This episode of The Persuasion Game podcast is about the three things you have to do as a brand to get your portfolio strategy right.
Our guest this week is Steven Melford, who co-founded The Forge 12 years ago.
Steven, Adam and Laura discuss the art and science of great portfolio management, why all branding decisions need to be anchored in value, and the importance of having an eye on the future.
We also reflect on the importance of sometimes saying no to a new opportunity, and why more brands need to focus on consumer needs, rather than internal capabilities.
This episode is the last in our portfolio strategy series and pulls together some key takeaways from leading figures at major brands.
Links:
Steven’s article: Why your portfolio could be getting in the way of your growth ambitions
CREDITS:
The secret to a winning portfolio with Sally Smallman, Diageo
Julian Gomez Part 2: Unlocking brand portfolio growth
Breaking through in innovation with Jane Buck, Cadbury
Episodes are released bi-weekly. Follow us on LinkedIn for updates.
Subscribe to The Persuasion Game Newsletter on LinkedIn.
Want to know more about us? Visit our website here: thisistheforge.com
This is an 18Sixty production for The Forge.
CHAPTERS:
(02:29) Understanding Portfolio Strategy
(05:04) Distinctiveness in Portfolio Strategy
(10:33) Challenges and Opportunities in Portfolio Strategy
(16:18) Consumer-Centric Approach
(21:28) Future Value and Market Trends
The Persuasion Game is available on all your favourite podcast apps: https://link.chtbl.com/PersuasionGame
Episode transcript:
Adam: So welcome to The Persuasion Game, Steven Melford.
Steven: Thank you. Thank you very much. Good to be here.
Adam: So Steven, you co-founded The Forge, what, 11 years ago?
Steven: Twelve.
Adam: Twelve years ago, okay. And prior to that, you’d set up another growth consultancy, but interestingly, prior to that you did a PhD in molecular biology.
Steven: This is true, yes.
Adam: How did that journey come together?
Steven: It’s a bit of a cliche, in the sense that marketing and branding is often described as half art and half science that was my truth anyway. I love science, I love the rigour of science, but I felt that there was a creative element and a creative angle missing, personally.
So when I looked around for something to do, it seemed to tick those boxes. Yeah, escaped from the laboratory, as I often tell people into this world and, yeah it’s lived up to those initial beliefs.
I like to try and bring a lot of that scientific thinking and rigour to the type of consultancy that we do. But yeah, having that creative element, that ability to operate slightly outside of the rules has just made it, yes, a really fascinating industry to be in.
Adam: And we’re going to be talking about portfolio strategy today, which I think really brings those two skills together, doesn’t it? The art and the science.
We’ve seen at The Forge a lot of clients coming to us over the last couple of years at least talking about portfolio strategy. Do you think, do you get a sense as to why there’s more of an interest in it now, or why clients are struggling or grappling with these challenges now?
Steven: When you listen to the previous guests that have been on, good businesses and good organisations are thinking about this all the time. But I do think there are some contextual factors that are making people maybe look at it a little bit harder at the moment.
These are really challenging times financially for a lot of people. Really tough trading conditions out there. And as much as consumers are having to prioritise and focus and make some tough choices about where they’re spending their money, I think the same is true for brand and businesses. They need to work out from the assets that they have, which ones are going to give them the greatest return on value. So, I think organisations are just looking to work those assets a lot harder at this particular point in time.
Adam: You recently wrote about some of this in an article and you pulled out three principles to great portfolio strategy and they were distinctiveness, anchored in value, and with a future focus.
Are you able to summarise those and share the relationship between them?
Laura: And show your working please?
Steven: I’ll do my best!
Distinctiveness is about ensuring that all the elements of your portfolio, whether that be brand portfolio, product, or ranging, that they’re all doing something very different. They all have a role that is separate to the other elements that are in there, which means that they can address different opportunities.
Therefore, across your portfolio, you’ve got a real breadth of different opportunities that you can tap into. What you also want to make sure is that each of those elements is aligned with where the money is in a market, where the value sits.
