Brand architecture and brand portfolio ... In the professional and academic field, studying the process of managing a created trademark and company management, these two terms are often found. What do they mean? Why build a brand architecture and does a company need a whole portfolio of brands?
Definition of a concept
Begin by analyzing the definition. In the concept are the characteristics of the organizing structure, in which the place and role of each brand are predetermined. Building certain relationships between brands is very important in order to build a competent company work, allocating resources to important areas of activity and not squandering into less promising ones.
Thus, the rights and obligations of each participant in the work process are determined, they play a special role in the overall activities of the company, as well as the corresponding level of responsibility. Each trademark is analyzed and created as a separate tool for conducting an advertising campaign, creating a common image of the head brand, launching a new product line.
The whole company is involved in the work on each of these projects: there are parent brands that support sub-brands. Brand architecture is an instrument for the functioning of a number of companies as a single system for the benefit of the entire structure. This construction of the connection of each company into a single structure makes it possible to avoid "trade cannibalism" and conduct effective work to achieve the goals of the whole company.
Why is this structuring necessary?
Planning the work process and possible risks of the company is very important for the proper organization of effective activities in any industry. That is why there are a number of useful tips for organizing the workflow and life cycle of a company. In management and marketing, the main advantages of a company that uses brand architecture construction are highlighted:
- With successful work, a clear hierarchy and distinguished roles of each component of the company, there is practically no competition between the parties, and accordingly, all trademarks from the portfolio of trademarks work for the benefit of a single goal. Thanks to this, the most important effect is achieved: reducing the risks of loss of profit and the possibility of increasing internal competition in the company, it is guaranteed that it is impossible to absorb one brand by another without the decision of the company's leaders about the inefficiency of one of the components of the brand portfolio.
- The distribution of roles and the importance of trademarks in the brand portfolio helps to determine the priority of the distribution of monetary resources for their development and work. Creating a brand architecture involves an initial analysis of such roles and the strategic importance of the components of the entire system, which will make it possible to draw up a strategy and material development plan for the entire company.
- Increasing the synergistic effect and fruitfulness of the work of the whole organization. The interaction of brands in architecture, according to their graphic embodiment, makes it possible to optimize the roles and responsibilities of each company - the cell of the organization acting in the interests of the company, which is a single whole in achieving certain goals.
- Due to a clearly built hierarchy and erosion of the meaning of trademarks in the eyes of the consumer, the company's capital, its value and importance in the market are growing. The market share of each brand name changes inversely with the change in the number of extensions of the brand and its family.
All these factors in the planning and management of the company play an important role. Thanks to the functions performed due to the correct architecture and portfolio of brands, the introduction of which is vital for the company, its appearance on the leading positions in the market is given with less risk and with minimal financial loss.
Where to begin
This concept is used for serious companies that think in the future and strive to develop the organization in the future. A vivid example of the architecture of brands is any organization that has existed on the market for a long time and has included other companies as supporting trademarks without leveling their importance in the work process.
After a new organization is created, they come up with a brand and a communication strategy from the beginning of a brand’s entry to the market to its inclusion in general marketing processes. This is followed by the implementation of a specific product promotion program, as well as the achievement of customer loyalty. Next, do not act rashly, because for each individual organization there is a unique path along which it will move in its development in the market. Each company focused on long-term development should have its own brand architecture. This will open up opportunities for increasing the business productivity and profitability of the company due to the possibility of expanding and maintaining its internal integrity.
Historical relationship
It is important to identify the relationships between the components of a portfolio of trademarks in order to effectively create brand architecture. This is necessary in order to understand the possibilities of further work with the portfolio of brands as a whole.
Throughout the history of branding, two fundamentally different approaches to the strategy for working with trademarks have been formed: the House of Brands, which will later be called the Western approach, and the Branded House, later called the Asian approach to developing a strategy.
House of Brands does not advertise the parent company, and a separate trademark is created for each product line created. The Asian approach defined its brand for the recognition of each product created by the corporation, which led to the recognition of the parent company. The trademark coincided in all manufactured products. The architecture design of brands has been constantly changing in proportion to the study of their types and functioning. Initially, branded architecture was studied in the division into two strategic approaches, but with the course of history, the division continued.
Modern division
The types of brand architecture depend on the roles that make up the brand portfolio. That is, the trademarks included in your organization make up the nature of the architecture and determine its success. Here are the types of brands that make up the portfolio:
- Megabrand or strategic. The name itself speaks of the importance that a key trademark of a company has for its existence and functioning. This is a branded product, with which not only the company is associated, but also on which the provision of the bulk of the sales and profits of the organization depends.
