Have you ever wondered how brands like Apple, Starbucks, and Netflix manage to achieve worldwide recognition and success? The secret lies in their global strategy.
Most of the shops have a lot of different products. However, the only thing you see on them is the brand name. You might experience a shock if you look at the manufacturer’s information written in the fine print. It is very likely that the company name, unlike the brand name, will not ring any bells. Why? Because companies grow and create or buy new brands.
They create new products and services which necessitates the creation of master brands, sub brands, or daughter companies. This is quite a challenge, as the distinct brands must be promoted separately, and at the same time, each has to avoid communication chaos and reach different target groups, since every product is addressed to different people.
This is why consistent brand architecture is an important part of brand strategy and brand management.
In this article, we will talk more about this issue and present 5 brand architecture examples.
What is brand architecture?
Brand architecture can be developed through systematized products, services, sub brands, and brand structure. It consists of specific colors, nomenclature, or symbolism, which makes the brand portfolio easier to define.
The best brand architecture model is characterized by intuitiveness – each brand is different but at the same time as consistent with the others as possible.
The creation of various types of separate brands within one company is one of the most effective methods for diversifying distribution channels, communication styles, or specific marketing messages.
Intuitive brand architecture defines the place and roles of individual sub brands which creates a synergy, for example in terms of clarity of messages, while being able to reach different markets. The sale and promotion processes of premium products differ from those that are used for cheaper goods, even if they were created by the same manufacturer.
Effective brand architecture is important in managing customer buying behavior, as it allows to shift brand equity from one brand to another. If a customer trusts the master brand and its brand promise, they will be more likely to trust the sub brands.
Why is brand architecture important?
Brand architecture is one of the tools you can use to shape customers’ cognitive processes and at the same time define the scope of the brand portfolio.
There is a misconception among smaller business owners that brand architecture is relevant only for large, complex companies with a master brand and multiple sub brands.
However, organizing brand’s offerings can boost smaller companies’ financial gains as well.
For any company, large or small, there are several important aspects of the business that influence brand architecture:
Lower marketing costs
The better the brand hierarchy is structured, the more effective its marketing activities become. What is more, a clearly defined brand architecture creates room for cross-brand promotion, which can contribute to greater returns on marketing and brand management spending.
Keep in mind that in the context of brand architecture, co-branding can influence how brands are positioned and integrated within the overall structure.
It helps in targeting the needs of specific customers
Organizing your offer is the most effective way to get the message of the endorsed brand across to your potential clients. It ensures that every member of your target audience reads a compelling brand story and finds what they are looking for.
It accelerates development and increases investor and employee confidence
The intuitive architecture of the endorsed brand makes it much easier to create an extension of the master brand with new services or products. With proper management and focus on the development of endorsed brands, investors or employees gain more confidence that the company is going in the right direction.
Defines the position of the master brand
Appropriately defined endorsed brand architecture has a wide impact on brand strategy and positioning. Improving this factor affects the effectiveness of the message and makes it easier to stand out from the competition – it fuels the sub brand.
Strengthens brand value
Each action of this type contributes to the company’s ultimate competitive advantage, i.e. brand equity. The greater the equity, the greater the profits as the existing brand’s authority in the industry increases with its market value. So there can be no doubt that having a brand architecture strategy is essential for business success.
Builds customer awareness
In the absence of proper brand specificity, brands must rely primarily on the corporate brand to capture customers’ attention. With the right brand architecture, the brand gains the ability to differentiate the types of businesses by highlighting the strengths of each of the sub brands.
Things to analyze while planning a brand architecture strategy
To create a good brand architecture, you need to consider more factors than those already mentioned.
The most important thing is to not overcomplicate them. The goal of brand architecture is to organize, simplify and present the brand, its products, and services to the customers.
With this principle in mind, you only need to implement the following three steps to define a solid, intuitive brand hierarchy.
In order to create the best brand strategy you have to conduct research among customers on brand awareness, associations it evokes, as well as brand loyalty.
This is the only way to check whether your customers understand your offer. With insights from research, you can choose the right type of brand architecture that will work best for your business.
Research can be conducted in the form of interviews with customers, surveys, and focus groups with employees or significant stakeholders.
You can also conduct brand equity studies to help you evaluate the equity of your non-master and master brands.
Performing a competitor brand audit can also be helpful and provide insight into the strengths and weaknesses of both the brand and its competitors.
2. Define a brand architecture strategy
In the brand architecture strategies phase, you can determine what type of brand architecture will be the best solution for your brand’s unique needs.
Each type of brand architecture enables you to use a corporate brand or master brand differently.
If a merger has recently taken place, especially one involving competitors, it is very important to answer the question of how closely would you like to tie the parent brand to the sub brands. You have to determine how brands should promote or compare each other and how independent they should be.
The most optimal solution is to create visual alternatives of different brand architecture types, identifying the pros and cons of each example. It is worth evaluating all examples according to the previously defined guidelines so that the assessment is as reliable as possible.