The future part of that is. It’s all very well aligning your portfolio with where the money sits at the moment.
Laura: Yeah.
Steven: But what you really want to make sure you’re doing is
thinking about where’s that value going to be in the future? Where might there be some emergent spaces? Where might be spaces that you’re in currently that might be declining? So effectively it’s three layers of interrogation that all build on top of each other because effectively what you want is a set of propositions in the market that are clearly aligned against current and future value opportunities.
Adam: Just think about distinctiveness for a second. There’s a big difference, isn’t there, between a consumer’s view of what is genuinely different in the market, maybe aligned more with the different needs they have, and sometimes what we may as marketers believe is a truly distinctive separation of products?
Steven: Yes. So I would always call out the difference between something being visually distinct and something being meaningfully distinct. And what I mean by that is you can make your range or your portfolio look very different through design, but often those propositions aren’t actually really different in consumers and customers worlds, they’d be overlapping.
And in that situation it can actually compound the issue because you’ve got a situation where consumer might be at the fixture looking at these different offers and they always be like telling different stories about what they’re doing. But in reality, when you get to use them, they’re not actually different.
And that leads to a lot of waste of shelf space because it’s not incremental, waste of investment and time of organisations trying to manage a portfolio that looks different but isn’t actually different in the real world.
Laura: It’s interesting, actually. I was thinking about it over the weekend, and if you think about the big luxury fashion houses, often they are really good at having very distinct propositions for each of their brands. When you think about the sale of a Versace, for example, a lot of that was about it no longer owned a distinctive space in the market compared to some of the other brands.
And at the same time, fashions have moved on. So that idea that actually you really need to think about what the consumer takes out, like who that consumer is can apply to the highest luxury item. But actually, it also plays out in everyday products that we see at shelf.
Steven: Absolutely. I always admire businesses that operate in spaces where there’s maybe not that much difference in the product itself.
Laura: Yes.
Steven: Ones that can lean towards slightly more commodity, whether that be, water, beer to some extent. Spaces where consumers when challenged couldn’t see a difference necessarily in the product part of it but what you wrap around that in terms of your storytelling and execution creates portfolio that are addressing very distinct market-led opportunities.
And a good example of that would be a business like Danone waters. They’ve got some really iconic bands within the portfolio in some Evian and Volvic, Global and in places like France, they’ve got Badoit and La Salvetat as well. What they succeed in doing is identifying a value space and they dramatise that, bring it to life across lots of different touch points. Communication, packaging, sponsorship. So what you get is a real sense of that these are doing very different jobs and there’s a real incrementality. You’re minimalising the overlap. You’re minimalising the cannibalisation. You can, in theory, make any portfolio in any sector or category distinctive.
Adam: And I think it’s Kirsty at The Forge, isn’t it, that says, “it’s simple as possible, as complex as necessary” when talking about portfolios because you can quite easily have too many brands that ultimately then do cannibalise the other opportunities.
Steven: Yeah, absolutely. I think that works both internally and externally. If you take the view of a consumer at fixture, the last thing you want is them overwhelmed and confused by different offers that are there, but equally internally as well.
Brands, portfolios, they are expensive to support, they take up time, they take up resources. But quite often we can find on some of the projects that we are involved in a lot of internal competition happening for opportunity in the market space because the clarity on the role of each brand that what it is seeking to do has not been clearly enough defined. And you have to do that first because if you haven’t done it and then you just try and do a design job to differentiate a fixture, it just becomes really confusing.
You need to really nail, what is the job to be done for this element of the portfolio. Who’s it for? What’s the benefit? What’s it trying to do relative to the other parts of my portfolio? Once you’ve got that, then you dramatise that bit. Another phrase we use a lot at The Forge is “valued and visible”. Those two things mean, first of all, work out what’s the point of this element? Is it doing something different? And once you’ve got that, make sure that you really make that story come through clearly internally and externally.
