Brand Architecture - What is it?
Updated: Aug 30, 2022
“Clarity from Clutter”
Brand Architecture describes how a business shapes the structure and ranking of its brands. It is used to define the relationships between each sub-brand and to communicate the differences to its audiences and stakeholders.
Brand architecture is important because it is ultimately about managing perceptions. Externally, it helps customers and suppliers make sense of a complex organisation. Internally, it serves as a valuable tool for optimising marketing and operational management efficiency.
Brand Architecture Types
In most instances, brand architecture falls into one of four categories:
House of Brands
Let’s take a closer look:
1. The Branded House
The branded house strategy always includes the parent brand name beside the name of the product or service. The parent is the dominant brand that allows the company to leverage existing customer loyalty. The consumer attaches the same quality perception to the new product as to the one they already know and love. The branded house strategy features numerous products or services tied closely to the parent brand. It is typically the model most younger organisations adopt.
Samsung: Samsung Galaxy, Samsung Refrigerators, Samsung Dishwashers, etc.
Virgin: Virgin Atlantic, Virgin Holidays, Virgin Mobile, Virgin Hotels, etc.
DHL: DHL Express, DHL Global Forwarding, DHL Freight, DHL Supply Chain, etc
Apple: iPod, iPhone, MacBook, Watch, AirPods, etc.
Halo effect from the parent brand
Economies of scale, as less marketing resource is required to manage similar identities across the sub-brands to the same/similar audience.
Reputation spill-over means sub-brands have a higher chance of success when launched under the parent name.
Sub-brands tend to be accepted and adopted more quickly due to parent brand recognition.
All marketing activity simultaneously promotes the sub-brand and the parent brand.
A negative issue with one sub-brand can quickly taint the reputation of the entire portfolio.
Dilution of meaning. When a brand is stretched too broadly across multiple product/service categories, its meaning can become weakened.
Less easy to spin off as a standalone
2. The House of Brands
A house of brands architecture provides numerous familiar brands under a parent brand that customers may or may not have heard of. The parent brand is usually relevant only to the investment stakeholders. Customer loyalty is attached to single brands rather than the parent brand. You find this in brands like Unilever, with its extensive portfolio of products across numerous market segments.
Products within a house of brands architecture may reveal their parent identity on their packaging by way of a small logo or address. However, some brands choose not to disclose the relationship at all because of specific strategies around pricing, perceived quality, or target audiences.
P&G: Pampers, Ariel, Pantene, Oral B, Gillette, etc.
Mars: Snickers, Skittles, M&Ms, Uncle Bens, Dolmio, Pedigree, etc.
LVMH: Moët & Chandon, Hennessy, Christian Dior, Givenchy, TAG Heuer, Bvlgari, Tiffany, etc.
Hilton Group: Conrad, DoubleTree, Waldorf Astoria, Hilton, etc.
Mondelez: Cadbury, Oreo, Belvita, Philadelphia, Toblerone, Daim.
Freedom to develop products/services for any market
Sub-brands are easier to spin off as standalone without association with the previous parent.
If there’s a negative issue with one brand, there’s less likelihood of tainting the other brands within the portfolio.
More suitable if some of the brands are premium standard, and the company wishes to launch an economy product or vice versa
Greater flexibility to reach different particular target market segments
More costly to manage as each sub-brand requires separate marketing resources and standalone brand-building effort.
No Halo-effect from Parent Brand.
Risk of cannibalisation between brands.
Parent brand gets no real benefit from sub-brand development spending.
3. The Endorsed Brands
In an endorsed architecture, there exists a parent brand and associated sub-brands, all of which have their own specific standalone identities. The sub-brands benefit from the endorsement from the parent. It could be described as a compromise between a Branded House and a House of Brands model. ‘Endorsing’ only works effectively where the parent brand is strong and well-known.
Nestle: Nescafe, Nespresso, KitKat, Milky Bar, Carnation, etc
Ralph Lauren: Polo, Purple Label, RRL, Denim & Supply
Marriott: Courtyard, Springhill Suites, Protea Hotels, Fairfield
Sony: Playstation, Bravia, Walkman, VAIO, Handycam
Kelloggs: Bran Flakes, Nutrigrain, Coco Pops, Rice Krispies
· The endorsing brand acts as a reference for quality
· Lower risk to the other sub-brands than the Branded House strategy
· Offers more positioning options than a Branded House strategy
A negative issue with a sub-brand can end up tainting the reputation of the parent brand
Similar high costs of developing singular stand-alone brands
The mutual benefit effect between sub-brands in an endorsed architecture may be negligible.
The Hybrid Brand
As the name suggests, a Hybrid strategy is a mixture of two or more brand architectures. Some sub-brands will carry the parent name, and some won’t. It typically occurs over time when a mature firm acquires numerous existing brands through merger or acquisition, rather than being a proactive brand strategy. Deep pockets are required to sustain the Hybrid model.
Google: Google, Chrome, Google Play, Adwords, Android, YouTube, Pixel
Microsoft: Microsoft Windows, Microsoft Office, Linkedin, Skype, Xbox
Coca Cola: Coca Cola, Sprite, Fanta, Minute Maid
Volkswagen: Volkswagen, Seat, Audi, Bugatti, Skoda
Danone: Danone, Alpro, Actimel, Volvic, Evian, Activia
· Allows a company to enter different markets at different levels with new or existing brands
· Allows greater flexibility when considering ‘fit’ for acquisitions and mergers
· Allows companies to test new markets or products without risking the parent reputation
· Like a house of brands, it becomes expensive to administer
· Can be unwieldy - difficult to control and manage
Benefits of Proactive Brand Architecture
Proactive brand architecture is not merely for the largest organisations. Small companies can benefit significantly by optimally organising their multi-brand structure.
Well-conceived brand architecture can enable you to-
Build clarity from clutter
Target the wants of specific audiences more effectively
Lower marketing and administration costs
Manage sub-brands more successfully
Clarify positioning and messaging
Build customer awareness more quickly
Improve audience understanding of your products/services
Maximise the potential of future brand extensions
Build and protect brand equity
Facilitate growth and bolster stakeholder confidence.
There are no hard and fast rules when it comes to implementing a brand architecture. However, there are some simple guidelines to make it work for you:
· Keep it simple
· The parent brand is the one you most intend to build over time
· Brand architecture should primarily be structured with external audiences in mind
· No more than two levels of brand hierarchy
· The architecture system should be future-proof
· Sub-brands should be created sparingly – always use an existing brand where possible
· Before targeting new market segments, a deep understanding of those new audiences is vital.