Contents
- Brand Hierarchy: Definition and Purpose
- Difference Between Brand Hierarchy and Brand Architecture
- Why Brand Hierarchy is Important
- Levels of Brand Hierarchy
- How to Manage Brand Hierarchy
Brand Hierarchy: Definition and Purpose
Brand hierarchy is a concept that organizes and structures the relationships between various brands within a single company. It helps to define the position of each brand relative to others, as well as its purpose. For example, companies may create separate trademarks for products that belong to different categories or target different audiences. This approach allows for effective differentiation of products and services, highlighting their unique characteristics and attracting specific customer segments.
Large corporations may have numerous sub-brands and subsidiaries. To create an effective marketing strategy and understand the structure of brands, companies develop a hierarchy. It functions like a roadmap, where the main brand is at the top level, followed by sub-brands and individual products. For instance, Nestlé owns over 2000 trademarks worldwide, where the parent company coordinates brands like Purina and others, creating a multi-level structure.
Difference Between Brand Hierarchy and Brand Architecture
Although brand hierarchy and brand architecture are often used as synonyms, this is not entirely accurate. Brand architecture describes the overall system by which brands in a company's portfolio are organized, showing how they are related to one another. Hierarchy, on the other hand, reflects the specific position of each brand within this system. For example, the Volkswagen Group uses a hybrid architecture, where some subsidiary brands are closely linked to the parent brand, while others develop independently. This allows for a clear view of how hierarchy is organized within the group, including passenger vehicles like the Volkswagen Polo and Skoda Fabia, as well as commercial transport.
Why Brand Hierarchy is Important
Brand hierarchy is an important tool for organizing a brand portfolio and addressing various business challenges. Here are several key benefits:
- Brand Portfolio Management: Hierarchy helps clearly define the position of each brand, its goals, and objectives, simplifying the decision-making process regarding development and investments.
- Product and Service Differentiation: Enables the identification of necessary products and their positioning in the market.
- Increased Recognition: A clear hierarchy helps consumers navigate the company's offerings and creates a cohesive brand image.
- Brand Consistency: All brands are interconnected, and their effectiveness depends on one another, helping to create a unified perception.
Levels of Brand Hierarchy
There are three main levels of brand hierarchy: corporate, assortment, and individual. The corporate level represents the parent or master brand that encompasses all trademarks. The assortment level includes brands that group various products under an umbrella brand. The individual brand refers to specific products or product lines. For example, L'Oreal is a corporate brand under which brands like Garnier and Maybelline New York are positioned. Sometimes a modifier level is also highlighted, which helps differentiate versions of products with different characteristics.
How to Manage Brand Hierarchy
Effective management of brand hierarchy is a strategic process that requires analyzing the current situation in the portfolio, defining the company's goals, and developing a new structure. Companies like "Magnit" successfully use rebranding to improve their financial performance. It is also important to test new products before major launches to minimize risks. Additionally, creating a brand book and conducting regular audits will help maintain the relevance and effectiveness of brand hierarchy.
In conclusion, a well-structured brand hierarchy can significantly enhance business efficiency and strengthen its market position. Success in brand management depends on understanding their interdependencies and the right promotional strategy.