Start-up owners, entrepreneurs and CMOs of fast-growing companies have plenty on their plate, not least growth, finding business and sourcing talent. Lower down on their list of priorities would be brand architecture – assuming that term is even on their list. Few realise how important this is, yet if left too late, poor brand architecture can negatively affect how a brand is perceived.
Firstly, lets define what brand architecture is. Brand architecture is a phrase used to define how a company structures itself in relation to its brands and/or sub-brands. It is a company’s positioning and how it presents itself to the consumer. A well-designed brand architecture will leave the consumer in no doubt as to what that company or brand is and make it easier to sell products and services. A poorly designed brand architecture creates confusion.
There are generally three types of brand architecture. First there is the “Master Brand”, examples include Google (before it created Alphabet) and Hewlett-Packard, and is also known as the “Branded House”. Under the “Master Brand”, all sub-brands operate under the main brand, so all products would be Hewlett-Packard or Google products. Advantages include the ability for smaller brands to leverage the credibility of the main brand, but the products should all share the same target market as brand positioning is dictated by the main brand.
The second model is the “Endorsed Brand” in which each sub-brand retains its distinctive positioning, yet operate under a main brand. So, while there is a main brand that owns multiple companies, each of those companies will still be free to target specific markets. Those companies may be endorsed by the main brand (for example, DoubleTree by Hilton hotels), or the main brand could have no prominence whatsoever. This is a very flexible model and allows sub-brands to leverage the credibility of the main brand yet still target specific markets and customers. It is most effective for fast-growing firms who wish to expand their scope of services through acquisition.
Lastly, there is the “Hybrid”. This is a rarer model and is much harder to achieve as it blends a bit of everything. A good example is Coca-Cola which have both a number of sub-brands that are obviously endorsed by the main brand – Diet Coke and Coca Cola Zero – and a number of brands which are more separate such as Fanta, Sprite and Dasani. This model is usually applicable for larger firms that have both acquired new brands (Coca Cola acquired Dasani) and have their own in-house brands, so it allows for established brands to continue, while giving newer brands space to grow.
The question business heads need to ask is which model works for them and when should they start thinking about their own brand architecture. Firstly, entrepreneurs need to think about their brand architecture in the early stages, even including it in their business plans. Start-up founders who are in the initial negotiating stages of acquisition should have that conversation early on in the negotiation phase to ensure everyone is on the same page. CMOs, especially those who have just started in a new company, should take stock of all the brands under their belt and see if the current structure in place is the best fit for those brands and the master brand.
For start-up founders especially, having their company and brand – which they have spent years building – subsumed into a larger company may be hard to watch, but they cannot let emotion and attachment affect how these decisions are made. Defining how a brand is presented to the world is one of the most important things any marketer and business owner can do, so brand architecture needs to be a priority.
The writer is Chris Greenough, VP, product marketing and strategy for Hyperlab, an Everise company.