The importance of having a strategic vision and a clearly defined management process for brand architecture has increased significantly over the years. As brand portfolios expand and become more complex, building and managing a coherent brand architecture framework has become increasingly challenging for organisations. Regional and global expansion, mergers and acquisitions, diversification, product and line extensions are all factors that influence brand portfolios, which in turn have a direct impact on how effective brand architecture can be designed and implemented.
Before going further, it is important to step back and understand what brand architecture actually means. There are numerous definitions that have emerged over the years but all of them have a common thread in terms of addressing the principal tenet of brand architecture. The Cambridge Dictionary defines it as a “way in which a company organises and names its products in order to show consumers the differences and similarities between them”. In short, brand architecture is a tool or framework for organising brands into groups or hierarchical levels, which are interlinked to display the relationships that exist between them. It acts as an input for brand strategy and is also an outcome of brand strategy implementation.
Brand architecture as a framework is closely interrelated with other key brand strategy elements like brand portfolio optimisation, brand equity, brand positioning / re-positioning and brand value. All these elements define the relationships that exist between groups of brands that are placed at different hierarchical levels in the brand architecture.
The domain of brand architecture has rapidly evolved in recent years. Significant amount of research has been conducted and lots of strategic thinking has shaped the domain knowledge. Brand architecture tools and frameworks have been developed and important concepts like the evolutionary nature of brand architecture have been created. Additionally, there have been other important pieces of research and academic contribution to the brand architecture domain.
Understanding of brand architecture as a strategic framework for managing brands in their portfolio is not a new concept for global organisations. Firms like Procter & Gamble, Shell, Nestle, Unilever and Kellogg’s have had established brand architecture frameworks for a long time. Because of the evolving nature of their businesses, brand architecture is not a static concept in these organisations, but a continuously evolving one. The concept of global power brands is a defining characteristic of these organisations and a well-defined architecture allows them to leverage these power brands in different countries. In recent years, more organisations are understanding and implementing superior brand management practices internally. This has resulted in an increasing focus towards brand architecture and how to implement a framework in the organisation.
It is important to understand the principal components and core tenets of a successful brand architecture framework. An important factor to keep in mind is that “simplicity” is the key for coherent brand architecture. This is easier said than done in today’s world of global portfolios consisting of 1000+ brands, numerous sub-brands, hundreds of local brands and a continuous stream of product and line extensions.
As mentioned before, “simplicity” and “comprehensiveness” are two key characteristics of good brand architecture. Many global organisations and emerging regional powerhouses have implemented brand architecture models that are strong examples of efficient and logical brand management thinking.
Some examples that are often quoted for coherent brand architecture models include those of The Virgin Group (“branded house” framework) and Procter & Gamble (“house of brands” framework). The Kellogg’s Company consistently follows an endorsed brand strategy throughout its architecture. Numerous global organisations have developed strong brand architecture frameworks that are characterised by a single “Masterbrand”. Some relevant examples include IBM, FedEx and General Electric (GE).
Brand architecture audit: An audit is the starting point for developing and establishing a brand architecture framework. It establishes the current state of the organisation’s brand architecture. This is crucial to understand and assess the existing relationships between the different brands in the portfolio and how they layer up to a set of master product names and the corporate brand name. The audit acts as the base architecture, which then needs to be adapted, redesigned and improved. Conducting an audit before any form of brand architecture development work is crucial if the organisation has gone through a long period of visible absence of any form of brand portfolio management work, a series of acquisitions, has had business units merged, launched new brands, has seen significant levels of product or line extensions or has merged with another organisation as a whole.
The audit has to be performed with two key objectives in mind:
The audit is akin to a due diligence exercise to measure how far or close the current architecture in terms of the organisation’s growth strategy and how it wants to position and sell its brands in the market.
Audits can take multiple forms depending on the level of accuracy and comprehensiveness desired. The audit can be done at an individual brand level to assess the fit of each brand in the architecture in terms of relationships with the product master brand or corporate brand. Essentially audits try to measure mismatches or divergent positioning of individual brands from what was originally intended. These identify positioning conflicts or sub-standard brand management practices that led to the deviations. Additionally, audits also identify whether the market structure in which the brand operates has changed, which implies that the brand’s position in the architecture needs to be changed.
Another form of audit, which should generally be conducted along with individual brand audits, is a strategic one. This examines the existing brand architecture in its entirety and conducts a stress test to understand whether the architecture still holds in light of recent market and category changes. More importantly, the strategic audit tries to measure the applicability of the architecture in light of how the organisation itself has evolved due to a merger or a series of acquisitions.
Brand portfolio evaluation: After the audit has ascertained the current state of the architecture, some key decisions need to be taken for future positioning of brands for consumers and the internal management principles. A comprehensive brand portfolio evaluation is the second importance stage. This exercise provides answers to many critical questions, some of which can be:
Brand portfolio evaluation, in many instances, also involves the use of sophisticated analytical techniques to measure preference levels for different brands in competitive markets. Advanced conjoint and preference measurement techniques are used to measure and simulate market conditions and also the potential impact of launching new brands, pack sizes, extensions etc.
The outcome of this second stage should be a rationalised set of brands in the portfolio, which have been identified as drivers of growth for the organisation, have been launched and developed with a clear positioning, have a strong relationship with master brands and the corporate brand and are strategic assets for the organisation. Portfolio evaluation, in many instances, also involves brand valuation. The valuation domain is an evolving one and there are multiple methodologies available, each with its own pros and cons. Analytical preference measurement exercises are substantiated by conducting valuation to arrive at a commercial driven answer for killing or keeping brands in the portfolio.
Brand architecture framework decision: Before the final architecture is implemented, multiple frameworks need to be developed, examined and reviewed. Frameworks should always do justice to the current brand relationships but should also be futuristic in its design. The key elements that influence the design of frameworks include:
In many instances, especially for global organisations, frameworks may need to be designed at a global and local level. The global framework can cascade down to a level where the global brands have endorsement relationships with local brands. If local portfolios are sizeable and have been allowed to independently develop and grow, then local level architectures are required. They should also have links to the global architecture but should not be completely governed by it.
It is also not necessary, and in many instances not possible, for an organisation to have a unified brand architecture for the whole portfolio. Hybrid architectures are also common and are driven by expanding brand portfolios, strong local brands and power brand repertoires. Organisations like Nestle and Unilever operate with country-centric strategies, which in turn impacts brand architecture. Unilever, primarily, has numerous local brands that are market leaders, which operate without any form of endorsement. Nestle has a hybrid strategy, where some of its power brands are endorsed with the Nestle corporate brand name, and many local brands operate without any form of endorsement.
Brand naming guidelines: Sometimes the fourth stage can be conducted in conjunction with the third stage to eliminate different architecture options using brand naming as a stress-testing tool. If architecture framework cannot guide brand naming, then it cannot be implemented.
Brand naming guidelines are developed to act as a set of principles for new product naming. Depending on the final brand architecture, naming guidelines should be able to help in naming new products by following the principles of the architecture. For example, an organisation that follows a principle of master brand endorsement for power brands can use the naming guidelines to start endorsing a new product that has the potential to become a power brand. Established naming guidelines can be of strategic help when an organisation acquires brands. If a few of the acquired brands are market leaders or have dominant market shares, then the organisation can use the naming guidelines in conjunction with the brand architecture framework to decide what form of endorsement, co-branding, independent branding etc. is required.
Implementation and dissemination: The fifth, and often the most overlooked stage, is the implementation of the final brand architecture, and its dissemination throughout the organisation. It is important to keep in mind the fact that the architecture was developed and designed by people and is meant for people. It is not a fancy, elusive framework that everyone has heard about but no one knows about.
Dissemination is key for the successful implementation of the brand architecture framework in the organisation’s brand and portfolio strategy. A critical thing to remember is that any form of brand architecture should be developed from consumers’ point of view and not the internal marketers’. Architectures should not have any form of ambiguity in terms of the position and relationships of the brand. Coming back to dissemination, it is key that the right modes and forms of dissemination are selected. Brand books can be developed that can visually depict the architecture, individual training sessions and collaborative workshops can be designed and conducted, brand strategy / management / marketing and sales teams can be regularly educated on the architecture, guidelines for using the architecture to develop new brands can be established etc.
The concept of having in place coherent brand architecture is increasingly becoming a continuous practice, rather than a point in time occurrence. Annual brand audits and brand architecture reviews are increasingly becoming common practice in global organisations. These are considered crucial strategic checks to assess whether ever expanding brand portfolios are still making rational sense in brand architecture and whether brand management practices are showing the required results or not.
In global organisations with huge portfolio of brands, many of which are global or regional in terms of market coverage, the practice of putting an individual or a group in the role of brand custodians is increasingly becoming common. These individuals or groups are responsible for ensuring consistency of brand positioning across international markets, which is in sync with the brand architecture. These custodians are increasingly playing a significant role in standardising brand management, positioning and equity development for global brands across markets.
The importance of having a strategic vision and a clearly defined development and management process for brand architecture has increased significantly over the years. As brand portfolios expand and become more complex, implementation of a coherent brand architecture framework has become increasingly challenging for organisations. Factors like regional and global expansion, mergers and acquisitions, diversification, rapid innovation processes and increasing frequency of product and line extensions have influenced brand portfolios in organisations, which in turn have had a direct impact on the complexity and management of brand architecture frameworks.
In light of the above factors, organisational strategy should focus on creating a sustainable, coherent, clearly defined and actionable brand architecture for its portfolio of brands. It is crucial that brand architecture serves as a guidance map and navigational tool for brand custodians, enabling them to implement development and expansion strategies for the portfolio. A strong link between the architecture and strategy ensures medium- and long-term growth for the organisation.
Effective brand architectures are strategic in nature and are developed with a futuristic, evolving perspective. It is important that organisations treat the brand architecture development process as a core element of the strategic toolkit. This in turn will ensure that the organisation manages and positions its brand portfolio in the market with a clearly defined aim of winning and consolidating market share.
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