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From Brand Acquisitions

to Brand Rationalization

Dhanashree Borse
Roshni Shewakramani
Sourav Saraf
Vipul Sharma
Introduction
Shift in how value of firms is determined
Tangible assets (factories, inventories) -> Intangible
assets (competencies, customer base, distribution,
employees, brands)
HUL- manufacturing company -> brand marketing group
Branding- the differentiator, helps escape the
commodity magnet, greater sales, price premiums
Brands can be bought or built
Large brand portfolios- top some percentage of brands
generate the maximum sales and profits for the
company
Brand portfolio rationalization becomes important
Brand Proliferation- A costly affair
Managing mammoth brand portfolios presents the following
problems:
Insufficient Differentiation: Leads to cannibalization and duplication
of efforts
Inefficiency: Large brand portfolio -> lower sales volume for
individual brands.
Inadequate resources -> product platform sharing -> increased efficiency
but lowered perception of product variety. E.g. Volkswagen beetle and Audi
TT
Minimum amount required for marketing and advertisng a brand has

increased manifold
Lower market power weaker brands vs private labels. It has
triggered brand consolidation
Management Complexity: Tensions between marginal brands and
country managers. Focus on internal allocation than fighting
competitors
Brand Rationalization: Challenges
Retaining market share , sales volume and
customers of the doomed brands
To stem this- two brands are often merged instead of
deleting one. Only one out of 8 such attempts succeed
Failures:
Kal Kan and Crave -> Whiskas -> Kal Kan
Hilton and UK based Stakis -> Hilton.

Each brand has devoted channel members,


customers, prospects, brand and country managers
Brand rationalization is not straightforward and
decisions suffer from politics and turf wars
Case: Electrolux
Bottom-Up Segmentation-based approach in
the professional food service equipment
business
Large and complex brand portfolio -> Cut
costs through plant rationalization but with
modest success
Had different brands in Top 3 across countries.
Hence failed to achieve global economies of
scale or scope
European Professional food service equipment
business- Fragmented, 15-25 competitors per
Case: Electrolux
Cross national, Need-based segmentation study
Prevalent segmentation - Low, medium, High according to price and
product specifications
Electrolux segmentation: prevalent + customer profile
Study Insights: Customer type does not reveal its needs and each
customer wants the best solution
Five layer brand pyramid used to examine each brand- personality,
values, rewards, functional benefits and features
Four segments discovered
Performance specialization- airlines, hospitals, 5-star hotels- Electrolux
Basic solution, Fast ROI- Pubs, convenience stores
Gastronomy partnership- staff canteens, family restaurants, elderly
homes- Zanussi
Prestige Gourmet- gourmet restaurants, independent and within 5- star
hotels- Molteni

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