand managers for missing an emerging opportunity than for failing when they try to exploit it.
For these and other reasons, brands (including sub-brands and line extensions) are proliferating at a breakneck pace in industries such as beverages, consumer durables, food, household goods, and pharmaceuticals.1 Among other ills, this explosion makes it harder to define customer segments and positioning objectives consistently. Consider, for example, the predicament of automakers that have stuffed their brand portfolios with dozens of all-too-similar sport utility vehicles. Discerning indeed is the consumer who can pick out meaningful differences among them. Costs reflect the profusion of brands as well, since companies with too many of them suffer from increased marketing and operational complexity and from the associated diseconomies of scale.
If marketers are to thrive, they must resist the compulsion to launch new and protect old brands and instead shepherd fewer, stronger ones in a more synchronized way. Anheuser-Busch, for example, uses a coordinated approach: it recognizes that customers shift to different beers (from lower- to higher-end or fuller to lighter brews, for example), and its portfolio strategy aims to keep those customers within its family of brands when they do so. Procter & Gamble has carried out a successful global rationalization over the past few years. And several other consumer goods companies have achieved rates of revenue growth two to five times higher than their historic norms and saved 20 percent of their overall marketing expenditures by managing their brand portfolios more effectively.
How do such companies do so? In part by establishing clear roles, relationships, and boundaries for their brands and then, within these guidelines, giving individual brand managers plenty of scope, subject to oversight from one person who is responsible for the portfolio as a whole. Top-down goals, such as P&G's recent desire to prune brands that aren't top-two performers in their categories, also play an important role—provided