Brand architecture refers to the organization of different brands within a company. It creates the basis for customers to relate with the various offerings of the business. Businesses strategize on brand architecture for several reasons. Variables can include the number of products or services and how they are differentiated. It also provides the structure for brand identity, design, development, and value proposition.
A company needs to revisit its branding architecture when the offerings are somewhat muddled from the customer’s point of view. Internal issues like chaos can arise from poor brand architecture. It causes high costs in marketing and other departments. It also deprives the organization of direction as lines of business may go in directions that are detrimental to the overall business since they compete for resources.
Why is it Important?
- Tailor your advertising and marketing campaigns to unique customer segments
- Reduce your marketing costs by creating an effective marketing strategy. For instance, by cross-selling.
- Create a strategic brand identity and articulate the message to staff. This can create direction for your teams.
- Set structures that facilitate future expansion, diversification, and differentiation
- Protect brand equity and capitalize on brand strength.
What are the Types?
Brand architecture can be split into three types:
The corporate brand overshadows any sub-brands in its portfolio to the in this strategy. Think of Coca-Cola. It is a big corporate brand with various products like bottled water, juice and Coca-Cola the soft drink.
When Coca-Cola branches into a new product it leverages its brand to thrust the product into the limelight. The coca cola label is convincing enough to make customers accept the new product faster than they would.
Note that coca cola is consolidating its brand in instances where it had diversified existing brands like diet coke. However, its strategy was still predominantly corporate branding.Other big companies use this tactic too, like Virgin.
Apart from the easier acceptance that corporate branding brings, it is also cost-effective since the same marketing campaign benefits several brands.
The decision on whether to go for corporate branding is not strictly about the obvious cost savings though. If products are differentiated or target mutually exclusive markets, the strategy needs consideration. That explains why Unilever does not use its brand boldly like Coca-Cola despite being big players in the global markets.
The main weakness of this strategy is that if the brand goes through a scandal or crisis, its business suffers significantly. It is a marketing equivalent of putting all eggs in one basket.
Endorsed brands share some similarities with corporate brands to the extent that they benefit from the overall corporate brand. For instance Apple.Their products are labeled with the corporate brand. However, the brand is not largely displayed if you compare with Coca-Cola. As a result, consumer awareness of these brands is more subdued.
The strength of the sub-brand is partly from its name and partly from the overall corporate brand or endorser brand.
The perks of this strategy are:
- The strength of the endorser brand can boost acceptance of the endorsed brand
- Various sub-brands under the umbrella of the brand endorser can benefit from cross-selling
- The marketing activities for specific sub-brands can have positive spillover effects on other sub-brands
For this type of branding, you weaken the corporate brand a little and strengthen the sub-brands a little. So the marketing costs for this type of branding can be higher than in corporate branding.
A big company can have different brands that do not bear its logo. Consider Toyota; it is a global brand. Some of its offerings took on different brand names though, like Sion and Lexus.Toyota made this step to combat certain perceptions about its Toyota brand and the strategy paid off.
This strategy allows a company to target different audiences and niches without impacting its overall image. If any of the brands go through a crisis, customers might not lose confidence with all the other offerings.The downside of this strategy is that a company forfeits its ability to reap from marketing economies of scale.
How to decide on a winning strategy
To choose and implement the right system you need a clear understanding of the bigger picture in the internal and external environments of the business. The first place to begin searching for direction is your customers. Find out their perceptions about your brands. Compare that to how you think they should perceive your brand.
At this point, you can tell what is right and wrong. Focus on creating order and find out the model that will work for your business based on the relevant factors like the variety of products or services the company offers, business vision and budgets
Do not ignore the fact that the strategy will affect the internal structures. Get the management team on board.
Finally, create a blueprint that can work within your organizations potential and meet its vision. The implementation is a process rather than an event so sensitize the relevant players within the organization and any partners so that everyone is in sync.
In-house competition among different sub-brands is always something to contend with. The person in charge of creating a structure should be above the line of business rivalries and interests.
So this responsibility should fall on someone with overall managerial powers, like the CEO, or the Chief Strategy Officer.
Businesses are diverse, and the differentiation of brand architecture is somewhat fuzzy. The company can apply corporate branding for a section of its offerings and endorsed branding for another section. The solution is to find out how much you need to mix things up or separate them.