What is it?
This is a tool for analysing a brand portfolio by separating brand differentiation (quality) and awareness (quantity).
Brands have a natural lifecycle moving around this matrix. When new brands are launched, they have low awareness and sales. You need to find other leading indicators to judge their success. The degree of differentiation, as perceived by customers, is a great leading indicator. Brands with high differentiation but low awareness are your emerging stars – they may have low sales now, but as awareness and sales distribution increase, they will become your power brands. If customers do not perceive a new product as differentiated, cut it – there is no point fighting an uphill battle to build awareness and distribution without a product edge.
Power brands are your current performers – fully mature, they are both differentiated and with high awareness. Marketers invest to keep their brands in this position. Maintaining Differentiation is a continuous competitive battle however, and brands sometimes lose their edge.
It takes longer for them to lose their awareness, so the brands that lose differentiation slip to become “has-been”. Their sales are high, but they are driven by high awareness and high weighted distribution. These brands are living on borrowed time however, they are living off their historical equity. If they cannot innovate to recover differentiation, they will slide slowly down to irrelevance, losing awareness and distribution since they no longer recruit new customer champions to end their lives as weak brands.
When is it useful?
This portfolio framework is useful when analysing a brand portfolio. It immediately shows the health of the portfolio, looking beyond short term sales numbers to highlight the expected future. For brands, it works better than the BCG Matrix in resource allocation decisions, giving top-down guidance on what to focus on in the brand plan.
The emphasis for Emerging Stars should be investment to boost awareness and distribution, expanding channels and customer reach. For has-been brands, it should be on innovation to restore differentiation. Weak brands have not earned investment.
They have some emerging stars, in particular brands like VO5 or Ben and Jerry’s that have been recently launched or acquired and have not yet been exploited in the full power of Unilever’s global distribution machine.
They have huge Power brands where they continuously invest in innovation to maintain differentiation, like Lux or Surf.
They also have some older brands in the portfolio, with high awareness in selected markets but likely to be undifferentiated with aging demographics. Vaseline and Brylcreem (Since 1928) may be “has-beens”.
Finally, the Birdseye brand was one of Unilever’s earliest brands, from the 1930s. It lost differentiation against supermarket own-label products however, so despite very high awareness and sales, profit margins were low. As part of Unilever’s initiative to cut the weak brand tail of its portfolio, Birds Eye was sold to Private Equity in 2006.
How do you do the analysis?
You need to apply it intelligently. For example, your target market might change from brand-to-brand – there is no point measuring awareness and perceived differentiation in young men of a product aimed at older women.
Once you have identified the right target customers to measure, awareness (either aided or unaided) and differentiation metrics come directly from your brand tracking market research.
Plotting movement over a number of years on this map can give a dynamic picture of the portfolio health.
For global brands, the position on this matrix represents a weighted average across all their markets. If you are analysing a global brand, plotting the position of every country on this matrix will help your resource allocation
How can you adapt this concept?
Another way to look at the brand health is to analyse the demographics of loyal customers. Vibrant brands will have strong equity in young people – you need to be differentiated in order to recruit. Dying brand sales and equity will be concentrated in older consumers – these customers will continue to buy the brand if it is still in distribution purely on loyalty and habit, even if there are better products available.