Laura: And ironically, the better you have the consumer or the benefit in your mind with a brand lens on it, the more possibility you probably have to play in different spaces, for more than one brand to look at health, for example, because they can do that with their distinctive tone of voice, or they can speak to a certain consumer cohort with more clarity between what the different benefits are.
Steven: It is liberating to know exactly where you are going and where you aren’t going because the tighter that is in some ways that enables better creativity.
Laura: Yeah.
Steven: And better ability to actually bring to life your central thought.
Laura: It’s the freedom of a tight brief thing all over again.
Steven: Mr. Ogilvy.
Laura: Of course.
Steven: Absolutely.
Adam: And this point about incrementality is really important, isn’t it? And this is where we get into the discussion about it being anchored in value, making sure that every additional part of the portfolio is incremental to the business. It sounds like it’s as much about saying no as it is about, anything else, deciding what you’re not going to do with your brands.
Would you agree with that?
Steven: Yeah, absolutely. I think almost the linear process of figuring out how you do this is to identify in your category and markets what areas are desirable generally. So, which ones are big, which ones are growing, which ones potentially have got the higher margin in?
Once you know that, the second question becomes for my brand or range or product, which of those are most credible? So where can I bring something where consumers are going to say, yeah, that is a great solution for what I need in this particular space. And that requires you being quite honest in your appraisal.
And it’s almost where having a portfolio can be a real advantage because although they cost money to support, they do enable you to tell tighter, cleaner stories that are more pointed at the opportunity. You could potentially tackle all those opportunities with a single brand, but you can end up being a little bit fuzzy and diffuse in terms of how you land the stories.
Laura: When we were talking to Julian, we talked about Drunk Elephant as an example of incredibly expensive tween skincare now, because, they’d seen this huge opportunity on TikTok to get tweens engaged with 49 pound exfoliators and they had gone after it, but obviously at some point..
Steven: Yeah it’s a sad truth in the Melford household, I have to say, with lots of teenage daughters.
Laura: Yeah I can imagine at some point, Charlotte starts to feel a little bit resentful towards Drunk Elephant. That’s right. As well perhaps if there had been a Drunk Foal or a pre-drinking age.
Steven: I see what you did there. I think it’s calf not foal but yeah I see what you did there.
Laura: Damn it.
Julian: Maybe they were running too fast. Let’s not forget, Drunk Elephant has been there for what, ten, fifteen years?
Laura: Yeah, not long
Julian: Not that long. So I think that they try to build penetration with the new generations, Gen-Z because they are quite engaged with the category, with beauty and skincare specifically, and face care. But maybe the way they were changing their tone of voice.
Or maybe they missed to really understand well, their core consumer. So I think that here there was a bit of a gap in understanding their consumer willingness for going too fast and maybe not being clear with what was their tone of voice.
Steven: Yeah I think there’s loads of examples in this value space of businesses looking at where that desirable opportunity sits and then working out well, which of my assets can and can’t tackle it? And it’s always more cost efficient to do it with existing assets, but if you can’t, if you can’t be that credible player, then sometimes you need to create something new to do that.
And Love Beauty and Planet, a Unilever brand is a great example I think of identifying a under met space. And actually the best way to tackle that is with something new to the portfolio because we can just tell a really resonant story that is going to land, with the right benefits, with the Gen-Z, millennial audience that was looking for that.
So knowing what to say yes to, what to say no to. But I think that comes from just the credibility point and also probably just factoring in almost the financial viability or the financial reality of how many propositional elements you can support in a market. It’s really easy to say, yeah, let’s put a new one in.
Let’s put a new one in. And I think you can see that in retailer own label where they control the shelf space and where it’s just a question of creating a little bit of room for it. You often see creation of new almost branded elements.
Businesses need to think a bit harder than that because they do require money.
If to create the mental and physical availability for people to look at something and go, yeah, that’s, for me, that doesn’t just happen. So you’ve got to be pragmatic in understanding what you can and can’t support in the market.