You must prioritize the transparency of connections between sub brands, products, departments, and services. The more common elements brands have, the stronger their connection will become and the customers will be less confused about their correlations. You also need to be realistic about your budget and resources.
3. Take action!
The last step is to put all your collected data to good use. This stage includes naming, corporate identity design, which you will find in Nopio’s offer, clearly defining the hierarchy of various sub brands, or expanding the offer in accordance with the brand strategy.
All of these elements are key to helping customers, employees and stakeholders understand brand architecture.
However, it is worth remembering that switching existing brands from or to a new brand architecture is a huge undertaking that carries significant risks. For example, consolidation after mergers or acquisitions most often results in the conversion of many brands into one master brand, or the splitting of one brand into many.
Proper consideration of each step is the best way to minimize risk and cause confusion in the market when implementing any brand architecture changes. Constant communication with shareholders, employees, and the board is also important to maintain existing brand equity.
In addition to the brand architecture plan, as the result of this stage, you should also be able to create the company’s portfolio, specifying what strategic role each brand has and what their unique scopes are, i.e. the offers and correlations of all brands with the master brand.
When should you switch to a different brand architecture?
If you have not defined a clear brand architecture yet, or have not done it the right way, customers will do it for you, and that can often result in trouble and poor sales.
But how do you know that a company needs a brand architecture change?
Here is a list of several clear indicators:
1. You have acquired a new brand
In the case of acquiring a new brand or planning to do so, it is worth making sure that the combination of its products or services will be properly implemented and then used. Therefore, it is worth analyzing the brand architecture and making the required changes.
2. Your offer is complicated
Customers, not being aware of or not understanding your offer, can form false beliefs. Only a well-defined brand architecture can help change this. So if you spot misconceptions about your offer across different communication channels, it is a sign that you need to think about changing your brand architecture.
3. You want to create a new offer
When launching a new product or service, you need to connect it with existing ones and master brands. The right brand architecture gives you clarity about how this will impact the value of both new and other brands in your business. Our branding strategy services can help ensure a cohesive visual representation that aligns with your brand strategy.
4. One of your offers does not perform well
A change in brand architecture can also be useful when one sub brand does significantly worse than the others. It will make customers notice it and increase its visibility on the market.
5. You want to enter the market with a parent brand
If you are getting ready to enter the market and want to ensure that the evaluation of your brand will be high, a clear brand architecture will send a message to investors which will visibly show that you have built a good brand and are adding value to it.
Types of brand architecture
There are four main brand architecture models offering different concepts for a brand portfolio. Each type of brand architecture has its pros and cons, so you must choose wisely.
We can distinguish 4 types of brand architecture, namely the branded house, the house of brands, the endorsed brands, and the hybrid model.
A branded house strategy is a type of brand architecture that consists of a strong main brand or umbrella brand and a collection of product or service brands – including the name of the main brand that completely manages its sub brands.
Branded house architecture uses a branded house approach for customers, where audiences pay attention not so much to product features or benefits, but to the main brand promises of liked and endorsed brands.
The branded house model has many advantages. First of all, the master brand and sub brands have a uniform positioning strategy and visual identification, which makes branding and marketing activities more profitable. A branded house is the least demanding type in terms of short-term investment and causes the least disruption.
The customers are less confused thanks to visual consistency and clarity, while awareness and visibility of sub brands increase the value and exposure of the master brand. In turn, parent brand quality and trust are automatically extended to sub brands.
Unfortunately, the branded house type has a downside. The biggest one is the risk related to how closely the main brand is linked to the sub brands. This means that complications with a single brand strategy can affect the rest, including the parent brand.
In addition, if the brand is presented too extensively in a large number of categories, products, or services, its impact may be perceived as chaotic and difficult to define. Unfortunately, a branded house is not very flexible, which means that an underperforming brand can jeopardize the entire system.
House of brands
House of brands architecture consists of independent brands which are characterized by individuality – they are under the parent brand or umbrella brand, which customers may not even have heard of or know very little about. The parent company is important only from the investors’ perspective.
In a house of brands system, brand extensions support each other as they develop, and the master brand realizes the benefits that come with it. House of brands products sometimes have a master brand identity on their packaging, in the form of a small logo or address.
Some brands choose not to publicize the relationship between the master brand and sub brands, due to specific pricing strategies, quality, or target audience.
A house of brands gives you the freedom to create a unique brand identity, positioning, or experience. It also gives you the ability to precisely target different market segments while any negative impact of one brand does not affect the others.
The house of brands also allows for easier differentiation of the business with additional brands, without fear of not fitting into the whole system.
However, there are some serious drawbacks to this solution. First of all, each brand requires its own, separate strategy, website, and marketing, the cost of which can be significant. None of them can have the same brand identity as others. It also limits the possibility of brand cross-promotion.
The success of one brand does not carry over to another. Customers can also get confused about whether the master brand or a sub brand best represents the company. The last major disadvantage is the legal complexities and costs associated with servicing several corporate brands.
