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. pdf 2009
