4 Factors In Making Brand Architecture Decisions

Brand Architecture Strategy Decisions

The brand architecture spectrum has been well documented and has proven to be a powerful way to describe and map the brand architecture universe. Do a Google image search of brand architecture spectrum and you will find many variations on a theme (like this one). These renditions show the progression of brand architecture options from branded house (one single brand) to house of brands (many brands under one roof).

As a marketer, it’s useful to understand this framework and be aware of the pros and cons of different brand architecture options. Companies on the House of Brands end of the spectrum (think P&G) have the ability to build brands on functional benefits targeted against specific product categories, but have to carry the expense of managing a portfolio of brands. Companies on the other end of the spectrum (think BMW) are able to channel all their marketing investment against one brand but lose the ability to focus their brand against specific segments. Companies in the middle of the spectrum (think Marriott) seek to use a combination of their company brand and product brands to get the best of both worlds but add a complexity that can be confusing to customers and difficult to manage.

Seek More Of Less

But the decisions that marketers have to make about brand architecture are not about choosing from this full set of architecture options like going into a store and taking one off the shelf. It’s more about deciding which way to move along the brand architecture spectrum—branding more things vs. branding less. Although both directions may be valid, the default choice should always be less branding—branding more things adds cost and complexity so should only be sanctioned when the benefits outweigh the costs.

Within companies, those who have brand responsibility and who understand that excess branding costs money often have to play the unappreciated role of brand cops disallowing what others in the company see as necessary or fun branding forays. What harm can it be, thinks a salesperson or an HR person, for me to give my newsletter a fancy new name and its own special color? Why can’t I trademark and brand this new product feature that I’ve worked on for months, thinks a product development person? The damage of a single instance of extra branding may be slight but, unchecked, these can mount up to be a tangled profusion of branded entities that choke the company’s marketing efforts. Those responsible for branding are the weed cutters, using guidelines and rules to try and stop the company sliding into branding anarchy. Strategically deciding to be on the house of brands side of the spectrum is one thing, letting yourself slowly slide in that direction is another.

Where companies set the bar for what can be branded and what cannot is the more strategic part of brand architecture. There’s quite a range of factors to consider:

1. Brand: Existing equities obviously need to be taken into account—not just their overall strength but also their pliability. To take a ridiculous example to make the point, P&G does not have the option to reduce its brand portfolio by stretching Tide to cover other non-adjacent product categories like toothpaste (Crest) and paper towels (Charmin). Even brands on the other end of the spectrum may find themselves having to launch new brands when their business strategy takes them into spaces where their brand doesn’t naturally fit. Google’s decision to create a new operating structure with Alphabet as the parent company at its head reflects the fact that there were ventures that the organization wanted to undertake that really didn’t fit under the Google brand umbrella.

2. Stakeholder: The homogeneity or distinctiveness of the needs and make-up of a company’s customers is important—distinctiveness being the driving force behind branding diversity. A simple example is companies that target customers with products in the same category but at different price points. Toyota found that its brand did not carry enough prestige for it to compete in the luxury end of the car market so it launched Lexus, similarly Marriott’s higher-end hotels like the Ritz Carlton keep their branded distance from the parent company.

3. Market: If competitors are specialized against a specific market, it’s more difficult to compete with a generalist brand. That’s what led food manufacturers to acquire brands like Cascadian Farm (General Mills), Odwalla (Coca-Cola) and Stonyfield Farm (Group Danon). They needed these brands to be able to participate in the natural foods market and get distribution in retailers like Whole Foods.

4. Culture: How companies are set-up and organized will have a material effect on what kind of brand architecture is possible. If there’s a high degree of autonomy given to divisions to decide their own marketing strategy, it may be impossible to successfully introduce a central point of brand control. While brand architecture should be driven as much as possible by external factors, ignoring internal organization realities is a recipe for frustration and failure. A single brand structure requires a supportive environment and highest-level executive management backing.

By systematically evaluating these four groups of factors, companies will have a better sense of how parsimonious they can be when it comes to brand architecture and identify those times when they can add branded entities to positive effect.

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Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Licensing and Brand Education

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