Updated: Dec 20, 2019
We call Brand Management, Product Porfolio Management, etc because we want to define the best way to manage something. In business, chaos is not a good choice for business and marketing strategy. That is why a clear Brand Structure or Brand Architecture is really essential and vital for brand development and brand building process!
WHAT IS BRAND STRUCTURE?
Brand Structure, is also called as Brand Architecture, is the way in which the brands within a company's portfolio are related to, and differentiated from, one another. The brand structure is to define and manage the different segments of branding within the organization, how the corporate brand and sub-brands relate to and support each other, and how the sub-brands reflect or reinforce the core purpose of the corporate brand to which they belong.
We can consider a brand structure or architecture as an integrated process of brand building through establishing brand relationships among branding options in the competitive environment. The brand structure/architecture of an organization at any time is, in large measure, a legacy of past management decisions as well as of the competitive realities brands face in the marketplace.
WHAT ARE TYPES OF BRAND STRUCTURE?
There are 3 main types of brand structure (brand architecture): the Branded House, the House of Brands, and the Endorsed Brand. Each option comes with its own advantages and disadvantages. You should clearly understand them before deciding which one to follow:
1. The Branded House
FedEx is an example of The Branded House brand architecture, with their operating companies and portfolio of solutions all falling under the name of the master brand. This structure makes for a consistent experience, minimizes confusion, and builds equity for the corporate brand.
The branded house architecture is great for the established customer loyalty where audiences don't care much about product features or benefits than they care about the central brand promise they know and love. Besides, the branded house approach has another benefit as more efficient marketing and advertising spend and positive equity spill-over between sub-brands. Of course, spill-over can be negative as well when a problem with one sub-brand can wind up being a problem for the entire brand.
The advantage of the branded house strategy is dilution: when a brand is positioned too broadly across multiple service categories, its meaning can become too diffuse.
2. The House of Brands
A house of brands architecture features a collection of distinct, familiar brands under a parent brand that customers may or may not be aware of. This insulates the master brand from brand extensions and in turn protects brands from each other. A house of brands also allows for a Master Brand to have competing brands in the same segments. There are many good examples for this type of brand structure / architecture, mainly in FMCG industry such as P&G, Unilever, Henkel, etc.
The brand extensions in a house of brands system essentially endorse each other, while the parent brand realizes the benefits.
Products within a house of brands architecture sometimes feature their parent brand’s identity on their packaging by way of a small logo or address. Some brands choose not to disclose the relationship at all, because of specific strategies around pricing, perceived quality, or target audiences.
3. The Endorsed Brand
In an endorsed brand architecture, there is a parent brand and associated sub-brands, all of which have unique market presences. The sub-brands benefit from their association with, or endorsement from, the parent.
The relationships between the sub-brands within an endorsed architecture is often mutually beneficial, each benefitting from the strength of the other.
An endorsed brand structure strategy is one where you’ll find messaging like “brought to you by…”. Endorsement limits a business’s reputation risk and offers more positioning alternatives than a house of brands approach, for example.
For example, consumers already understand that Bioderma is a dermo-cosmetic brand and also a biological brand. They already believe the quality of Sensibio which is for sensitive skin, they can recommend Sebium range to their friends if their friends are suffering acnes. When product performance of a sub-brand is well appreciated, it can enhance the high-quality perception for the Endorsed brand, here Bioderma. And Bioderma has its own spill-over effects on other sub-brands like Photoderm or Cicabio, etc.
What are the Benefits of a Strong Brand Structure?
People always think that brand structure or architecture is only for big, complex organizations. But even small businesses can get a great benefit by better organizing their offerings. Regardless of your company’s size, effective brand architecture can enable you to…
1. Target the needs of specific customer segments. Brand architecture enables you to segment your market smaller and deeper. Bioderma as an example, At first, it only has one brand and then expand from Node shampoo to facial care for Sensitive Skin, after that extend to Oily Skin with Sebium, etc. When consumers use the right product range, then we can expand the specific range bigger and bigger. Now you can realize that there are many products in Sensibio and many products in Sebium range.
2. Significantly reduce marketing costs. When brands are built in a logical and structural way, your marketing efforts are much more efficient. With opportunities for cross-promotion between brands, marketing is more effective as well. Consumers spend les time to select the brand range to find the relevant products. For example, currently consumer A is using Sensibio brand for sensitive skin and then she needs a suncare product, she can right away look for the Orange range known as Photoderm, and just select the right product within the suncare range of Bioderma. When she suffers a damage, she can access the website can click on Cicabio brand to select the right product. This is something we call spill-over or hallow-effect.
3. Clarify positioning and messaging. Nothing increases the efficacy of your brand positioning like clarity. Clearly articulating positioning and messaging is like giving your brand a high-performance tune-up. Just like the example in the point 2, when people see the Pink color in the Bioderma brand portfolio, they understand that that product is for sensitive skin. Then they just read more for the message of each product. For example, each brand follows the structure of "I cleanse - I treat - I maintain", and in each group, we can select the most relevant product for your own needs, Sensibio Cream Light is with the light texture and Sensibio Cream Rich is with the richer texture.
4. Facilitate growth and bolster stakeholder confidence. The modular nature of an intuitive brand architecture makes it easier to add brands, products, or services as your company grows. And future-minded brands are a reassuring sign for investors and employees alike. Besides, the well structured brand helps consumers trust and love because they think that the brand is professional than un-structured brands.
5. Enhance customer awareness. When a brand’s various divisions are not clearly delineated, they must rely on the parent brand to capture the attention of the marketplace. Brand architecture gives a parent brand the power of diversification by highlighting the unique strengths of its distinct sub-brands. As you can see the explanation in the point 2 and 3.