Endorsed brand model
The endorsed brand model refers to the relation a master brand or umbrella brand has with the related brands. All the brands have their own unique market presence. The goal is to create sub brands that have their own identity, which they are using for individual business activities under the parent brand – while being a part of the same brand portfolio.
You can easily spot where this strategy was implemented, for example, by phrases such as: “Delivered by…”. In this brand architecture model, brands benefit from an affiliation with an endorsing brand. The relationships between all the brands in this architecture are often based on mutual profits as each brand benefits from the strength of the other.
This type of endorsed brand architecture approach balances the master brand’s equity of the house of brands and the collective branded house equity. It offers the best of both worlds.
The master brand is associated with sub brands, but its name is often not visible, which reduces the risk of linking it to their failures. Thanks to this type of architecture, you can also freely create positioning, experiences, or your own identity. You can also precisely target brands’ activities to specific market segments, but with the existence of cross-promotion. Another advantage is the boost to the prestige and credibility of the main and supported brands.
The disadvantages of this type, however, are similar to the disadvantages of a branded house. Each brand requires its own distinct strategy, brand identity, and marketing, which can make the costs pile up. Also, problems experienced by one brand can affect all of them.
Hybrid brand architecture
Hybrid brand architecture is a combination of all of the above systems. In the case of an acquisition or merger, this model is the best solution when the existing brand equity of the acquired brand is to be preserved. However, this model is very often characterized by a complicated property structure.
The advantage of hybrid architecture is certainly the flexibility of many layers of hierarchy.
This allows you to harmonize different levels of market-oriented brands and sub brands. Like the house of brands, it gives you the freedom to create brand positioning, experience, and identity necessary to target specific market segments.
It makes diversification easier with the addition of new sub brands, which can retain their market value.
However, hybrid brands may turn out to be founded ad-hoc, if individual solutions are not applied wisely and with a clearly defined goal. The inevitable complexity can cause confusion among customers. Still, each hybrid brand needs individualized marketing activities, related to branding or brand identities, and the cost of these activities can be significant.
Company’s brand architecture examples
Finally, it is time to present a few examples of brand architecture examples.
Let’s take a look at this list of five global giants.
FedEx is an example of branded house architecture. This strategy is based on one strong brand that drives purchases and provides value.
FedEx is a parent company, while the following are its sub brands: FedEx Office, FedEx Ground, FedEx Freight, and FedEx Travel Network.
Each of them maintains a very close relationship with the parent brand while having a strong identity and the same differentiators.
Despite that, most people associate FedEx with an ordinary courier company.
Unilever uses the house of brands architecture. It has over four hundred brands whose product lines include personal care products, cleaning products, food, and beverages. Their products are used by over 2 billion people around the world.
This parent brand owns many endorsed brands that are far more famous than the company itself.
Those brands include Lipton, Axe, Dove, Knorr, Rexona, Magnum ice cream, Hellman’s, and many others.
3. Procter & Gamble
Procter & Gamble is the parent company of home products, owning mostly endorsed brands from the cosmetics industry. It is also known as a sponsor of many sporting events.
This is another example of the house of brands architecture model.
There are multiple brands under this master brand, such as Gillette, Old Spice, Tide, Braun, as well as endorsed brands such as Oral-B, Head&Shoulders, and many other well-known brands.
Nestle is one of the endorsed brands associated mainly with cereals and sweets. Nestle uses the house of brands model, but also the endorsed brands architecture. It promotes many of its brands but also has a portfolio of brands that are standalone giants.
However, Nestle controls other brands as well – from cocoa and coffee to tea markets.
This master brand owns, for example, Corn Flakes, Nesquik, Cheerios, and other cereal brands, chocolate bar producers like Princessa, KitKat, and Milkybar, coffee giants like Nescafe, Nespresso coffee, and the bottled tea brand Nestea.
Products from all those brands carry Nestle’s logo.
Associated mainly with the largest Internet search engine or email, Google is an example of a hybrid brand.
It is a widely endorsed brand, with tons of tools and software as well as services for both ordinary people and businesses.
In addition to Google Search, there is the payment method Google Pay, the Google Play mobile application store, and Gmail, but there is also Youtube, Android, Google Docs, Google Analytics, Search Console, and many other famous brands, without which we could no longer function.
In addition, it has advertising services, both Ads, which allows companies and individuals to advertise, and AdSense, which enables you to earn money on ads.
Brand architecture – summary
Brand architecture is the hierarchy in which the brands of a given company are arranged, i.e. the master brand, sub brands, products, services, etc.
The most important thing for you to remember is that it is not important only for large and complex companies.
It is also very important for smaller businesses, because it ensures order, and thus proper customers’ or stakeholders’ understanding of the offer.
Creating a solid brand architecture is very important to the corporate branding strategy, which you can also read about on the Nopio blog.
With the above knowledge, you can confidently design the right brand architecture strategy by choosing from the best brand architecture models for your business. Create a good brand strategy and succeed!