In recent years, there has been an increased focus on brand architecture. Brand architecture is a strategic approach which enables companies to manage their brands strategically by placing them into groups which are aligned to the company’s overall business strategy. This ensures that each group of brands and products can be managed as a single entity, whilst retaining flexibility in the management of individual brands. It also allows for a brand to be managed by different departments depending on its product category, and gives the company more control over each brand with regard to cross-brand promotion, pricing and investment decisions.
Brand architecture is the interdependency of your brands that determines how you position and connect them. It helps you to organize your portfolio in a way that reinforces their unique strengths (and weaknesses). A good brand portfolio strategy will help to determine which products are best positioned as complementary offerings and what those offering’s strengths and weaknesses are.
When should I apply brand architecture?
Brand architecture is a strategic system for deciding how brands interact with each other in the market place. Research has found that when taken into account, brand architecture can make or break a company’s competitive position. As such, it should be taken into consideration during the early stages of brand development.
What are some examples of good and bad brand architecture?
A great example of a company that embraced an effective brand portfolio strategy is P&G, who in 2010 realigned their brands across two categories – core needs and indulgence. They were able to do this due to the fact that they had invested heavily in a system for measuring customer value and then linked it back to revenue. They also followed an approach of “branding without borders” where brands were able to interact with each other across multiple product categories, which made them more than just individual brand names.
On the other hand, Kodak is a great example of how not to do brand architecture. In their case, they had such brands as Kodak and Pure Digital that were competing for the same customer in digital cameras. As soon as one product line fell behind another on quality or pricing, it would take the entire brand with it.
What is the optimal number of brands?
Research has shown that there is no ideal number for a portfolio, and instead it depends on the industry and market conditions. However, one thing that does remain true across all industries is that companies do well to stay away from too many brands.
How do you evaluate a potential new brand?
The first step in creating a successful brand is determining what makes that particular product distinct from the competition. What problem does it solve for customers besides just being another device, service or experience? Why would they choose this over another option on the market?
Answering these questions can help you to understand an expected customer’s total experience. They serve as a window into what customers value and want from your brand, which helps you to determine if they are worth investing in the first place. If this is something that would be difficult for them then it probably isn’t worth pursuing.
Is there a formula when it comes to brand architecture and the number of brands?
Research has found that as the complexity of a product increases, the number of brands needs to decrease. The more complex a product is, the less customers value multiple options and therefore are willing to pay for them in exchange for simplicity.
What’s important when it comes to creating brand architecture? What should I avoid?
Be careful with how you position your brands. You can’t assume that because one brand is successful in one category it will be equally as effective in another. As such, you should avoid overlapping customer segments and instead focus on offering more specific solutions for narrower problems for each of your customers.
There are also a number of common mistakes that many companies make when developing brand architecture. The first is to rely solely on the customer’s perspective for defining their value proposition. They do this by using a traditional segmentation model where they define a target audience and then create product offerings based off of what would be most appealing for them. This can lead to brands that are being marketed to the wrong people and products.
Another common mistake is to treat all customer segments equally, which can lead to a lack of focus on those who truly matter for the long-term growth of your business. It also leads you to miss out on opportunities in other markets, as well as encourage your customers to focus on price rather than quality.
Most importantly, you should avoid confusing brand architecture with messaging or positioning. Positioning is used for communicating who the company is and what it stands for, while brand architecture deals with how the different brands interact in relation to each other. They can be influenced by each other, but they are not one and the same. The most common mistake companies make is to confuse these two concepts when in reality you need both of them to be successful in creating a cohesive brand portfolio strategy.
What would your advice be for a company that’s struggling with their brand architecture?
The first step to solving any problem in marketing is to determine what the customer uniquely values. This should be done by conducting research and talking with them about what they find important. If you can’t do this, then your brands are unlikely to succeed in the long-term and will likely lead you toward failure.
Developing a good brand portfolio strategy is only the first step to success, however. You need to stick with it and not let other factors get in the way of your long-term plans for your business. If you can do this and follow through with your strategy, then you should be able to create a cohesive brand portfolio that will help your business in the long-term.