Brand Rationalization Case Study

Overview- More is no longer better

Taking cue from Darwinian concept of “Survival of the fittest”, companies are downsizing their product portfolios.

Gone are the days when supersizing brand portfolios and product line extension were the pioneer strategy to rule the domestic market and conquer the global ones. Brand rationalization has emerged as the “panacea” to overcome the ills of supersized portfolios- be it the FMCG, Mobile services, Electronics or Automotive sector. However, the implementation of Brand rationalization (reducing the portfolio size by deleting or merging brands) has its own challenges.

Why kill one’s own brand??

A multitude of factors have made companies kill their beloved brands.

AT&T decision to relaunch Cricket kills

AT&T decided to shut down the Aio business which it launched a year ago as it didn’t wanted to operate two brands.

Diageo Way

Diageo sold off its lower end Glen Ellen and MG Vallejo ($5–$7 a bottle) as these brands did not fit into Diageo’s increasing emphasis on marketing premium wine brands that sold for $10–$15 a bottle and higher. Besides this it sold off Guinness World records as a part of company image makeover. Diageo also divested from Pillsbury unit for $10.5 billion to focus on its spirits, wine, and beer businesses.

Vaio disinvestment

Decreased profitability, increased competition and spiraling costs forced Sony to sell Vaio to Japan Industrial Partners.

Dabur

During late 1990s, Dabur discovered that it an enormous brand portfolio adversely affecting its marketing efficiency. Moreover the stakeholders felt it would end up scattering attention and resources on too many brands. Thus Dabur hired the services of McKinsey & Co to trim its product mix and brand portfolio and achieve an ideal product mix

Dabur retained three product lines— foods, personal care and healthcare and with 12 to 15 brands overall offering the other brands for

It had almost 15-25 rival in almost each country and ended up buying many of them, thus creating a bulky monolith(swollen costs, inflexibility, slow decision making, and stressful relations with shareholders impatient for returns).It had more than 70+ brands by 1996 .Thus it asked itself “how many brands did Electrolux needed to cater to customers in a market??”And rest is history

Almost an 80-20 rule: Focusing on fewer brands which generate maximum profit

Procter & Gamble Co. recently planned to cut more than half of its brands (90-100) and focus investment on remaining product lines (70-80) that comprise more than 95% of company profit.

Retrospectively, the biggest brand rationalization was by Unilever in late 1990s reduced the size of its brand portfolio from 1,600 to under 400 brands. Taking a cue from its parent company, HUL downsized its portfolio from 110 to 30 power brands which generated the maximum revenue in 2000-01.A lot of brands on which enormous amount of time, energy and money were spent were not contributing enough; there were little or no returns from many of them.

In 2006 Safeway reduced the number of private label brands from 70 to 10. In 2009, German CPG Company Henkel scraped a significant number of under-performing