While rarely in the marketing spotlight, it will always be one of the most critical areas of brand strategy. The decisions made will have a significant impact on both the internal management of a business and how they market their products and services to customers long term.
It is relatively easy to design in the early growth stages for a business but tough to change once entrenched into a broader environment (like the minds of consumers).
Compare the following.
- An old house. It has a few rooms built in one style, then a few more rooms built on later that try hard to match the original but fail because there is no clear design guide. This is followed by a further extension which completely ignores all style elements of the original house. The result is a mess.
- Next is a house designed by an architect with clear design rules – everything is uniform and works synergistically together. Even if an extension is added, as long as it respects the rules of the architect’s original design, the changes can be handled seamlessly. The building can grow while remaining coherent and functional.
My experiences in larger companies saw brand architecture as an essential element of strategic brand planning – often combined with a new product development pipeline and a group focused on the deletion of weaker products. A slow but gradual process of phasing out the duds and giving new products a chance.
Ideally, this is done in a way which will improve the profitability, consistency and clarity of the products or services being sold.
Is Small Business Different?
Small business is different, so I thought. A significantly lower number of products and services, with a smaller customer base. However, a discussion with a business owner recently brought to light the importance of getting this area of brand strategy right regardless of the size of the business.
The business in question had one core area of expertise, but the potential application stretched across numerous channels from supplying big business through to direct-to-consumer products.
They already had several brands, and with a strong desire to grow the business with even more products, were deliberating the best path forward.
Several websites were already managed along with customers being confused as to the difference between the current brands. On the management side, it had also created complexity with billing and reconciling their accounts.
It was clear that the choices related to their brand architecture made now would have a long-term impact not only on their ability to maximise the businesses opportunity in the marketplace but also their ability to resource and manage the business as it grew.
The Two Key Brand Structures
Essentially there are two fundamental structures and then numerous variations in between. The difference between the two is significant.
Brand-Led approach (House of Brands)
A company owns and manages a range of independent brands. The most crucial aspect to understand is that each has a unique identity and key associations in the marketplace – they will need to be managed based on their unique requirements. The company which owns the brands takes a back seat from a publicity perspective.
Examples often cited are several of the larger FMCG driven companies such as Unilever or Procter & Gamble. Most people would know and use many of the hundreds of brands they own but be oblivious to the company behind those brands.
Business-Led approach (Branded House)
There is an overarching business master brand which takes the front row in representing all the products and services owned by the business. Each time the products or services are presented to the public the company master brand is the focus of the brand’s marketing efforts.
An example would be Virgin. They have numerous services that stretch across a wide range of diversified industries but always leverage the identity and strength of the Virgin master brand.
There is also a diverse range of options which goes far beyond the two relatively simple examples above. It is certainly not as clear-cut as just the two opposing examples cited above (but explaining all the variations now would just lead to confusion).
Often a combination of the two exists within a business – especially if they have purchased existing brands off other companies.
Anyone who wishes to gain a greater understanding of this area of brand strategy should give most marketing textbooks a miss and just read the one following article – it sums up all the options perfectly. The brand relationship spectrum: The key to the brand architecture challenge. DA Aaker, E Joachimsthaler – California management review, 2000.
What are the Benefits of each Structure?
There is no right or wrong approach – both structures have examples of extremely successful businesses and brands – so probably more important than which type of architecture to use – is to understand the benefits and drawbacks of each approach, decide, then carefully manage it.
The Brand-Led approach allows each brand to have its unique identity and for them to be marketed in such a way that the key associations can be perfectly aligned with the product and services offered and the chosen market segments – overall there is no need to compromise on how it is presented to the marketplace.
The drawback is that the brand then needs to be able to stand on its own. It will require its own budget, a greater level of management and a lot of long-term dedication to ensure success – in a highly competitive marketplace this can be a task often beyond the reach of many smaller businesses.
The Business-Led approach allows each product or service to leverage a master brand. This approach forgoes a level of creative freedom for the ability of all the products and services to leverage a common pool of goodwill and brand assets.
- New products and services can enter the market far quicker by piggybacking on the familiarity and goodwill of the master brand. They can be slotted into the current marketing, sales and accounting system with less fuss and additional work.
- A core collection of brand assets (names, logos, brand reputation, etc.) can be developed without a divided focus.
- A great piece of media communication or a PR win will benefit all the products and services offered.
Even at the big end of town, there seems to be a trend to moving towards a business-led approach (either through subtle re-branding or the selling off of individual brands). And the reason for this is straightforward – it allows for a greater sharing of resources internally, and from a consumer perspective, it provides simplicity. – Brand Strategy Advisor.
The drawbacks can be several. The master brand may become strongly associated with a certain market category, making new launches in dissimilar areas potentially challenging. It can also make the sale of individual products or services to another business difficult – as they are so intertwined with the original business that they have little value once split away.
Six Brand Architecture Design Suggestions
As with many areas of marketing and business, there are no definitive rules, a business could take any number of paths and with focus make it work. This is the case with the design of a business’s brand architecture.
