In theory, at least, most marketers recognize that they should run their brands as a portfolio. Managing brands in a coordinated way helps a company to avoid confusing its consumers, investing in overlapping product-development and marketing efforts, and multiplying its brands at its own rather than its competitors' expense. Moreover, killing off weaker or ill-fitting parts of the product range—an important tenet of brand-portfolio management, though not one that should be applied at all times—frees marketers to focus resources on the stronger remaining brands and to position them distinctively. It thus reduces the complexity of the marketing effort and counteracts the decreasing efficiency and effectiveness of traditional media and distribution channels.

Theory, however, is one thing, practice another. Marketers today face heavy pressure to produce growth in an era of fragmenting customer needs. Understandably, they often react by expanding rather than pruning their brand offerings. After all, killing tired brands and curbing the launch of new ones isn't easy when the remaining portfolio must capture nearly half of a discontinued brand's volume merely to break even. Marketers also worry about the repercussions of using a portfolio approach and making the wrong call. Companies today are more likely to punish brand...