Brand extension beats brand addition
Brand growth has been the focus of this blog over the past five years. However, some manufacturers do not put all their eggs in one basket and rely on multiple brands. We examined the scope of more than 21,000 manufacturers present in some 90 FMCG categories across eight markets (Austria, Germany, Hungary, Ireland, Romania, Sweden, UK, US).
Not surprisingly, the vast majority of manufacturers are very focused:
- 9 out of 10 compete in one country only (amongst our selection of countries)
- 95 out of 100 are present in only one category type (food, beverage, household, personal care, or pet food)
- 3 out of 4 manufacturers compete in just one category
- Only 14 in 100 manufacturers own more than one brand
The most common configuration (2 out of 3 manufacturers) is the 1-1-1-1 pattern (see table): One brand competing in one category only (and hence one category type) in one country. The next most frequent configuration is to be present in two categories (within the above-mentioned category types) in a country with the same brand. Extending the scope of a brand to the same category in a second country is more common than offering a second brand in the same country.
While much less common, there are manufacturers with extremely broad scope. Within our focus of investigation we find
- 30 manufacturers that are present in all eight markets
- 13 manufacturers present in four category types (none in all five)
- 174 manufacturers present in at least nine categories
- 124 manufacturers who own nine or more brands
We plan to investigate portfolio success in more detail over the next few months, in particular how buyer overlap between brands furthers or hinders growth.
This will help our understanding how adding brands and their targeting drives manufacturer growth.
Tags: brand growth brand portfolio