Brand Architecture and Brand Portfolio… In the professional and academic field that studies the process of managing the created trademark and the management of companies, these two terms often occur. What do they mean? Why build a brand architecture and does a company need a whole portfolio of brands?
Definition of concept
Start with an analysis of the definition. The concept contains the characteristics of the organizing structure, in which the place and role of each brand is predetermined. Building certain relationships between brands is very important in order to build a competent company, allocating resources to important areas of activity and not wasting on less promising ones.
Thus, the rights and obligations of each participant in the workflow are determined, they are assigned a special role in the overall activities of the company, as well as the appropriate level of responsibility. Each trademark is analyzed and created as a separate tool for conducting an advertising campaign, creating a general image of the parent brand, launching a newproduct lines.
The entire company is involved in the work on each of these projects: there are parent brands that support subbrands. Brand architecture is a tool for the functioning of a number of companies as a single system for the benefit of the entire structure. Such a construction of the connection of each company into a single structure makes it possible to avoid "trade cannibalism" and conduct effective work to achieve the goals of the entire company.
Why do we need such structuring
Planning the workflow and possible risks of the company is very important for the proper organization of effective activities in any industry. That is why there are a number of useful tips for organizing the workflow and life cycle of the company. In management and marketing, the main advantages of a company using brand architecture are highlighted:
- With successful work, a clear hierarchy and dedicated roles for each component of the company, there is practically no competition between the parties, and, accordingly, all trademarks from the trademark portfolio work for the benefit of a single goal. Thanks to this, the most important effect is achieved: reducing the risks of loss of profit and the possibility of increasing internal competition in the company, it is guaranteed that one brand cannot be absorbed by another without the decision of the company's managers about the inefficiency of one of the components of the brand portfolio.
- The distribution of the roles and importance of trademarks in the brand portfolio helps to determine the priority distribution of financial resources for their development and work. Creating a brand architecture involves a primary analysis of such roles and the strategic importance of the components of the entire system, which will make it possible to draw up a strategy and plan for the material development of the entire company.
- Increased synergies and productivity throughout the organization. The interaction of brands in architecture, according to their graphical embodiment, makes it possible to optimize the roles and responsibilities of each company - a cell of an organization that acts in the interests of a company that is a single whole in achieving certain goals.
- Due to a clearly built hierarchy and the blurring of the meaning of trademarks in the eyes of the consumer, the company's capital, its value and significance in the market grow. The market share of each brand changes inversely with the change in the number of extensions of the brand and its family.
All these factors play an important role in the planning and management of the company's work. Thanks to the functions performed by the right architecture and portfolio of brands, the introduction of which is vital for the company, its emergence in the leading positions in the market is given with less risk and minimal financial loss.
Where to start
This concept applies to serious companies that think ahead and strive to develop the organization into the future. A striking example of brand architecture can be any organization that has been on the market for a long time and has included other companies on the rightssupporting trademarks without diminishing their value in the workflow.
After a new organization is created, a brand and communication strategy is devised for it from the start of the brand's entry into the market to its inclusion in the overall marketing processes. This is followed by the implementation of a specific product promotion program, as well as the achievement of consumer loy alty. Further, you should not act rashly, because for each individual organization there is a unique path along which it will move in its development in the market. Every company focused on long-term development should have its own brand architecture. This will open up opportunities to increase the business performance and profitability of the company through the possibility of expansion and maintaining its internal integrity.
Historical relationships
It is important to define the relationships between the constituents of a brand portfolio in order to create an effective brand architecture. This is necessary in order to understand the possibilities of further work with a portfolio of brands as a whole.
Through the history of branding, two fundamentally different approaches to the strategy of working on trademarks have been formed: the House of Brands (House of Brands), which will later be called the Western approach, as well as the Branded House (Branded House), later called the Asian approach to strategizing.
House of Brands does not advertise the parent manufacturing company, and a separate trademark is created for each product line created. The Asian approach defined its brand forrecognition of each product created by the corporation, which led to the recognition of the parent manufacturing company. The trade mark coincided in all manufactured products. Brand architecture design has changed all the time in proportion to the study of their types and features of functioning. Initially, brand architecture was studied in two strategic approaches, but the division has continued over the course of history.
Modern division
Types of brand architecture depend on the roles that make up the brand portfolio. That is, the trademarks that are part of your organization, and make up the character of the architecture and determine its success. Here are the types of brands included in the portfolio:
- Mega brand or strategic. The name itself speaks of the importance that the company's key trademark has for its existence and functioning. It is a branded product with which the company is not only associated, but also depends on the organization's main sales and profits.