6. Build and protect brand equity. The upshot of all of the benefits above is the ultimate competitive advantage for any company: brand equity. Growing your brand equity gives you compound returns as industry authority and marketplace valuation grow with it.
How to a Create Strong Brand Structure?
How do you develop and build a brand structure / architecture that benefits both your company and your customers? Firstly, don’t over-complicate it. The purpose of brand architecture is to make your offerings clearer, not more convoluted.
There are 3 simple steps toward defining a sound, intuitive brand architecture: Research, Strategy, and Migration.
The best brand structure / architecture starts with research into brand awareness, loyalty, and associations. Only with clear research can you understand how your audience understands (or doesn’t understand) your key offerings.
Conducting internal and external surveys or interviews, and then testing the insights you glean with more widely distributed online surveys is the best way to understand how and why your customers make decisions.
Research data will tell you which brand architecture type will best support your business strategy. It gives you information you need to parse your offerings or divisions in a way that makes sense to those you serve.
In the strategy phase, you determine the optimal brand architecture type for your business’s unique needs. Each type offers a different way to leverage (or not leverage) the master brand.
How closely do you want to associate your sub-brands or extensions to your parent brand? This question is particularly relevant if you’ve recently undergone a merger or acquisition (and even more relevant if a former competitor was involved in the process).
The best way to answer this question and others is to create illustrative examples of multiple architecture alternatives, identifying the pros and cons of each. Evaluate each alternative against pre-determined criteria to ensure objective evaluation.
Prioritize clarity in the connections between sub-brands, divisions, products, or services. Cross-promotion between brands doesn’t work if customers are confused by the correlations between your extensions. The more common elements there are among your brands, the stronger the synergy is between them.
Lastly, be realistic when it comes to budget and resources. Make sure to create a system that you can reasonably expect to support given the manpower and capital you have available.
The final step is to create a blueprint for the system you’ve organized and outline a plan for migration. This includes a naming structure and identity system that clearly delineate your various sub-brands or extensions in a way that aligns with your overarching brand strategy.
The visual and verbal breadcrumbs that result from a tightly constructed blueprint are key to helping customers and other external stakeholders navigate your brand architecture.
Developing management tools such as decision trees for future architecture decisions will ensure that you continue to get the most out of your chosen architecture as your brand continues to grow.
What to Consider When Creating a Brand Architecture?
There are many factors to consider when deciding which brand architecture type best suits your business’s unique needs. We’ve outlined six of the most important ones below.
By taking into consideration each of the following concerns, you can mitigate the risk that is inherent to any brand restructuring.
1. Brand Equity
It’s important to evaluate both the strength and flexibility of the existing equity in each of your brands. Do you risk losing valuable brand equity by consolidating brands after a merger or acquisition? Can an existing brand’s equity reasonably be leveraged to promote another?
Proctor & Gamble can’t exactly leverage the equity of its Head & Shoulders brand to promote other products in its portfolio like batteries or cold medicine. The resulting confusion would be problematic for all the brands involved.
Internal factors like values and company culture are just as important as external ones when structuring your brand architecture. If you’ve acquired a new company with a radically different culture, it’s important to ask whether it makes more sense to merge it or keep it separate. Certain divisions operate better with a level of autonomy that isn’t compatible with a codependent marketing strategy.
A branded house approach demands that all entities be on the same page when it comes to positioning and personality. If that doesn’t seem likely, or even possible, another architecture type needs to be considered.
3. Growth Strategy
Growth strategy should be front of mind when determining brand architecture. Does your business model entail pending mergers, acquisitions, or alliances? Do you plan to expand your product or service lines in the near (or even distant) future?
Your brand architecture should support and enable successful growth by providing strategic latitude for each brand. The right approach will allow you to identify underperforming brands and avoid the exposure that comes with a single-brand strategy.
Perhaps the most important factor is the market or markets in which your company operates. If your business targets a single market, a branded house can boost brand awareness, optimize marketing spend and bolster reputation. If you have products or services aimed at significantly different markets, multiple brands can help to protect each market from the other, mitigating risk and ensuring differentiated messaging.
By acquiring natural foods brand Odwalla, Coca-Cola was able to participate in a fast-growing market segment that would have been otherwise unavailable because its association with junk food.
Distinctiveness is the driving force behind branding diversity. Unable to compete in the luxury car market, Toyota launched Lexus. The Ritz Carlton is able to retain its luxury status by keeping a branded distance from its parent company, Marriott, and other, more budget-conscious sub-brands in the Marriott family.
Another key factor is how much disruption you’re willing to endure with a reorganized brand architecture. Every rebranding initiative entails a certain amount of risk. The important thing is to measure that risk against the long-term gain you stand to realize.
Realigning lesser known products under a well-known brand is relatively risk-free. Rebranding well-known products with a new and unfamiliar parent brand runs the risk of confusing and/or alienating a brand-loyal customer base.
Last but certainly not least among factors to consider when creating your brand architecture is cost. Maintaining a slew of separate brands is always going to be costlier than organizing all of your offerings under a single brand.
It’s also expensive to rebrand the packaging, signage, and digital assets of multiple brands and consolidate them under a new single entity. Intangible costs like brand equity need to be considered as well.
Brand architecture strategy should be systemic – consider what you are trying to accomplish overall, how many distinct promises you need to make to grow your business, and how many individual brands you can afford to support. Thinking this through at a high level will help you better understand and activate the roles of each brand in your overall strategy.