Struggling companies often do better when they focus on their core brand.
There are good reasons to have many different brands. A broad portfolio lets you target different customers with unique brands. It also reduces risk; if one brand gets into trouble the other brands can help offset the declines.
The problem is that managing a big brand portfolio is difficult; each brand requires marketing investment and attention. Brands don’t thrive when you neglect them.
When an organization is having financial troubles, a large portfolio can be a major strategic issue. There is not much money for investment so some brands get neglected or, even worse, all the brands get little support.
This is why companies that get into trouble often prune brands and focus on the core. When McDonald’s stumbled, for example, the company ditched Chipotle and Boston Market and many other brands. General Motors made pruning the portfolio a key part of its turnaround plan. P&G rebounded under CEO A.G. Lafley by focusing on the big brands that mattered.
The New York Times Corporation is making a similar move. Last week the company announced that it was rebranding the International Herald-Tribune. The century-old paper would now be known as the International New York Times.
A week earlier, the New York Times announced it was seeking a buyer for The Boston Globe.
Last August, the New York Times sold the About Group, which includes About.com.
The New York Times Corporation, once a collection of media brands, will soon have just one main brand, the New York Times.
This makes perfect sense for two reasons. First, the company is struggling. The stock trades at less than $10 a share, down from over $45 a share back in 2004. Revenue is falling steadily. Profits have been inconsistent; the company made $160 million in 2012 but lost $40 million in 2011. With limited resources, the New York Times has to focus on the brand that matters; there just isn’t money or time to spend on other brands.
Second, the New York Times is a strong brand; it has high awareness and a loyal following. Readers value the product. The challenge is to turn this into financial returns. Perhaps the most encouraging sign in recent years is that readership held up better than expected when the paper eliminated free internet access and started asking people to pay.
The New York Times Corporation will succeed if it can ensure that the New York Times brand emerges as the most respected and trusted source of information and perspective in the world.
The other brands in the portfolio were distractions; the New York Times is making a smart bet.
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Expert Marketer Magazine named DefendingYour Brand one of the finalists for marketing book of the year. The next round is determined by vote; please cast your ballot at https://www.marketingbookoftheyear.org/
This week I am off to Colorado for an advisory board meeting (and some skiing). I then head to Germany to teach in the Kellogg-WHU Executive MBA program. That is always entertaining; the class is a mix of students from Europe, Asia and the Middle East which makes for some interesting discussions about branding and marketing strategy.