- "Silver bullet". This trademark is developed not only by the team that launches it, but also by the employees of the parent brand. This is due to the fact that this sub-brand gives an impetus to the development of the image and reputation of the entire company. Examples of brand architecture describe the work of the most successful trademarks, in which, when launching a new brand, significant attention was paid to the “silver pool”.
- The launching brand is a project of the future positioning of the company with all its characteristics, which are worth attracting the attention of consumers.
- Dairy Cow is a consumer-oriented trademark. A large amount of money is not invested in it, but other resources are invested that will allow us to show it on the positive side to form the basis of the company's work - loyal customers.
Trump in the sleeve
With a clear idea of ​​the components of the company’s trademarks and their importance in the development of your business, you will always have an advantage: you will know on the basis of which trademarks to build priorities and invest material funds for the development of new areas of production, as well as how to create a healthy brand architecture. Now it all depends on how accurately and correctly you analyze and evaluate all the trademarks included in your brand portfolio: it is necessary to conduct an audit of each brand as objectively as possible in order to determine priorities and development prospects.
Stages of the audit of the components of the company
In order to conduct a competent analysis of all the brand names that make up your brand portfolio, and to appropriately evaluate their capabilities and work results, it is worth sticking to the following plan:
- Make a clear assessment of each component of your brand portfolio. An audit of one of the company's trademarks is impossible without the exact same analysis and its other components. A similar characteristic of each brand consists of external and internal audit. It is important to collect all the necessary information by all possible methods (qualitative and quantitative) and request it from various sources (primary and secondary).
- Next, we determine the most promising development opportunities for the brand, taking into account its positive qualities and weaknesses. For this, the method of conducting a SWOT analysis is used. After determining its characteristics, we form the image of the ideal brand with which you would like to see it. After that, we determine the promising directions of the company’s development, based on its competitive advantages, working with the strategic marketing matrices BCG, McKinsety - GE, Ansoff.
- Distribute the roles of brands in the market and in your brand portfolio.
Do it yourself design
After such an audit, you can begin to plan the relationship that you will establish between the trademarks of your organization. It is important to remember the different roles of the main brand and sub-brands.
Doing this is also measured, dividing all activities into five main stages:
- Identifying the value of each of the brands in your portfolio.
- Clarification of the roles performed by each of them officially and in practice.
- Clarification of the commodity-market context and the image of each of them.
- Develop the desired structure of your brand portfolio and the relationship of its components.
- Drawing up graphic solutions for your portfolio, which will make it possible to visually determine the relationships and functions of each brand and sub-brand of the company.
How it works
Identifying the meaning of each brand may seem like a simple process, but the experience of Aaker and Joachimstaler, two legendary researchers, shows that sometimes this process can consist of solid pitfalls. In their studies, they proved by the examples of well-known companies: some brands may in fact turn out to be inactive, and another part may have vague characteristics. Be careful and careful: at this stage you have to list all the brands of your portfolio and add a few new ones if necessary, to enhance certain qualities of your portfolio.
Here you will find an easier task: to determine how many brands and with what features you need. It is necessary to decide which role will be strategic, which will connect the components of the brand portfolio, and who will take the place of the equally important “silver bullet” or “cash cow”.
Then you should analyze the opinions of potential consumers: which brand they most trust, and what would happen if one brand combined with a sub-brand. It is worth considering the benefits of trademarks that they will receive when combining or creating a fundamentally new brand.
The structure of the brand portfolio determines the way of grouping trademarks while refining the logic of their relationship with each other. You can divide different brands into semantic groups. For hotels, there are targeted topics for guests:
- the goal is business or leisure;
- demand for a product - for long stops or for the weekend;
- product quality - luxury or economy.
The graphic embodiment of brand architecture and the visual processing of each of the brands in your portfolio are very important. The development of logos and packaging, advertising, design, etc. All this is based on the relationship between trademarks and joint support. Look at them at the same time and ask yourself if they transmit a common message in a consistent manner and whether they all work to maintain the structure of your brand portfolio.
Nestle hierarchy examples
The architecture of the brand is a brand portfolio consisting of 8500 trademarks. Its success depends on many factors, however, one of the key successful features is that the company is organized in accordance with the role and geographical status of each of the brands that make up its architecture. Such relationships are built on the matrix architecture of the Brandstorm brand (the company that first took a serious approach to an expanded portfolio of trademarks).
Nestle is a corporate brand that functions as a support brand. That is, the name of this factory brand is shown on the packaging of each product in order to guarantee the quality and loyalty of potential customers.
Six strategic trademarks stand out in the architecture of the Nestle brand, each of which manages dozens of sub-brands. Under the leadership of this company, bars and dairy products, chocolate and baby food are produced. Each of the products is guaranteed to be of high quality.
The very center of the Nestle universe is chocolate and condensed milk. These are real brand symbols that are most often associated with a company by most consumers and potential buyers.