- "Silver Bullet". This trademark is developed not only by the team that launches it, but also by the employees of the parent brand. This is due to the fact that this sub-brand gives impetus to the development of the image and reputation of the entire company. The brand architecture examples describe the work of the most successful brands that have placed significant emphasis on the "silver bullet" when launching a new brand.
- The launching brand is a blueprint for the future positioning of the firm, with all of its features worth drawing attention toconsumer.
- "Cash Cow" is a trademark focused on consumer loy alty. It does not invest a lot of money, but other resources are invested that will allow it to be shown on the positive side to form the basis of the company's work - loyal customers.
Trick in the hole
With a clear understanding of the components of the company's trademarks and their importance in the development of your business, you will always have an advantage: you will know on the basis of which brands to prioritize and invest material funds for the development of new lines of production, as well as how create a he althy brand architecture. Now it all depends on how accurately and correctly you analyze and evaluate all the trademarks included in your brand portfolio: it is necessary to audit each brand as objectively as possible in order to determine priorities and development prospects.
Stages of the audit of the components of the company
To conduct a competent analysis of all the brands that make up your brand portfolio, and to reasonably assess their capabilities and performance, you should adhere to this plan:
- Perform a clear assessment of each component of your brand portfolio. An audit of one of the company's trademarks is impossible without exactly the same analysis and its other components. A similar characteristic of each brand consists of external and internal audits. It is important to collect all the necessary informationby all possible methods (qualitative and quantitative) and request it from different sources (primary and secondary).
- Next, we determine the most promising development opportunities for the brand, taking into account its positive qualities and weaknesses. For this, the method of conducting a SWOT analysis is used. After determining its characteristics, we form the image of the ideal brand that you would like to see it. After that, we determine the promising directions for the development of the company, based on its competitive advantages, working with the strategic marketing matrices of BCG, McKinsety - GE, Ansoff.
- Assign the roles of brands in the marketplace and in your brand portfolio.
Self-design
After this audit, you can start planning the relationship you will establish between your organization's trademarks. It is important to remember the different roles of the main brand and sub-brands.
It is also worth doing it measuredly, dividing all activities into five main stages:
- Identifying the value of each of the brands in your portfolio.
- Clarification of the roles performed by each of them officially and in practice.
- Clarification of commodity-market context and image of each of them.
- Developing the desired structure of your brand portfolio and the relationship of its components.
- Create graphic solutions for your portfolio, which will make it possible to visually identify the connections and functions of each brand and sub-brand of the company.
How it works
Identifying the meaning of each brand may seem like a simple process, but the experience of Aaker and Joachimsthaler, two legendary researchers, shows that the process can sometimes be full of pitfalls. In their research, they proved using the examples of well-known companies that some brands may actually be dormant, while others may have vaguely expressed characteristics. Be careful and careful: it is at this stage that you will have to list all the brands in your portfolio and add a few new ones if necessary, to enhance certain qualities of your portfolio.
Here you will find an easier task: determine how many brands and with what features you need. It is necessary to decide which role will be strategic, which will link the components of the brand portfolio, and who will take the place of the no less important "silver bullet" or "cash cow".
Then you should analyze the opinions of potential consumers: what brand they trust the most, and what would happen if one brand teamed up with a sub-brand. It is worth considering the benefits of trademarks that they will receive when combining or creating a fundamentally new brand.
The brand portfolio structure determines the way brands are grouped while clarifying the logic of their relationship with each other. You can divide different brands into semantic groups. For hotels, target topics for guests work:
- goal - business or leisure;
- demand for the product - for a long timestaying or for the weekend;
- product quality - luxury or economy.
Very important is the graphical representation of brand architecture and the visual treatment of each of the brands in your portfolio. Development of logos and packaging, advertising, design, etc. All this is based on the relationship between trademarks and joint support. Look at them at the same time and ask yourself if they communicate a common message in a coherent way and if they all work to maintain the structure of your brand portfolio.
Examples of the Nestle company hierarchy
Brand architecture is a brand portfolio of 8500 trademarks. Its success depends on many factors, but one of the key success features is that the company is organized according to the role and geographic status of each of the brands that make up its architecture. These connections are built on the brand architecture matrix of Brandstorm (a company that pioneered a serious approach to an expanded brand portfolio).
Nestlé is a corporate brand, it functions as a support brand. That is, the name of this brand is shown on the packaging of each product to guarantee the quality and loy alty of potential buyers.
Nestlé's brand architecture has six strategic trademarks, each managing dozens of sub-brands. Under the leadership of this company, bars and dairy products, chocolate andchildren food. Each product is guaranteed to be of the highest quality.
The very center of the Nestle universe is chocolate and condensed milk. These are the real symbols of the brand, which are most often associated with the company by most consumers and potential buyers.
