In any significant construction project like a hospital, office building or condominium the starting point is generally its architecture which is the art and science of how the building will be designed, the method and materials used to build and other specific physical attributes. In building a brand the last thing most company’s think about is its brand architecture beyond the single product or service they are positioning into the marketplace. Brand architecture only becomes important when the corporation (master brand) branches out into new products or services or acquires existing brands. Why design architecture with 10 rooms when at the beginning all you need is one room to fit one brand.
Brand architecture is the least exciting part of building a formidable brand. First, you need more than one brand to start thinking about brand architecture. But if you plan to build a business beyond one brand the brand architecture can be a game changer. Don’t end-up scrambling like Apple did when they moved from the Mac brand to all the “i” branded products to finally the Apple TV and Apple Watch.
In 1996, David Aaker, a prolific writer on the subject of brand strategy, developed the well-known three types of brand architecture approaches: branded house, house of brands, and endorsed brands. While there are other terminologies such as umbrella brand, monolithic, master brand, free standing brands, and hybrid brands, the overall concepts are the same. In reality, most corporations don’t have a clearly defined brand architecture strategy in place until it’s too late or they did the brand strategy after the fact. There are many reasons why many brand houses aren’t perfect such as business consolidations of acquisitions, mergers and reorganizations, brand extensions and new business and market opportunities, spin–offs and new customer acquisitions. In most cases, the decisions are based on the business opportunities and not on the customer needs. From the customer’s point of view most of these decisions make no sense, if not very confusing.
Branded House – All in One
A good example of a branded house approached would be Virgin and BMW. The BMW brand is focused on the monolithic brand – “ultimate driving machine,” regardless of model. Having a master brand is good and bad. Good because a brand has a unified image based on the brand essences that is consistent and can be effectively amplified to all customers. Bad because the brand message must be so high-level that it doesn’t reflect the personnel experience that the consumer is having with a unique sub brand. A Virgin Mobile experience isn’t the same experience as the Virgin Airlines experience or Virgin Money banking experience. Renée Richardson Gosline, an assistant professor of marketing at MIT Sloan School of Management, cautions that “…consumers seek distinction, even within the brand. So, along with the egalitarian message that all BMWs are ‘ultimate driving machines,’ BMW has to make owners of different models each feel special as well, by building relationships with the owners of each model.”
Master brands that have a strong brand image in a specific product category like personal care products can leverage the overall brand essences into additional related categories, where the variant/functionality itself becomes a sub-brand. L’Oréal Group is the world’s largest cosmetics company that started with a hair dye formula called Auréale in 1909. Today, L’Oréal has over 500 brands covering many categories from hair color, hair styling, body and skin care, cleansers, makeup and fragrances.
The world isn’t as big and confusing as it once was. Digital technology has eliminated geography and cultural differences, and expanded choices based on: quality, accessibility and price. Customers are becoming more enlightened; more demanding and more concerned with whom they do business with. As a result, corporations need to become more transparent and focus on the customer’s journey with their brands. Privacy legislation, antispam legislation and big data is forcing corporations (master brands) to rethink their brand architecture to leverage their customer base by including more differentiations and tailored relationships. There is also the consideration of terms of management and administration costs of multiple logos, websites, brochures and brand stories to communicate. There is a fine balance between efficiency and customer-centricity.
House of Brands – Each Brand is Unique
Procter & Gamble is an excellent example of a house of brands, which has over 180 product brands independent of each other, targeting different customers across multiple product categories from detergent to toothpaste. P&G as an identity brings little to the table as it concerns branding. Nobody understanding the P&G brand and really doesn’t care. This is the most accommodating framework with no brand reliant on each another or any synergy between brands. If a brand fails or succeeds the other brands aren’t affected. The cost of managing a complex portfolio of brands must be overwhelming and each brand must struggle to get any attention from the parent company. A.G. Lafley, president and CEO of P&G, said the future would be “a much simpler, much less complex company of leading brands that’s easier to manage and operate.” I have trouble keeping track of my three kids; I can’t imagine keeping track of 180 brands!
Endorsed Brands – In the Middle
In the middle of the brand architecture is the endorsed brand model where the parent brand has a halo effect by endorsing the sub brands. There are numerous examples of this strategy: Think Courtyard By Marriott, Polo by Ralph Lauren, Microsoft Windows, Honda Motor Company, Sony and the list goes on. This framework allows the parent brand to have a vision that can evolve over time and take advantage of new trends or technology.
It is fair to say that brand architecture strategy has been driven by past management decisions of the brand portfolio and specific brand assets. It is also based on the nature of relationships between the brands as it concerns resources, investments and marketing positioning. Rajagopal and Romula Sanchez in their white paper suggest that “Brand architecture is not a static framework.” As marketplaces and competitive environments change, brand dynamics transforms and brand life cycles evolve. Master brands must continually revaluate the brand portfolios and the architecture requirements. As master brands respond and react to the many challenges and opportunities they create “brand baggage” where shifts of resources move from one brand to another creating strong and weak brands. An inflexible architectural structure can also create a barrier to innovate and limit the ability to move into new products or services.
It is fair to say that a great deal of brands reside in a mixture of all of the above. Coca-Cola Company is best known for its beverage with the same name that has a line of other variant Coca-Cola brands. But it also has unrelated brands such as Sprite, Fanta and Minute Maid each with a unique look and feel. The Gap Company, which is made up of Gap, Old Navy, Banana Republic, Athleta and INTERMIX , takes a different approach to being a parent company. Gap leverages their multiple brands to offer customers many choices under one umbrella to reach a variety of customers. Their online strategy is to make sure customers goes to a sister brand before they go to any competitor’s websites.
The ultimate master brand goal is to satisfy shareholders by continually growing customers and generating more sales and profits. That is a very self-servicing and inward approach to brand architecture.
The perfect world would be to build a brand architecture starting from a customer-oriented brand vision where one-size-fits-all doesn’t work. Companies need to carefully understand their customer’s journey and provide products and services along the way, may it be going down the food isle shopping for breakfast, lunch and dinner or starting a journey from a wedding, to a new home, to the first child, to acquiring a university degree.
Brand Architecture is a Balancing Act
A single brand model into today’s fast paced and changing world can be a liability. The ability for a brand to speak to and service a multitude of customers is becoming almost impossible. A master brand positioning must be so basic it would mean nothing to most target groups. Therefore, many brands are tweaking their strategy and brand architecture to allow products and services within the brand structure the flexibility to speak directly to its customers in a meaningful way. But it is a balancing act. Too many brands will create confusion and loss of meaning.
The future is about utilizing big data and building relationships between brands and customers throughout their life cycle. Helping them navigate the human journey with solutions from one phase to the next, and from one brand to the next. P&G showcased a number of brands in its “Thank you Mom” Olympic campaign either to save money or to start bringing their brands together. Starwood Preferred Guest (SPG) reward program (of which I am a happy member) brings together all of their nine hotel properties under one umbrella. From a customer’s point of view this provides me with more options and choices. And the confidence that my experience will be similar from hotel chain to hotel chain.
Brand architecture can be complex and driven by business needs but if you can focus on the customer’s journey and provide them solutions along the way you can be a formidable master brand and sub brands, all together.