Invest in an aligned and efficient brand portfolio strategy
The internet is a wonderful tool that has changed everything in the world and everything in business. Every potential customer and every existing customer has an infinite amount of data available at their fingertips to gather information as part of their decision-making process. Unfortunately, in our 147-characters-or-less world, once a customer has developed a perception – which is accomplished at internet speed - about your company, products, and value proposition, there is a danger they can categorize you and keep you stuck there forever. This is called “pigeonholing.”
The pigeonhole principle is a mathematical concept based on a basic principle that states if n items are put into m containers, and it is given that n > m, then at least one container must have more than one item. Based on this principle it is easy to predict where the extra pigeon is going to be so therefore the extra pigeon becomes pigeonholed.
Academics and Consultants have taken this concept and applied it to the world of business. Advantexe has integrated it into our core Business Simulation algorithms. A classic example of a business that was at one time pigeonholed and has spent decades diversifying away from being known for just one product is Coca-Cola. Through organic growth of their own brands like Sprite and Diet Coke and acquisitions of other brands such as Minute Maid and Kurig coffee, Coca-Cola has avoided being known for just one product.
Developing a Strategic Brand Portfolio is critical to long term success. The secret to success is making sure your brands are aligned to a business strategy and are able to offer a unique and clear value proposition. When Coca-Cola diversified outside of beverages and into the motion picture business (they bought Columbia Pictures) it was a total disaster.
Here are five Business Acumen tips to develop and manage a diversified product portfolio that doesn’t trap you as one product:
Have a Similar Value proposition
Coca-Cola offers a portfolio of beverages. McDonalds offers a portfolio of food products. Amazon offers a wide variety of products. Apple offers a portfolio of technology products. Each of these companies offers customers a unique value proposition and a portfolio of unique products that are all aligned internally to employees and externally to customers.
Create efficiencies
Operational efficiency in terms of elements such as production, inventory management, and supply chain management is critical in terms of managing costs and enabling a company to focus on more product development.
Balance
Create a strong balance between brands so there is the ability to offer customers bundled products. For example, Gillette has created a strong balance between razors, razor blades, and shaving cream. The sum of the parts offers their customers a better value proposition than each of the different products by themselves.
Strong Digital Presence
In the digital age the only way to succeed is to build a strong digital presence. The digital awareness strategy should be on the portfolio and key products, not just one key product. That is a surefire way of pigeonholing your business.
Manage Customer Segments
The beauty of brand portfolio management is being able to have a similar value proposition, similar products, and be able to target different types of customers. The Diet Coke customer is very different than the regular Coke customer. The consumer who buys an Apple iPhone is different from the consumer who buys an Apple computer.
To summarize, we at Advantexe work with our clients to understand that focus is good; you don’t want to be all things to all customers. However, too much focus such as only selling one product can hurt a business in the long-term. The key to long-term success is avoiding being pigeonholed and invest in an aligned and efficient brand portfolio strategy.
