The first question about Brand Architecture Strategy should be:
Why do I need it?
Usually companies start with one brand for a product and its single positioning (usually this is the corporation’s brand). However as companies expand into new products or new positionings they feel the need to create new brands. This is the moment when a company needs to develop a brand architecture strategy. This strategy will be the framework in which you’ll have to fit not only existing brands but also every future brand to come. Ideally this should be a framework set in stone as it dictates positionings, synergies and leverages between your brands.
Brand Architecture strategy usually complies with one of 3 models:
1. Corporate / Monolithic – Single Business Identity aka Branded House
This is when the company uses a single brand and visual framework across all its products. This single brand is usually the corporate brand, hence “Corporate Brand Architecture Model”.
Advantages & Disadvantages of this Model usually have to do with Brand Equity Spillover.
– Saves you money when communicating your corporate. Because, when you’re communicating one brand you’re also indirectly communcating the others;
– New brands in the framework don’t start from zero. They benefit from or inherit the positive equity of the corporate brand;
– There can also be negative equity spillover from one brand to the other. If one brand is involved in a controversy then your whole corporation is;
– All your brands must have similar positionings. Meaning, if your brand has a Premium positioning in one market, you can’t have a brand with the same identity having a Value for Market approach in another market or even the same market. They also can’t have different personalities, you can’t have a brand being kind in one product but rebellious in the other. This can be a big limitation when trying to tackle different audiences and expanding your business.
Overall, despite having different brands, it’s like you’re managing a single brand with everything good and bad about it.
In the west, Samsung is mainly known for electronics, however in Asia, Samsung is involved in all sorts of businesses and constantly uses its Corporate Brand in all of them.
⦁ Samsung Electronics
⦁ Samsung Heavy Industries
⦁ Samsung Engineering
⦁ Samsung C&T
⦁ Samsung Life Insurance
⦁ Samsung Everland
This is also a model which works well with Personal Brands since the goal is to leverage the unique personality throughout the different products. Gary Vaynerchuk has a hybrid version of this model:
Gary Vaynerchuk (GaryVee):
⦁ GaryVee Audio Experience
When should you use it ?
When all your brands will reflect a single personality and offering.
2. Brand-Based Identity aka House of Brands
Here the brands have no strings attached to their corporate brand, there is nothing that links them back to the corporate brand. This allows brands to have different personalities and offerings and act independently.
- One brand’s negatives do not affect the other. Consumers may love a brand and hate another one from the same House of Brands;
- Reaching different targets within the same market or having different brands more appropriate to each;
- Brands need to stand up on their own. All communication efforts are independent and that also means financial independence;
- Starting from zero. While a blank sheet is great for crafting a brand’s positioning, it also means that you need to communicate everything from scratch.
FMCG companies usually want to tackle many different types of consumers and see this as a great approach. Consumers might feel cheated knowing that the same company owns a Premium and a Value for Money brand in the same market and these brands have totally different equities and targets. Concrete cases are:
Houses beer brands with clearly different identities like Budweiser, Corona or Stella Artois. Each is from a different country and owns different brand territories so it doesn’t benefit from being linked to the others;
Owns several brands even in the same market. For instance, it owns Ariel, Tide and Gain, with different price and positionings;
When Should you Use It?
When trying to target opposing audiences or different targets in the same markets. You want to let each brand breathe on its own and get as close to its consumer groups as possible.
3. Endorsed – Multiple Business Identity
This Brand Architecture model is a middle ground between the two. Despite every brand being endorsed by the corporate brand, you have multiple brands with their own personalities. This is because despite the different personalities, the endorsement works as a seal of quality for trust.
This model can be a bit tricky since in a way, you’re trying to have your cake and eat it too. You can rip the benefits of the other two models, but you’re also exposed to their disadvantages. It is a hard model to pull off but can be great if done right.
- New brands benefit from the corporate brand’s values and trust;
- Negative spillover from Corporate Brand or vice-versa;
Notice that nestlé is not part of the brand’s name. But it will be present in the packaging at all times.
When Should You Use It?
If your company has been in the market for a long time and has built a reputation of quality or professionalism for itself. This is not only relevant for consumers but also suppliers. B2B businesses for instance have higher transaction value where trust is very important. While consumers like to have a brand that speaks their language, they will greatly value the trust an experienced company’s endorsement provides.
There is no right or wrong model. But rather the right and wrong one for your business. In the end you’ll need to choose which will create the most synergies in order to rip brand and financial benefits in the long term. Arguably, even more important than choosing the model, is to execute it properly through constant coherence.