Brand Portfolio Strategy and Firm Performance

Abstract

Most large firms operating in consumer markets own and market more than one brand (i.e., they have a brand portfolio). Although firms make corporate-level strategic decisions regarding their brand portfolio, little is known about whether and how a firm's brand portfolio strategy is linked to its business performance. Using data from the American Customer Satisfaction Index and other secondary sources, the authors examine the impact of the scope, competition, and positioning characteristics of brand portfolios on the marketing and financial performance of 72 large publicly traded firms operating in consumer markets over ten years (from 1994 to 2003). Controlling for several industry and firm characteristics, the authors analyze the relationship between five specific brand portfolio characteristics (number of brands owned, number of segments in which they are marketed, degree to which the brands in the firm's portfolio compete with one another, and consumer perceptions of the quality and price of the brands in the firm's portfolio) and firms' marketing effectiveness (consumer loyalty and market share), marketing efficiency (ratio of advertising spending to sales and ratio of selling, general, and administrative expenses to sales), and financial performance (Tobin's q, cash flow, and cash flow variability). They find that each of these five brand portfolio characteristics explains significant variance in five or more of the seven aspects of firms' marketing and financial performance examined.

Expanding to outward foreign direct investment or not? A multi-dimensional analysis of entry mode transformation of Chinese private exporting firms

“…Extant literature emphasises the role of brands in a firm's FSR base (Anand & Delios, 2002;Morgan & Rego, 2009). As a valuable intangible asset, brands are important in distinguishing products by status, emotional characteristics and subjective qualities.…”

What explains the performance of Chinese exporting firms?

“…Brands is another widely considered important type of resource (Anand & Delios, 2002;Morgan & Rego, 2009;Park, et al, 2013;Wernerfelt, 1984) Secondly, high-quality brands are more responsive to marketing effects and these effects not only come from advertising and promotions but also the satisfied customers' experiences (Srivastava, et al, 1998). Customers respond more quickly to new products for those brands with good reputations and are more likely to "try the brand, adopt the brand and begin to refer the brand to others sooner than otherwise" (Srivastava, et al, 1998, p10).…”

“…Brands is another widely considered important type of resource (Anand & Delios, 2002;Morgan & Rego, 2009;Park, et al, 2013;Wernerfelt, 1984). They are VRIN assets that are costly and time-consuming to build up (Brouthers & Xu, 2002).…”

“…Our findings associated with brands are consistent with the theoretical prediction, revealing that firms with brands achieve better performance than those without. As discussed above, well-established brands put firms in a better position to compete with rivals because they are perceived as producing high quality products in the mind of consumers (Morgan & Rego, 2009), they are more responsive to the marketing effects (Srivastava, et al, 1998) and they have a deep and meaningful relationship with customers and channels (Park, et al, 2013;Srivastava, et al, 1998). These advantages 27 can help to attract more consumers, reduce price sensitivity, attain price premium, reduce advertising and sales costs and build up customers' and channels' loyalty, thus enhancing firm performance.…”

Strategic brand management as the factor of company competitiveness

“…Koncept se temelji na izgradnji veze između potrošača i brenda, koja uz podršku komunikacije, osećanja i emocija, postaje izvor tržišne diferencijacije i održive konkurentske prednosti. 118 Emocionalni element je osnova ovog pristupa i smatra se pokretačkom snagom brenda.…”