September 9, 2016

Brand Differentiation Within the Portfolio: Prioritizing Budget Among Similar Products

The CMOs and brand managers we work with daily have a tough job. In the agriculture sector it’s gotten even tougher recently, with commodity prices in the basement and marketing budgets often taking the hit. And yet, in spite of decreasing budgets, expectations to grow revenue and increase market share remain the same for many of our beleaguered friends. The pressure to produce has never been higher. And that pressure naturally extends to us, the agency partner.

One strategy for growth in the face of budget challenges is centered around the product portfolio. Expanding the portfolio with sub-brands and line extensions can reap successful results, but it can also present a challenge when it comes to prioritizing your budget among brands with overlapping or very similar qualities. How do you go about allocating percentage of spend?

Strategy Drives Budget – Not Vice Versa

We believe budget prioritization starts, like most things in marketing, with a strategy. If you don’t know what you’re trying to accomplish, then it doesn’t matter how much you spend. Or as Lewis Carroll put it, “If you don’t know where you are going, any road will take you there.”

So start by determining where you want to go with each product, and then with the portfolio overall. After thoroughly establishing a clear position for each individual brand, you may ultimately determine it doesn’t fit the portfolio. That’s unlikely, but it does happen. And if it does, portfolio pruning and realignment can be difficult in the short term, but it can lead to greater opportunities in the long term. We’ll save that topic for another discussion. Let’s get back to the first, and arguably, most important step in budget allocation: brand positioning and differentiation.

Differentiation Begins at Home

As marketers, we may not spend as much time differentiating our products internally as we do externally with our competitors. But depending on the depth and makeup of the portfolio, the importance of the internal differentiation exercise cannot be overstated. We have a crop protection client, for example, that has three products with the same active ingredient. Careful positioning and differentiation have resulted in three successful brands within the portfolio. The first product has been in the marketplace for several years and is positioned as the “standard” product. The second product is the same active at a lower concentration and is positioned as the “economical/fighting” brand. And the third product, a premix with another product, is positioned as the “premium” brand. In clearly differentiating these brands, they are not competing against each other with the customer and overall sales have grown as a result.

This differentiation strategy also shaped the budget allocation for each product. The allocation is weighted toward the premium product, followed by the standard product, with little to no spend on the economic brand. Positioning all three brands within the portfolio has created an even larger presence in the market than a stand-alone scenario. And even the economical/fighting brand has exceeded sales expectations as a result.

Internal Buy-In Is Key

We know from experience that differentiating products in a portfolio and establishing clearly defined brand boundaries is not always a cakewalk. It can be a challenge to bring all internal parties on board. Individual brand managers want to sell their product – that’s their job. And the effort to “be all things to all people” can seem, on the surface, to be a good way of doing that.

True differentiation within the portfolio may mean narrowing the target or focusing on fewer features and benefits for each brand. The portfolio becomes the wide net that is cast – not the specific brand. And while the individual brand managers may resist narrowing their focus, whoever is responsible for the overall portfolio has to cast the vision for the portfolio within the organization. When all parties have bought into the company-wide portfolio goals, allocating budget for each brand will be an easier battle.