What is brand architecture?
When I first heard “Brand Architecture”, I thought it was another buzz term in the infinite Marketing vocabulary. Turned out I was ignorant and throughout the year I had to manage Brand Architecture several times. Brand architecture is the term defining the way you structure your company’s brands so that they have a certain degree of relationship or not. As we’ll see, sometimes it involves establishing a hierarchy among your Brands (so we talk about parent brands and sub-brands), other times it requires establishing a clear degree of separation between them. Brand architecture, when done well, results in a clearer and simpler customer experience and it turns can create efficiencies on the company side.
The right brand architecture depends on the company’s business goals but also on starting architecture and the ability to effectively shape the new one successfully. It is a very very delicate process, as much as doing a multi-year long-term investment.
Who Needs Brand Architecture: Large vs. Small Companies
There are no company-size criteria to structure your Brand Architecture: it all depends on the current state of the art of your Brand(s) and what you want to achieve. To one extreme, if you are a mono-brand driven Company, and you have decided to enter a whole new category, you need to decide if to enter with your current Brand or set up a dedicated one. On the contrary, if you control a series of Brands, it might be wise to research whether there’s room for Brand consolidation under one Brand (this would technically be an Umbrella Brand). The outcome would definitely bring cost efficiencies across the Value Chain.
There are two types of brand architecture: corporate-driven and product-driven. The type of brand architecture a company uses depends on its size, industry, and history. Large companies tend to use corporate-driven brand architectures, while small companies tend to use product-driven brand architectures. But even among big Corporations, Brand Architecture varies. Take the two different approaches of Coca-Cola and Procter & Gamble, just to name two.
The choice of brand architecture should be based on a company’s strategic goals. The wrong brand architecture can lead to confusion and decreased sales.
What Are the Different Types of Brand Architecture?
There are three common types of brand architecture: Branded House, House of Brands, and hybrid.
– Branded House (family) architecture is when a company uses one parent brand name for all products and services.
– House of Brands architecture is when a company uses different brand names for different products and services. Each brand name plays its own game, often in one specific category.
– Hybrid brand architecture is when a company uses a combination of family and house brand architecture. This type of brand architecture is often used when a company wants to offer a variety of products and services under different brand names.
Brand architecture strategies
Branded house strategy
A branded house strategy consolidates all of a company’s products and services under one master brand. Of course, from a pure marketing operations perspective, a Branded House is extremely more efficient than any other setup. But it can also be risky because one weak product can drag down the whole company’s reputation. Even if that’s not the case, a Branded House when stretched too much across categories can bring too much rigidity to a Brand. Let’s for a second imagine Dyson Brand entering the car industry (absurd so far, but it’s the first example that came to my mind)…at present, I can hardly figure out what functionalities and Brand values can be injected into the automotive sector. At least until they find a way to move a car via a vacuum engine.
Endorsed brand strategy
An endorsed brand strategy is when a company uses multiple sub-brands or product lines that are all endorsed by the parent company. This can be done in a few different ways. The first way is to have the parent company name on all products, but use different sub-brands for each product line. Another way is to create separate sub-brands for each product line, but have all products endorsed by the parent company. This can be done through advertising or other marketing materials. The topical endorsed strategy is when you see a less known Brand name, followed by the “by XXX”, where XXX stands for the parent (and more salient) Brand.
There are a few benefits to using an endorsed brand strategy. First, it can help to create brand equity for the parent company. Second, it can help to differentiate the product lines from each other. And third, it can help to build brand loyalty among customers, speeding up awareness and saliency.
An interesting case of using an Endorsed Brand strategy is when you want to potentially morph the Brand onto the parent Brand. This is the case for example of the CDP SaaS called Segment, recently acquired by the more famous Twilio suite of products. At the time I am writing, the Segment logo report added a “by Twilio” extension which prepares the parent company to potentially incorporate the whole thing one day.
House of brands strategy
The house of brands strategy is when a company uses different brands for each of its products or services. It’s the most complex setup to run if you want to ensure support and progress for each Brand.
This strategy can be used to target very different markets or customer segments. For example, a company that sells both luxury and budget products may use different brands for each to appeal to different customers so that the luxury brand doesn’t get disrupted while still, the company has the flexibility to capture lower spenders. Sometimes, this is also the case when a company gets acquired via an M&A operation, but both companies keep on performing semi-individually.
Hybrid brand strategy
A hybrid brand strategy is one that uses a combination of two or more brand architecture strategies we have seen before. The most common hybrid brand strategy is the master brand and endorsement brand strategy. A master brand is a brand that is used to promote a company, while an endorsement brand is a brand that is used to promote a specific product or service.
Use The hybrid brand strategy to promote a company’s overall identity, as well as its individual products and services. This type of strategy can be beneficial for companies that have a diverse product line or that offer services in multiple markets. It can also be helpful for companies that are looking to expand their reach or that are looking to reposition themselves in the market. Think at Uber and UberEats,
How Do You Choose Between Brand Architecture Types? And What are the Key Factors to Consider in Brand Architecture?
Choosing between one or the other Brand Architecture is no easy task. But once again, data from research should help you figure it out. Before you go and kill one of your Brands though, let me clear this out: you change your current Brand Architecture for either efficiency or effectiveness reason, and if and only if a positive delta in one of those two variables outweigh any possible negative delta in the other.
Let me give you an example, a bit simplistic, but the topic is extremely complex and needs to simplify at this point. If you have two brands that (for whatever historical reason in your portfolio) overlap in price and challenge each other in the market or segment. Then, at that point, you might want to run a study specifically aimed at understanding the level of affinity between the two as perceived by customers. To keep on being simplistic (and optimistic), if you see that the attributes of both brands quite overlap in customers’ minds then proceed in quantifying the gain in efficiencies you might have killed one of the two brands.
The complexity of this choice and the potential consequences involved (losing overall market share etc..) is what makes them one most complex Branding decisions to take. Let’s dig deeper at just some of the factors to consider.
Existing equity
This is the value that is already associated with your brand, a set of attributes incorporated in your Brand(s)’ DNA(s). You will want to consider how you can leverage this equity to create a stronger brand architecture, whether you want to consolidate a current dispersed architecture or sustain a new brand that will benefit from the association with a stronger Brand in your portfolio.
Risk tolerance
How much risk are you willing to take on? This will help you determine which brand architecture strategy is right for you. For example, if you’re willing to take on more risk, you may choose to have a single brand that represents your entire company. This can be a great way to build a strong, recognizable brand. However, it also means that if something goes wrong, it will affect the entire company.
On the other hand, if you’re not as willing to take on risks, you may choose to have multiple brands that each represent a different part of your company. This can help you protect your company if one of your brands has a problem. However, it can also make it more difficult for customers to understand what your company does and what you stand for.
Especially when you intend to consolidate your portfolio (from the house of brands to branded house degree), thinking that you will retain all users when moving them from one brand to another is pure fiction. If data tells you that a) it’s feasible and b) you’ll become more agile, then inform your management by when you project the new setup to increase overall value.
Rebranding costs (aka execution)
Rebranding costs, no matter what can be significant, particularly for the development of a customer and trade education playbook as well as research studies pre, during, and post a rebranding exercise. It’s a thought exercise for both the marketing and sales organization.
Conclusion: What Brand Architecture means for Brand Management
Managing Brand Architecture is a complex and strategic topic, which surely can’t be fully addressed without specific preparation. Nevertheless, it’s one of the most actual topics in Branding nowadays. In fact, with an oversupplied market like the one we live in, companies are challenged with extreme competition while customers have the attention span of a 2-year-old kid and their efficiency is also a function of how they manage the Brands in their portfolio.