The following is not a step-by-step guide but several tips to help the design process.
1 – Take into account both the internal business and external customer perspective.
A business needs to take into account both the internal and external view. However, for smaller businesses, often, the internal perspective is more realistic to focus on first and understanding this will help ground the decision-making process.
A smaller business has a significantly lower level of resources compared to multinationals and this is something that is rarely discussed or appreciated in marketing textbooks or courses.
So, put aside the marketing ideals and before anything else undergo a realistic stock-take of the overall level of internal resources available now and in the foreseeable future. Staff, time for planning, accounting systems, financials. Often small increments are hard to achieve (even one more staff member may be beyond the businesses budget).
It’s easy to focus primarily on the customer perspective or a big idea only for the new brand to fail because there simply was never going to be adequate internal resources to support it.
However, you must still understand your customers’ perspective! Try putting yourself in the customer’s shoes – maybe even ask several for their feedback. You may go down the route of running some market research, but this may not be financially an option for some businesses.
Read forums and customer reviews for some insight within the relevant categories and what they complain about – often it will be what confuses them.
Respect the fact that there is rarely just one customer group (B2B or B2C or B2B2C) so the brand strategy may need to work across two distinct groups such as the retailer and their customer.
2 – Learn from competitors
Pretend to buy from your competitors and see whether their product or services are clear or confusing.
Try and learn about competitors marketing efforts and how much effort it has taken them to make a master brand or individual brands successful.
If the category has numerous competitors you will probably find that both approaches have been used – review which ones have been more successful or seem to work. The amount a business can learn from competitors is enormous.
3 – Design for the long-term
Understand clearly the vision for where the business will go ten years from now.
Granted businesses can branch out into unexpected areas as new opportunities arise, but as a rule of thumb, a small business will fundamentally be driven by a core set of skills (primarily built on the owner’s passions and skillsets) and will tend to stick close to these.
Build the brand architecture to cater for this vision and the most likely future scenarios.
Questions to ask could include:
- Are all the potential products and services marketed towards similar market segments or different ones?
- It the functionality and pricing for future products and services going to be similar?
- Is a whole-of-business or individual brand sale part of the long-term plan?
What is the level of investment you are prepared to place into establishing a new brand in the marketplace?
4 – Represent the brand architecture visually
Documents and spreadsheets don’t do this process justice.
So, draw it. It can then be a relatively easy process of running several scenarios.
- Start by placing all the current and potential future products/services on a large sheet along with notes on what they deliver and the ideal market segments.
- Try placing all the products and services together underneath a master brand as sub-brands (using a business-led approach).
- Then look at if they fit together in a consistent and unified way. Do they complement or clash with each other?
- Try removing the master brand and placing each product/service as a separate brand (using a brand-led approach).
- Could they stand on their own in the marketplace and how would you manage them?
- Now pull out the spreadsheet to help with validation by bringing some numbers into the decision-making process.
This is not going to be a black and white choice. Several parts of the business may be better suited handled differently.
If you are still not satisfied, then it may be worth exploring the numerous variations that lie between the brand-led and business-led approach. If this is the case, review the chart in the Brand Relationship Spectrum article mentioned above for more options.
5 – Keep it simple
This is one of the most important points that can be made. Avoid complexity and make it as simple as possible. People inherently shy complexity so don’t inflict it upon your customers – they are the last people you want to confuse. Look at what you can trash, sell or consolidate to clarify your offering.
Simplicity helps form habits as it lowers the level of cognitive effort required by a customer. Also once we have a level of familiarity with a brand then the level of cognitive effort and risk associated with purchasing from them, even if in a different category will be less than trialling a new unfamiliar brand.
Siegel+Gale each year publish the Global Brand Simplicity Index which continues to highlight that brands which offer a simple buying experience for consumers tend to outperform competitors.
Complexity also increases the burden on the business exponentially. Removing complexity will have multiple benefits for the whole business – internally and externally.
A clear product range will make it easier for customers to buy from you (increased revenue), increase volumes of a smaller set of products (lowering cost of goods and increasing margins), lower management overheads (increasing net profits) and allows more marketing dollars into each range (improving advertising reach).
6 – Give the Business-Led approach preference
This is just a recommendation, but even larger brands are heading this direction as supporting stand-alone brands requires significantly more resources. Make the most of your reputation and drive it across all the businesses activities.
Being able to spread a media budget over several products by promoting a master brand will always be more financially efficient and will take less planning and less management.
For many small businesses, online marketing forms the core of their communication efforts, and for this reason, the business-lead approach could be the best bet. Attempting to manage multiple websites and online marketing initiatives will multiply management requirements and divide the traffic.
Understand the options available, make a conscious choice based on a long-term strategy, then knuckle down and build the business and your brand assets based on the brand design decisions.
The brand relationship spectrum: The key to the brand architecture challenge. DA Aaker, E Joachimsthaler – California management review, 2000 – cmr.ucpress.edu