Understanding Brand Architecture: Building a Cohesive Brand Strategy

Introduction

Brand architecture is a strategic framework that organizes and structures a company’s brands, products, and services. It defines the relationship between different brands within a company’s portfolio, ensuring clarity, coherence, and synergy. Effective brand architecture enhances brand equity, facilitates brand management, and optimizes marketing efforts. This article explores the different types of brand architecture, their benefits, and best practices for creating a cohesive brand strategy.

When Facebook Decided to Buy WhatsApp

When Facebook decided to acquire WhatsApp, a crucial question arose: How should the combined entity be named? Options like "WhatsFacebook" or "FacebookWhats" were considered. The owner of Facebook wanted everyone to recognize WhatsApp as part of the Facebook family. The solution lies in brand architecture.

What is Brand Architecture?

Brand architecture is the underlying structure and relationship of brand assets within a given portfolio. The objective of brand architecture is to achieve clarity, synergy, and leverage by optimizing the hierarchy, links, and identity system of brands in the portfolio.

How Brand Architecture Works

Brand architecture describes how consumers should perceive the links and relationships between portfolio brands. It maximizes brand impact within the target group.

Types of Brand Architecture

There are three primary types of brand architecture:

1. Branded House:

• Description: The master brand and sub-brands share the same visual identity, with slight variants. For example, FedEx uses different colors for its divisions, and Apple differentiates products by name.
• Structure: All products are commercialized under a single powerful brand, sharing the same visual identity with slight modifications like color changes and new extensions. The master brand takes control over the whole operation, also known as an umbrella or corporate brand.
• Example: National Geographic (Nat Geo) - All sub-brands benefit from the visibility of the Nat Geo master brand, its logo, and identity.

Objectives:

• Provide clarity to customers as it’s easy to understand.
• Offer synergy between products by sharing and spreading positive associations.
• Leverage the brand strength of the master brand across more contexts.

Advantages:

• Economies of Scale: Reduced marketing and branding costs as all sub-brands benefit from the main brand's marketing efforts.
• Company Culture: Enhances the ability to deliver a consistent message.
• Simplified Customer Decision-Making: Customers are more likely to choose products from a familiar and trusted brand.
• Enhanced Brand Loyalty: Consistent quality and experience across all products under the master brand foster stronger customer loyalty.

Disadvantages:

• New brands from mergers and acquisitions must be rebranded.
• Limited flexibility; harder to diversify and target different market segments with the same brand image.
• Complex brand management; requires careful coordination to maintain consistency.
• Sensitive to negative disasters; if the master brand fails, all sub-brands will suffer.

When to Use:

• Target Customer Similarity: Ensure that the target customers for all products under the master brand are similar enough to be effectively targeted with a unified brand.
• Consistent Value Proposition: The value proposition should be consistent across all products. If some products are cost-oriented while others are premium, a Branded House might not be suitable.
• Market Synergy: Look for potential synergies between products. Sharing positive brand associations can enhance the overall brand strength.

Examples:

• FedEx (FedEx Express, FedEx Ground, FedEx Freight, FedEx Office),
• Apple (Apple Pay, Apple iPad, Apple iPhone),
• Samsung (Samsung Electronics, Samsung Life Insurance, Samsung Construction), General Electric (GE Energy, GE Money, GE Healthcare, GE Aviation).

2. House of Brands:

• Description:The master brand has no linkage to any of the sub-brands. All products are commercialized under different brands, which are independent stand-alone brands with little connection to the parent brand.
• Structure: Focuses on maximizing its impact on the market by allowing separate sub-brands to target specific niche markets or new categories.
• Examples: Procter & Gamble (P&G) and Unilever.

Objective:

• Market Segmentation: Effectively target diverse customer segments with tailored brand identities.
• Brand Autonomy: Maintain distinct brand identities to cater to specific needs and preferences.
• Risk Management: Mitigate risk by spreading it across multiple brands rather than relying on a single master brand.

Example (Product segmentation)

• Signal (targeting families, focusing on dental care for all ages).
• Closeup (targeting youth, emphasizing fresh breath and confidence).

