Brand Architecture and Naming

Digital Marketing - Study Notes:

Brand architecture 

Brand names help people identify the various products in your portfolio. And brand architecture is the organizational structure of a company’s portfolio of brands, sub-brands, products, and services. 

Effective brand architecture uses an integrated framework of names, symbols, and colors to help customers cognitively organize different brands in their minds. It helps them conceptualize your brand, understand what it means to them, and make a mental association between your brand and other brands, people, services, and products.

Good brand architecture allows people to distinguish and understand the different brands across a multi-brand organization. It drives clarity in the market as consumers understand the nuances of each brand, which leads to better product differentiation as well as upselling and cross-selling of products. The most straightforward aspect of brand architecture is the name you give to each brand in your portfolio.

Brand architecture is essentially how brands are structured and arranged within an organization. It displays the hierarchy and relationships between a corporate brand, a business brand, and all products and sub-brands in an organization. 

Benefits

Brand architecture defines and establishes the boundaries between the different brands within an organization. This architecture or structure should naturally follow the general marketing strategy of the organization.

A well-defined branding strategy and brand architecture offer the following benefits:
     It provides clear understanding of the brand identity at every level in the organization. 
     It provides guidance when using brand extensions, product lines, and new brands.
     It brings consistency to brand communication and aesthetics.
     It results in clearer brand awareness through consistency and by setting boundaries. 

Architecture strategies

There are three general brand architecture strategies:
1.    House of Brands
2.    Branded House
3.    Hybrid Approach

1: House of Brands 

With a House of Brands architecture strategy, there’s a clear separation between the mother brand and each individual sub-brand in a company’s portfolio. As a result, each sub-brand can have a distinct audience and brand identity that isn’t tied to the mother brand. Organizations who use this strategy include Procter & Gamble, Unilever, and Yum! Brands. 

When you adopt a House of Brands approach, consumers can look at product features and benefits and consider their relationship with the individual brand when making purchase decisions. 

This strategy is most suitable for organizations that have a very diversified brand portfolio. It can:

•      Allow each brand to grow and develop at its own pace and style. 
•      Help you target different segments with different offerings. 
•      Help you develop new products without worrying about the spill-over effects for other brands. 
•      Diversify risk. For example, if one brand is hit with a negative PR issue, it won’t have spillover effects on any other brands in the portfolio.

The House of Brands strategy builds brand equity on an individual rather than on a group level, so building equity becomes costlier and more time-consuming. In addition, brand management becomes a more complex task under such a strategy. Very clear guidelines are required to maintain consistency.  

2: Branded House

The Branded House architecture strategy combines several brands under a single umbrella brand. It leverages the corporate or mother brand for its awareness and consumer loyalty and uses it to boost each individual brand under its umbrella. 

This strategy is best suited to corporations who have a very strong corporate brand, or who are interested in building one. Apple and BMW are two of the companies who use a Branded House strategy. 

With this strategy, consumers consider their experience and relationship with the mother brand and their loyalty toward it when choosing between different products and making purchase decisions. It is a suitable strategy for organizations who have focused their products around a category (such as electronics or appliances) or a classification (like technology or mobility).

The Branded House strategy can help you:

•      Build brand equity effectively, since experience and communication with each sub-brand contributes to the equity of the mother brand. 
•      Stay top of mind in targeted segments. 
•      Extend product lines more easily, since consumers are familiar with the brand and are more likely to try out new offerings.
•      Convey brand values and identity consistently across all products. 

The main problem with the Branded House strategy is that a single negative issue with the mother brand can affect the entire portfolio. 

Also, when corporations develop and grow, it can affect their brand down the line. Facebook was a Branded House initially, and the company reaped the benefits of this approach at first. As the company grew and acquired more products and companies, like Instagram and WhatsApp, this approach became ineffective. A negative issue with the Facebook platform could cause problems for Instagram, resulting in decreased ad revenue. To avoid this problem, the company rebranded to Meta. Google had the same issue when the company became more than a search engine and had to rebrand to Alphabet. 

3: Hybrid Approach

The Hybrid architecture strategy can take many forms. It’s primarily focused on the mother brand endorsing products and individual sub-brands, either permanently or temporarily. Nestle’s KitKat is a perfect example of this approach. The packaging on this product displays the KitKat branding prominently and the Nestle logo in a smaller font. In this case, consumers who are not aware of KitKat but have prior experience with Nestle will be encouraged to try the brand. So, with a Hybrid strategy, the consumer purchase decision is based on experiences and relationships with both the mother and the endorsed brand. 

The Hybrid strategy is most suitable for organizations whose clear mother brand values can boost individual brands. Nestle is well known within the chocolate, coffee, and water sectors, so it can easily boost products within these markets. 

It’s also a useful strategy for companies that are involved in acquisitions. It can signal to consumers that a brand is now under a new mother brand that stands for a new set of values.

The Hybrid architecture strategy can:

•      Lend the mother brand’s equity to individual sub-brands via association.  
•      Help to diversify risk (if using a temporary endorsement, the mother brand will be removed once the individual brand starts performing well).

A drawback of the Hybrid strategy is that it confines the company to certain markets. If the association between the mother brand and the endorsed brand isn’t natural or fitting, consumers won’t be affected by the endorsement. It can also be costly, as the individual brands still need to be managed separately.

Brand names

It’s important to consider the names you give your brands carefully. It’s usually a good idea to choose names that are memorable, identifiable with the mother brand, and meaningful to the end consumer.

There are three main types of brand-naming models you can use when naming a brand:

•      Extension branding: This involves creating an explicit association between a parent brand and its sub-brands. For example: Virgin Atlantic, Google Maps.
•      Association branding: This involves creating a subtle link between a parent brand and the new brand. For example: McCafé, G-Suite.
•      Individual branding: This involves creating a standalone brand name for a product or business that is nothing like the parent brand. For example: Dove, Snickers.