Laura: You’ve just made me understand why they call it range rationalisation, because actually looking at it with a cool hair rather than just lots of twirls on the designs. Who knew?
Steven: Art and science. Yeah. So in, in terms of finding value in categories and markets. Going back to the Danone example we talked about earlier, what they’ve been doing in recent years I think is great in the sense that they are trying to shift the heartland of their big brands, Volvic, Evian from very functional hydration, which is a space under a lot of pressure. The competitive set for that involves things just like taps and into areas in the market where consumers have needs and demands that they are much more willing to pay for, so higher value spaces.
And in the case of Volvic, moving towards a sense of vitality and energy. And I think you can see that in their communication. I think you can see that in the sponsorship of the recent Rugby World Cup. And Evian taking a slightly different space, much more around health and purity. But both those spaces are valued and both of those spaces create an opportunity to effectively deliver higher value propositions in the marketplace.
Adam: There’s a lot of headroom in both of those, isn’t there?
Steven: Yeah. Absolutely.
Adam: One of the things that I thought was really interesting about the Sally interview, Sally Smallman, who came on from Diageo and talked about the whiskey portfolio, is that actually having a portfolio way of thinking, a category way of thinking is much more akin to how a consumer thinks.
“I want to have a glass of something to sip over ice” rather than thinking about the actual brands that they’re seeking out.
Laura: Let’s hear what Sally had to say about that.
Sally: We’re putting more emphasis on category leadership now than we have done in the past. We’re very well known for brand leadership almost. But I think putting yourself in the portfolio mindset is much more true to the consumer actually.
Laura: Yeah.
Sally: People don’t think about which whiskey shall I have. They think, which drink shall I have? And so it forces us to be more consumer centric and then to shape our portfolio based on that.
Adam: And if you want to hear the whole of that episode, we’ll post the link in the show notes.
Have you seen this in some of the brands that you’ve worked with about elevating the role of the consumer in all of this?
Steven: Yeah. I don’t think you can do this without looking at it in that particular way. You can easily fall into a trap of trying to build a portfolio out of, what can we make or what can we do? It’s much more powerful looking at the market from the point of view of what is driving choice for consumers, and it’s not necessarily the same in every category. Some lean towards, who you are, being a bigger driver. Sometimes it’s benefits or needs. Sometimes it’s occasions.
But I think you have to filter the opportunity through that lens before you then start saying what can I do about that as a business or brand or as port portfolio. So absolutely, consumer centric and not just the world as it is at this moment. In time, great portfolios look beyond the here and now and try and predict where the world might be going. That’s another fundamental part. So right at the start, but that’s the future part of strong portfolios.
Laura: It also ties nicely back to your point about saying no. When we were talking to Jane Buck, who’s now at Cadbury. In her time at Unilever, the development of Love Beauty and Planet, there was a recognition that, no, we can’t just repurpose one of our existing brands as strong as they are. Because this isn’t about a megawatt brand suddenly being seen to pivot, that’s not what the consumer is actually going to find credible.
Jane: Love Beauty and Planet is a lovely example because, and that was probably my biggest success case let’s say of helping create some real value as you say, over a billion euros and actually quite a short period of time from scratch – this brand didn’t exist at all.
And it was something that was born out of a workshop that I was doing where I spotted the name and the opportunity of the name of fitting the real zeitgeist of the need for skincare, mass-skincare, to move into naturals in a way that it hadn’t before.
It wasn’t just that I spotted this. It was actually called Love Peace Planet at the time, this name, and thought that’s really interesting place to start for a new brand.
Steven: The visible part of that is the key one for me, which is there’s no question that a business like Unilever isn’t building more sustainability into all their offers bottom up.
Laura: Yes.
Steven: But when it’s all happening bottom up and it’s across lots of parts of the portfolio, it becomes very difficult for a consumer to see that and decide how important is that to me in my decision making? And I think in the case of Love Beauty and Planet, elevating it and making it incredibly visible, really strong, valued idea, but really brought to life in the name and everything that it’s done.