Advantages:

• Allows separate sub-brands to target specific niche markets or new categories.
• Easy to acquire brands from other companies, sell existing brands, or allow for mergers.
• Market Penetration: Ability to penetrate various market segments with specialized brands.
• Brand Focus: Each brand can develop a strong, focused identity tailored to its target market.
• Risk Diversification: Reduces the impact of a single brand's failure on the overall company.

Disadvantages:

• Challenge to establish new brands without any endorsement.
• Requires significant time and money investment to build awareness for new brands.
• Higher Costs: Managing multiple brands requires more significant marketing and operational investments.
• Complex Management: Increased complexity in managing separate brand strategies and operations.
• Brand Cannibalization: Risk of brands competing against each other within the same company.

When to Use:

• Diverse Market Segments: Ideal for companies targeting vastly different customer segments with unique needs.
• Distinct Value Propositions: Suitable when products offer distinct value propositions that do not align under a single brand.
• Innovation and Expansion: Allows for innovation and expansion into new markets without diluting the core brand.

Examples:

• Procter & Gamble (Gillette, Tide, Old Spice, Braun, Head & Shoulders, Oral-B),
• Unilever (Lipton, Axe, Dove, Ben & Jerry’s, Knorr, Rexona, Magnum, Hellmann's),
• General Motors (Cadillac, GMC, Chevrolet, Opel, Buick, Pontiac, Hummer).

Hybrid Brand:

• Description: A mix of the above types in some configuration—some sub-brands may link to the master brand, while others remain separate.
• Structure: Supported by the single master brand in its products to share the same name, color, typography, or remain separate. Hybrid branding usually occurs when a company starts with one brand and then creates extensions as it grows, or acquires or creates new, separate brands to better compete.

Objective:

• Flexibility: Combine the strengths of a master brand and sub-brands.
• Market Reach: Cater to diverse customer segments.
• Unique Brand Identities: Allows for the most variance in the hierarchy, making it easy to diversify one sub-brand without impacting another.

Examples:

• Microsoft (Microsoft, Windows, Office, Xbox),
• Coca-Cola Company (Coca-Cola, Diet Coke, Coca-Cola Zero, Sprite, Fanta).

Advantages:

• Allows for mergers and acquisitions of different types of brands.
• Some sub-brands can have a new identity, while others remain closely related (greater flexibility).
• Brand Leverage: The master brand can lend credibility and recognition to sub-brands.
• Market Flexibility: Ability to target different segments with tailored brand strategies.
• Risk Mitigation: Balances the risk between the master brand and sub-brands.

Disadvantages:

• Confusion over which sub-brands should be independent and which ones endorsed.
• Challenge to keep brand books updated across the board.
• Complex Management: Requires careful coordination to maintain consistency.
• Potential Confusion: Customers might be confused by the mixed branding approach.
• Resource Intensive: More resources needed to manage both master and sub-brands effectively.

When to Use:

• Diverse Market Needs: When targeting a wide range of customer segments with different needs.
• Strong Master Brand: When the master brand has strong equity that can benefit sub-brands.
• Innovation and Expansion: When looking to innovate and expand into new markets without diluting the master brand.

Examples:

• Google (Google Pay, Gmail, YouTube, Android, Waymo),
• Coca-Cola (Diet Coke, Coke Zero, Sprite, Dasani, VitaminWater),
• Walt Disney (Walt Disney World, Disneyland, Disney+, ESPN+, Marvel, ABC News).

Conclusion

Brand architecture is a critical component of a company’s brand strategy. By organizing and structuring brands, products, and services effectively, companies can achieve clarity, efficiency, and synergy. Whether adopting a monolithic, endorsed, or pluralistic approach, the key is to align the architecture with the company’s vision, mission, and market dynamics. With a well-defined brand architecture, businesses can enhance brand equity, optimize marketing efforts, and drive long-term growth.

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?Additional Notes:

• In the past, there wasn’t brand architecture because organizations were less complex, selling fewer products and limited brand expansion, and there was less activity in mergers and acquisitions.
• Don’t confuse yourself about sub-brands and endorsed brands. It depends on what the company wants from this brand—is it to support the master brand or for the master brand to support them? So, we will consider them as hybrid brands in the end to limit confusion.

Look at the image and you will understand and clarify this concept further.

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