How Brand Can Guide Portfolio Strategy
When you order late night tacos and find there’s one healthy option on the fast food menu? That’s the result of a portfolio strategy. That bill payment software you use? It probably started as 10-12 point solutions that have been fused together, starting with a portfolio strategy. Even our friend Siri was part of Apple’s portfolio strategy.
Portfolio strategies influence a lot of our everyday choices and interactions. Switching from HBO to Max, for example, was the outcome of portfolio choices that brought together different streaming platforms.
So what is a portfolio strategy?
It’s a framework that helps companies organize (and sometimes rename) either a set of brands, or a set of products. This strategy helps them make decisions as to which parts to elevate and invest in, and which to integrate or divest from.
Here’s why brand is critical to portfolio strategy:
1. It aligns the entire portfolio to a central purpose.
Purpose defines what a company exists to do. Anyone who has watched 30 Rock will note how it satirized NBC’s place in a wider portfolio. At the beginning of the show, NBC is owned by GE, who is owned by the Sheinhardt Wig Company. Jack Donaghy, the CEO of NBC, is often seen creating harebrained product ideas for GE microwaves. This type of portfolio fragmentation can easily lend itself to comic absurdity, because there is no purpose or connective tissue between elements. Even if a holding company’s portfolio covers multiple sectors, it can still be guided by one purpose. Take Kellogg’s, whose purpose unites a diverse portfolio: “Creating better days and a place at the table for everyone through our trusted food brands.”
2. It aligns the portfolio to one category description.
What is the portfolio at large trying to do? Part of shaping your brand is defining the category you want to align to, or deciding to build a new one entirely. This category definition or creation exercise will illuminate which elements of your portfolio best serve the industry you want to shape (and which do not). For example, a digital wallet company may want to broaden their category description to financial technology, because it gives them more room to grow. Block Inc., the owner of Square, was created to sit over the company and leave room to play in other industries. Block focuses on financial empowerment, which they can use to connect the dots between the Cash app (mobile payments) and TIDAL (musical entrepreneurship).
3. It builds brand loyalty.
Finally, a brand lens helps each component drive growth and repeat purchase. If you love what the whole of the portfolio stands for through its brand, you’re more likely to shop across the portfolio. If you grew up shopping at Old Navy, you might have experienced a natural progression to Athleta and Banana Republic as you got older. A Honda Civic driver might purchase a Honda Odyssey later in life once they’ve had children.
4. It guides hierarchy.
Your brand lens can help you designate an organizational principle to use in ordering your portfolio. These principles can be things like audience segment, core need, quality tier or brand tenets. If you understand what your company is trying to achieve in the world, it makes it simpler to build hierarchy and map out an intentional place for everything it holds.
5. It builds harmony.
Once you’ve determined the organization of your portfolio, harmonization principles can connect the verbal and visual appearance of each brand or product. If you decide you want to be a branded house, you’ll need to create parallelism across the portfolio. If you decide to build a house of brands, you’ll want to pinpoint meaningful ways to allow distinction across your portfolio. A great example of a company that built harmony between their brands is Adobe, whose products take inspiration from the scientific table of elements. Each fits into its place beautifully with the others, conveying the idea that a creative workflow uses more of its products than less.
6. It guides how you activate in the world.
Once you have created a clear portfolio strategy, it’s time to bring it to life. This will affect many parts of your business, from how you set up your internal teams and tasks forces, to how you plan your go to market strategy. One common place that will be affected by your portfolio strategy is your website navigation. Understanding how that will translate into your digital experience is an important next step.
Stay tuned for our next piece about how brand guides digital experiences to learn more.
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