Laura: Differentiated rather than a hygiene factor that people absolutely might look for.
Steven: Absolutely.
Laura: Yeah.
Steven: Absolutely.
Adam: It’s similar, although this is an acquisition, it’s similar to Pepsi buying Poppi, isn’t it? Obviously, thinking that the portfolio that they had might not be able to stretch into the opportunity in the most credible way, or do it as quickly as Poppi has.
Steven: Absolutely agree. Yeah. I think someone looked at that and decided, there is an opportunity here. How can we most credibly address that in the timeframe that we want to address it? And the conclusion was better to acquire and build out rather than either create something new for themselves or try and reposition an existing offer. All of those things can take time to happen.
Good portfolios are responsive. They will spot opportunity in the shorter term and the longer term and we’ll make sure that they do what’s needed to address that opportunity.
Laura: That’s the thing that’s so fascinating about portfolios, isn’t it? Is that on the one hand it gets really deep into who is your consumer? And on the other hand it’s about these big macro decisions at a corporate level in terms of what’s the next billion dollar investment for, the Unilevers and Pepsis of the world.
Steven: It is yeah. And portfolio, I guess the word gets used, but there’s different types of portfolio as we talk about in the article. They could be like a business portfolio, brand portfolio propositions, products within a particular brand.
The principles are all the same, really. It’s just the scale of that opportunity that changes.
Laura: So I think you touched on something important just now, which was the idea of this is not a static exercise, this is something that’s always moving forward. We hear more and more requests about, we need to anticipate the future of where the category is going or where the consumer needs are evolving.
How does that fit into a piece of portfolio work?
Steven: Having that eye on where future value is going to be it’s crucial and yeah, it’s hard. It is hard to predict the future, it’s hard to shape the future. But I think when you have a portfolio of brands, particularly if you are involved in category leadership, you have to do this.
You cannot be caught in an endless cycle of competing with yourself. The share of the category as it is at the moment. So you want to be looking to either identify emerging opportunities that you can jump on the back of, or if you are a big player in a category, it’s your responsibility maybe to create those future opportunities through the investment that goes into them.
So yes, it’s tough, but I think it is necessary. I think it’s tough because it’s not just about the future. It is about where the value sits in the future. Therefore, it’s not just about looking at trends. You need to be looking at a whole range of different sources to try and work out in the most evidenced way you can, where you believe that value will sit.
Laura: What I find fascinating, and it might have always been the case, but it feels like it’s been really accelerated over the last couple of years, is the conflation of different categories. People aren’t going, oh, I’m shopping in the vitamins aisle and now I’m shopping in the drinks aisle, as a very obvious example.
Steven: Yep.
Laura: So there’s always new opportunities to stretch, even if you can’t see them within the shelf that you are used to operating in. What are your thoughts on looking to adjacencies as a way of anticipating growth?
Steven: I completely believe that Laura. I think not just adjacencies, but almost trying to identify areas where consumers or customers might be frustrated or might be an opportunity to do something better that they are not aware of. And I think when you are looking to grow, whether it be portfolio or not, looking at adjacencies and asking the question, what’s nearby that maybe we could appropriate and bring into our category so that consumers don’t need to go to that one over there, they will come to us. We do quite a lot of work looking at how you can effectively deliver, new motivations or new demands.
I think Müller as a brand in yoghurt, have done a brilliant job of lowering boundaries and leading that out because, you go back about twenty years, yogurts were seen as a diet pudding, and they injected fun. They injected enjoyment into that as a start point. And from there they’ve moved down to, we can do indulgence and now we’re into protein and gut health. And all of those just mean that consumers can go to the category end of the brand and find a range of very distinct solutions that are all really nicely aligned with where the money is at the moment.
And some of those are also where the emergent money is. I think it’s been a brilliant job of pushing a category forward, but using a portfolio with very clear storytelling and navigation so that consumers can absolutely see what you are offering them and they can make choices accordingly.
