Ngày đăng: 28/05/2019
All businesses that own a brand portfolio have a certain brand architecture, but the question is whether they have a brand architecture strategy?
Most marketers only think about their brand architecture strategy when there are changes such as M&A (merge and acquisitions), launching or rebrand. That’s when they are forced to look at a bigger picture. This often explains the problems of businesses such as bad brand reputation, negative spillover effects among brands or loss of growth opportunities.
What is brand architecture?
If your business has a Brand Portfolio, you will automatically own a Brand Architecture.
Brand portfolio is the term that represents all brands that the business is managing, and a brand portfolio strategy is how you manage this portfolio when expanding to target groups, new markets. For example, when Lego launched Lego Friends – a more suitable option for girls, or Coca Cola had to launch Coca Cola Zero because Coca Light was not attractive enough for men. This allows both companies to maximize sales instead of brands competing with each other to attract customers’ attention.
On the other hand, brand architecture is an external component of the Brand Portfolio Strategy, with the aim of making it easier for customers to see the link between brands, to find what they want and understand what your business is providing. In the case of Lego and Coca Cola, you can recognize brand architecture in the way that the parent brand name is linked to the sub-brand names. We will soon realize that this is not a coincidence, but a strategic choice of the brand architecture model named Sub-brand.
5 popular brand architecture models
There are five common types of brand architecture: Branded House, Sub-brands, Endorsed Brands and House of Brands and HYBRID, founded by Aaker and Joachimsthaler’s Brand Relationship Spectrum model.
BRANDED HOUSE
The Branded House model will have a parent brand covering a broad product-range, or even across multiple product categories. An example of this type is the Virgin Group with Virgin Airlines, Virgin Fitness, Virgin Music, etc. All are associated with the parent brand through the use of logos, colors and for a business purpose.
This structure creates a consistent brand experience that helps minimize confusion for customers. Businesses will have economies of scale and synergy, thus making it easier to build brand equity for each individual brand and for the entire portfolio. On the other hand, putting all your eggs in one basket also risks causing the business to be negatively impacted on the entire brand. Not only that, it will be difficult and costly to make a change to the brand in the future.
SUB-BRAND
The second type, Sub-brand also uses the parent brand as the main reference frame but makes the separate brands more different by adding new links. Examples of this model are Lego, Coca Cola, Microsoft and Microsoft Office, Nivea and Nivea Q10 or Sony and Sony PlayStation.
This structure provides credibility in new markets or product categories, while helping branch brands to create their own brand image. Therefore, this is a great way for you to test new markets while minimizing the risk of launching everything under the same name.
However, there may be some cases where the product portfolio will become out of reach due to mismatch with the parent brand name. For example, if Nivea wants to release a razor product, the name Nivea Razor may be deemed unsuitable with consumers’ opinion due to the Razor’s roughness and the Nivea’s softness (because Nivea products are mostly soft in form). In this case, the Endorsed Brands model would be more suitable.
ENDORSED BRAND
Endorsed brands are less associated with parent brands than Sub-brands because they have a unique name but still use elements from the parent brand as a guarantee of quality.
A shadow endorser is not clearly and visually connected to the parent brand, but many consumers still know this connection, such as Toyota’s luxury car brand Lexus.
In contrast, Token endorser has a clearer association with the parent brand, like adding a part of the logo or another branding element to the product: Unilever has added its U-shaped logo after each Dove product.
Finally, the linked name is when you create a family of brands that are linked by a common name, this link can be implicit or very obvious with the parent brand. An example of this model is Nestlé with Nespresso and Nescafe, or McDonalds with Big Mac, McNuggets, Egg McMuffin, etc.
With this type of architecture, the brand will have more flexibility and at the same time limit the synergistic effects compared to Sub-brand (the effect when a brand is adversely affected will lead to the entire related brands as they are closely related.) Therefore, determining which Sub-brand or Endorsed brand is more appropriate will depend on the nature of the product categories and target audience groups you want to target. A good rule of thumb is that the further away the category is from the parent, the closer you should get to Certified Brands; the further a product portfolio is from the parent brand, the closer you get to the Endorsed brand model.
HOUSE OF BRANDS
The fourth type of architecture is the House of brands, where all brands stand alone. Examples of this model are P&G with Gillette, Oral-B, Head & Shoulders and Pampers, or Yum! – parent brands of Taco Bell, Pizza Hut and KFC.
This type of architecture suits your portfolio if the business wants to maximize its impact on the market, category, or target group; and wants each brand to have a clear positioning and ability to deliver value to the target audience, without having to worry about negative spillover effects or be limited by the association with the parent brand. On the other hand, this is the only architecture where you completely lose all economic benefits by scale and synergy.
HYBRID
In fact, almost all companies use a mixed brand portfolio strategy, at least once. Therefore, the “hybrid” model – Hybrid brand is required. An example is Amazon with brands such as IMDB (under House of brands), Amazon Prime (Sub-brand) and A9 (Endorsed brand).
This model will be the right choice when you want to stick with Branded house for your home market, but want to combine other models for new markets. It’s a great way to keep customers happy, to avoid confusion while paving the way for future deals. However, at the same time, you still need to remember that you will lose potential synergy effects.
CHOOSE A SUITABLE BRAND ARCHITECTURE STRATEGY FOR YOUR BUSINESS
By delving into the pros and cons of each type of architecture, you will find what works best for your business. But keep in mind that Brand Architecture should not be considered a static part of the Brand Portfolio Strategy, but something you have to monitor and revise constantly, especially with the dynamic nature of the international market, and the changing environment of competition.
By evaluating your Brand Architecture more often, you will:
We also recommend reviewing your brand architecture at least once a year, following a bottom-up process where you look at each brand one by one and ask yourself:
