The right brand architecture adds value to any business

The 2007 MadTV parody of an Apple product launch unveiled the newest iTechnology that would change the world: The iRack. The not-so-subtle poke at President George Bush for his Iraq policy still feels oddly relevant today even though it is eight years old. Our news feeds are still full of stories about Middle East turmoil. And most of us still believe Apple has the power to enter and dominate any category it chooses. After all, in the “Internet of Things” age, can the iMicrowave be very far away?

Apple does not have this reputation by accident. It established the anti-establishment corporate brand early with the infamous 1984 Super Bowl commercial introducing the Macintosh computer and has stayed true to the brand since. Today, Apple brand equity can be used to enter, disrupt and dominate a wide variety of product categories – even consumer appliances.

The company gives us a prime example of a brand architecture that leverages the corporate brand to create value in all of its product and service categories. But, Procter and Gamble does the complete opposite – creating independent and even competitive product brands – and they are just as successful. Each of those companies chose a brand architecture that best fits their business strategy and they remain strongly committed to it.

While it might be hard for most companies to relate to large brands like Apple and P&G, having a brand architecture strategy can be just as important to smaller organizations. I’ve seen plenty of early stage companies build their brand identity around the product name, only to encounter a problem when they want to add the second product under a corporate brand that nobody knows or understands. The fact is all companies need to factor architecture into the brand and business strategies as they evolve. Here is a starting point for knowing what it is and when it is useful.

What are the different types of brand architecture?

By definition, brand architecture is a logical system of organizing and naming brands, products and services in a way that helps audiences form a set of expectations about a particular offering and the brand as a whole. It can be as simple as aligning everything behind a single, corporate brand, or as complex as blending the corporate parent and business units, solutions and product lines, and underlying technologies and processes in a web of brands targeting various markets.

There are many different flavors of brand architecture, most of which are based on the structure put forth by David Aaker in his book Brand Leadership. In the book, Aaker proposed a “brand relationship spectrum” consisting of four main categories and nine subcategories. The flavor of brand architecture that I’ve found to be the most useful for small to mid-sized organizations focuses on the main categories, uses slightly different terminology and adds a hybrid category, but it is essentially the same model as Aaker’s spectrum. Call it Rocky Road to Aaker’s Chocolate.

At the top of the model is the corporate brand. This form of a “master brand” is experiencing a resurgence of late because in the age of transparency the purpose of a company matters to employees, customers, media and investors (see the Lippincott blog post on this topic). So it is becoming more important than ever to distinguish your company, not just what it sells.

From the corporate brand position, we descend into a spectrum for classifying the offerings of a company. At one end of the spectrum is the “Branded House” model where the corporate brand plays a strong role and the sub-brands are directly connected to it. At the other end is the “House of Brands” where the corporate brand plays a background role and the sub-brands become more important.

Across the spectrum, there are four primary categories, each with a distinct purpose:

  • Monolithic – A single master brand is in the dominant role across multiple offerings. The sub-brands are descriptive of business units, products or services and are solely focused on building the value of the master brand. Example: The Goldman Sachs portfolio of services use descriptive names and are not individually branded.

  • Umbrella – The master brand is the primary driver, but it is complemented by sub-brands that extend the company into new categories. Both the master and sub-brands have a significant effect on the other. Example: Microsoft Office extends the Microsoft brand into the desktop productivity market.

  • Endorsed – Sub-brands drive the business and are “endorsed” by the master brand which plays a lesser role. The master brand lends credibility to the sub-brands to grow market share. Example: Marriot sub-branded chains (e.g.…Courtyard) are uniquely positioned for a range of traveler profiles.

  • Independent – The sub-brands are independent of the master brand which is mostly hidden from view. The brands have very specific market niches and buyer personas that may not be compatible with other brands. Example: Procter and Gamble is the classic case study because they market competitive products side-by-side in the store.

The larger a business gets, the more likely it is the business strategy may call for a blend of architectural types – or a Hybrid. We all know Disney as a provider of wholesome family entertainment, so producing “R” rated films would be in direct conflict with the corporate brand. Instead, the company uses Touchstone, Mirimax and other independent brands for that line of business to maintain separation from the Disney brand.

Which architecture is the best?

The most efficient architecture is a master corporate brand with a monolithic structure for all of its offerings. This approach allows the organization to focus its investment on a single brand and leverage it into new products, services, categories, geographies and other opportunities.

However, if the offerings have different brand attributes than the master brand, the organization needs an architecture that gives the sub-brands some degree of separation. The four operating company sub-brands under the FedEx umbrella reinforce the attributes of the master brand, but each has its own brand associations, customer segments, and value propositions, so they are slightly differentiated.

Marriot is a good example of how the portfolio of sub-brands can be even further separated from the master brand. Its sub-brands span a wide range of hospitality categories – from the luxury of The Ritz Carlton to the economy of Moxy – and have different relationships with the master brand depending on the target segment and personality of the brand.

FedEx and Marriott have deliberately constructed brand architectures that maximize the business return-on-investment. If FedEx added a “FedEx Sky” service for drone package delivery, it would have instant credibility with existing and new customers. And if Marriott purchased a chain of hotels in China catering to business travelers and their families, you would have confidence in making a reservation for your next trip.

So, the answer is the best architecture is the one that fits your business strategy best.

When should a company define its brand architecture strategy?

It is never too early in the company lifecycle to consider how the brand architecture will need to evolve with the business. While it is hard to know what path a company will take on the way to maturity, many successful organizations will encounter at least one of the following situations that impacts the brand:

  • Organic Growth – The business creates divisions, business units, product lines, services and other elements that add complexity.

  • Mergers and Acquisitions – The organization grows its capabilities through acquisitions, or has been acquired itself.

  • Market Segmentation – The brand needs deeper, broader relationships within a market or is looking to diversify into niche markets that require very specific value propositions.

  • Global Expansion – The business is extending into other geographies where the culture, market and audience characteristics are different.

  • Market Confusion – Years of change have created confusion for employees and customers who are no longer clear about the purpose of the business.

A well-planned brand architecture puts these changes in context to ensure customers continue to understand the value of doing business with the company. It also creates a roadmap for managing change that is more efficient, less costly, and maximizes return for the business.

“A coherent brand architecture can lead to impact, clarity, synergy, and leverage rather than market weakness, confusion, waste, and missed opportunities,” wrote Aaker in the California Management Review. The right architecture ensures everything your business does builds the value of your brand assets – and therefore your company.