Contents
- What is brand architecture?
- Brand portfolio
- Why is brand architecture necessary?
- Classic models of brand architecture
- Main models of brand architecture
- Hybrid brand
- How to choose brand architecture
What is brand architecture?
Brand architecture is a strategic approach that a company uses to organize its brands within a unified portfolio. This principle defines how various business directions are interconnected and what place they occupy within the company’s hierarchy. The brand architecture strategy becomes especially important during times of portfolio expansion: whether it’s launching new products or entering a new market under a different name. Depending on the chosen approach, brands can either compete with or support each other, which influences consumer perception and marketing strategies.
Brand portfolio
A brand portfolio includes all trademarks owned by a single company that serve to address a common business objective. For example, the Russian company "Orimi" owns brands such as Greenfield, Tess, "Princess Nuri", Jardin, and "Jockey", which collectively aim to capture a significant share of the hot beverage market. The choice of brand architecture affects naming, positioning, as well as economic and marketing strategies, allowing companies like "Orimi" to offer their products under different brands for various market segments.
Why is brand architecture necessary?
Brand architecture plays a critical role in several aspects:
- Building identity: It’s important to showcase new products from their unique sides to stand out among competitors.
- Simplifying management: A clear hierarchy of brands facilitates management and allows for quick adaptation to changing market conditions.
- Increasing sales: A well-planned architecture helps capture new markets and segments, leading to an increase in buyers.
- Optimizing promotional expenditures: An effective architecture allows for reduced marketing costs by rationally allocating resources.
- Minimizing risks: A proper structure helps avoid the negative impact of one brand on others, which is especially important in a competitive market.
Classic models of brand architecture
According to the classic theory of David Aaker, there are two main types of architecture: House of Brands and Branded House. The House of Brands is characterized by creating a separate brand for each product, as Unilever does with more than 400 of its brands, including Lipton and Persil. In contrast, a Branded House means that all products are released under one recognizable name, as Sony does with its various subsidiaries.
Main models of brand architecture
Modern companies are increasingly moving away from traditional models and creating hybrid structures. There are three main types of architecture:
- Umbrella brand: All products are released under one name, simplifying perception and strengthening identity.
- Multi-brand: Each product has its unique brand, allowing the coverage of various target audiences.
- Hybrid brand: Combines features of the two previous models, allowing some subsidiary brands to operate independently, while others are linked to the parent brand.
Hybrid brand
Hybrid architecture combines the advantages and reduces the risks of the two previous models. It allows for maintaining audience loyalty to already known brands, as done by the company "MegaFon," which retained the Yota brand after its acquisition. However, it’s important to note that such a structure can create confusion in brand perception, making management and promotion more complex.
How to choose brand architecture
When choosing brand architecture, a thorough analysis of the product portfolio should be conducted, defining the roles and potential of each brand, establishing priority links in the hierarchy, allocating resources, and considering business development prospects. It’s important that the brand structure does not create conflicts between products. For example, transitioning to a new architecture should be gradual to avoid losing customers and is usually accompanied by informing the audience about the new changes.