The interactive effects of product and brand portfolio strategies on brand performance: Longitudinal evidence from the U.S. automotive industry

Abstract Product and brand portfolio extensions are effective marketing strategies to meet customer needs and to create a competitive advantage in the marketplace. Nevertheless, product and brand portfolios can get out of control easily leading to a loss of market focus and market share. This study examines how product portfolio and branding decisions affect brand performance (unit sales and market share). Prior research in marketing has investigated the effects of product portfolio and branding strategies on firm performance in isolation. However, these decisions are rarely isolated events. Usually, for multi-product and multi-brand companies, product portfolio decisions are determined in conjunction with branding decisions. Using a dynamic panel generalized method of moments estimation on a comprehensive dataset from the U.S. automotive industry between 2007 and 2013, this study examines the extent to which product and brand portfolio characteristics interact to affect brand performance. Findings reveal that while brand portfolio scope augments the positive effects of portfolio depth and innovativeness on brand performance, it attenuates the positive effects of product portfolio breadth on brand performance. Also, brand positioning in auto industry enhances brand performance only when considered jointly with product portfolio breadth, depth, and innovativeness. Finally, the present study discovers critical managerial trade-offs between product and brand portfolio decisions, as product and brand portfolio decisions are intertwined and a careful examination of the existing product and brand portfolio characteristics seem to be warranted to maximize brand performance.