Laura: I was looking at a behaviour change framework, that classic of motivation and ability on different axes. And then there was also another one, which is then putting opportunity within that axis. And actually that’s what Müller have done, haven’t they? Is that they’ve recognised, there were some people who were very motivated, very interested in doing that, but actually by offering the opportunity, they expanded the universe of the people who were attracted to it.
So, it was really about popping up those opportunities for people going, oh, I hadn’t thought about it in that way. And of course you’ve got your leading edge people, where you’ve got your followers who then start to expect that from the category.
Steven: Yeah. I think they’ve done a really good job in simple terms of applying the rules of Ehrenberg-Bass. In the sense of how can we make this category appeal to all the users? And have systematically deconstructed barriers where there were barriers, but at the same time, they’ve created those really positive reasons to choose.
So you go back, what, two decades and a whole bunch of people go, yoghurt’s not for me, but like yogurt is just, it’s the what? It’s the solution. And the way that it has evolved is the benefits have become very, salient and the yogurt carries the benefit of an indulgence or fun or sustenance. And in doing that they’ve really opened it up to a lot more people can find something that works for them.
Adam: So Steven, I’m a brand owner that’s just jumped onto ABC corp brands and I want to know where to start. I love what you’ve said today on this podcast, but actually how do I build this portfolio out to be as effective as possible, what would your advice be to me?
Steven: I would start with a consumer driven framework that enables you to answer some of the key questions and those questions being effectively, where is the future value going to sit?
So something that enables you to see where the opportunity is. And build that, as robustly as you can. And once you have that framework, look at the portfolio that you have currently and map it onto it. And that can reveal so many interesting things, but it shows you where you sit relative to the opportunity.
And then from there you can work out key jobs to be done. Across your whole portfolio, and that could be, this one’s in the right place, it needs some fine tuning, It needs some repositioning. This one, don’t really see a long-term future for it. Gosh, there’s a lot of exciting white space over here that we are not addressing at all.
Adam: Or something competitors in the category isn’t addressing
Steven: Absolutely. And therefore how are we going to do that? Is that moving a brand or creating a brand, or buying a brand?
But I think the key thing is too often we see people starting projects just by looking at what they have, and what you need to get before you start trying to figure out how you move things about, is that, framework that dictates where the opportunity sits.
Adam: Yeah. Really good.
Laura: Great. Thank you so much for joining us, Steven.
Steven: Absolutely. Pleasure.
Adam: Yeah that was absolutely brilliant. Thank you Steven.
Laura: So Adam, any thoughts other than it being the best interview you’ve ever had?
Adam: What? Because it was with my boss. Yeah. I think the one word that I’ve taken out of these last three episodes, it’s about discernment and saying no and making sure that you don’t just accrue these brands, accrue these lines over time, you are saying no to things.
And that all starts with understanding what do consumers really want, and making sure that every one of your brands is totally anchored in value point, whether that’s a benefit space or a need that they have. And not allowing that long tail to creep in.
Laura: Yeah, exactly. It’s about what they need today and what they’re going to need tomorrow. And it’s not getting bogged down in legacy or feeling very passionate about what a brand used to be. It’s about looking at that reality and if I can give a metaphor, I’m not at all well placed to expand on, but it would be a bit like having a football team where you need different players for different things, and you need them to,
Adam: What things are those?
Laura: They would be kicking, they would be running. There is also holding the ball back, which I think is goalie.
Adam: Goalie!
Laura: It is goalie, isn’t it? No.
Adam: Yeah, it is goalie.
Laura: Oh, it’s goalie. I’ve got it. I did get it. Anyway, that would be my analogy for the day on that one.
Adam: Okay. Let’s leave it there, shall we?
Laura: Yeah I think we should.
Adam: And finally, Laura, if there’s one thing that you’d ask our listeners to help us with, what would it be?
Laura: Let us know what you want to hear more of. Share it on your socials tag people. We would love to be persuading more people to enjoy The Persuasion Game more often.
Adam: Absolutely.
And if you could think of anyone that would be a great guest for the podcast, then do let us know.
