We regularly work with startup founders who are keen to build strong brands, and one of the questions we get asked quite often is about brand architecture, especially when founders seek to expand into other categories or want to tap into new consumer segments.
Given that these questions come up frequently, we thought FreeFlowing would be a good forum to discuss this.
What is brand architecture?
Brand architecture is a system that organizes the products and services of a business to help consumers understand, engage with and navigate its range of offerings.
Why is it needed?
Nourished by enough love and care (read resources, strategy, and some luck), brands will grow. They will take a life of their own. A small brand will sprout branches in the form of new product lines and acquisitions, leaves in the form of new variants, and so on. Soon it will grow into a tree.
Now, we know that Nature loves patterns and structures. In the same way, these brand “trees” need to have patterns and structures so that consumers can understand them and love them. This is where brand architecture becomes relevant. Brand architecture provides these patterns and structures that help different brand offerings make sense.
There are 4 basic models of brand architecture. An easy way to remember how they are segregated is to order them by the recall and equity of the parent brand.
Branded House model
The master brand plays the role of the dominant driver of the brand’s equity across all its offerings. It is the umbrella under which all its products or services operate.
The products don’t have separate identities of their own, and ‘borrow’ the identity of the master or umbrella brand. In return, they contribute to the overall recall and identity of the umbrella brand.
This model works best when the products are in a similar category or offer a similar set of benefits. It can also be employed when the brand wants to build the same proposition and the same associations for different offerings.
In the startup world, Yoga Bar is a good example of a branded house model. Its portfolio encompasses a wide variety of products ranging from breakfast bars to whey protein to peanut butter and Muesli, all sold under the master brand of Yoga Bar.
- Clarity – easy to understand what the brand stands for in the minds of the consumers.
- Synergy – Trust in the master brand automatically extends to products/services, thus reducing the marketing investment needed to build individual brands.
- Reputation Risk – poor association with any one product is likely to have a negative rub off on the rest of the brands and the master brand overall.
- Lack of flexibility – If the master brand has strong associations with a certain category, new brand launches in dissimilar categories can be challenging.
House of Brands model
It’s essentially the opposite of a branded house model. In this model, each child brand stands entirely on its own in the marketplace. Each of these child brands will have their own unique positioning and brand identity, tailored to a particular consumer segment.
This model works best when you need to address different consumer segments or play in different categories, with tailored products addressing different needs.
Examples: P&G, Meta
One of the biggest questions that we get asked about House of Brands model is whether the master brand needs to develop its own equity. These days consumers have become diligent in knowing more about the master brand. People have started actively turning around packs to see where the brand comes from. Brands have also begun to realize that building equity for the master brand can deliver reputation advantage for the entire portfolio.
This is the reason why, after 150+ years of silence, P&G started building its master brand presence with the 2012 London Olympics, with its famous “Thank you, Mom” campaign, aimed at thanking the moms of Olympic athletes. P&G even roped in the Academy award winning director Alejandro González Iñárritu (Birdman, The Revenant) to direct the commercials, showing its determination to build its own brand equity.
Sometimes, brands will make the momentous decision to shift from one form of brand architecture to another. This is driven by fundamental shifts in the brand’s future plans or as a response to some crisis. In Facebook’s case, such a shift happened because of a combination of both – a conscious decision to peg its future to the Metaverse, and the need to distance the overall company from the negative publicity associated with Facebook. Facebook recently transitioned to a house of brands model with Meta as the parent brand and an enviable list of child brands including Facebook, WhatsApp, and Instagram.
- Increased reach and flexibility – it allows a brand to play in different market niches, targeting different audiences.
- Low reputation risk – if one brand goes through a crisis, other brands will be less impacted.
- Higher marketing costs – each brand will need to earn its investment, thus needing more money and time to build awareness and consideration.
- Low visibility for master brand – any success of a child brand is less likely to reflect on the master brand or other child brands, and thus synergy effects are reduced.
Endorsed brands model
This model packages brands under a master brand, but with more flexibility of approach than the other two models. Each child brand has its own identity, but is still endorsed by the master brand.
The biggest advantage of the endorsed brands model is that the child brands get the stamp of credibility and approval from the master brand, while still being allowed the freedom to have their own positioning and room to grow.
This model works best when you want to target different audiences while continuing to use the power of the master brand.
An endorsed brand model usually sets up and grows the child brands with independent brand equity. The endorsement from the mother brand helps a lot in the initial days, but eventually these child brands also start to gain awareness and brand equity for themselves. In this way, an endorsed brand model is oftentimes a brand incubator.
Titan grew as a brand with the endorsement of the Tata Group before launching Tanishq and Fastrack. Tanishq and Fastrack both in turn grew using the endorsement of Titan. And now, Mia jewellery is growing into a brand under Tanishq’s endorsement – a great example of progressive brand incubation using brand endorsement.
Hybrid brands model
Unlike the other three models, hybrid model is often the result of mergers and acquisitions. And as such, this model is meant more to help brands clarify their business strategy than to help consumers understand all of a brand’s products or services better.
Hybrid brands model falls in between house of brands and branded house model. It is adopted usually when the awareness and perception of the master brands is useful to grow some brands in the portfolio but not others.
In a hybrid model, the parent brand decides on a case by case basis what best to do when it acquires a new brand – either absorb it into the parent brand or leave it intact.
Microsoft is a great example of a hybrid architecture model. In addition to its enterprise solution models, Microsoft plays an endorser brand with its MS Office and Windows suite of products, while keeping itself out of the picture with its gaming product (Xbox) and its professional services platform (LinkedIn).
So, these are the four types of brand architecture models that are prevalent in the industry. When we discuss these with our clients, we also tell them about some fundamental truths of modern-day brand building which are relevant for early-stage brand builders.
As a rule of thumb, for resource constrained early-stage startups, building one brand is easier than building many. This allows them to focus all their efforts on building a single great brand instead of spreading themselves too thin.
Increasingly, we are seeing that the WHY behind the brand is becoming important. Today’s savvy and information hungry consumers not just want to buy brands, they want to buy “into” the brands. Hence, if as a brand you can provide a clear WHY, you gain more legroom to stretch your offerings. A great example of this is Mamaearth, which started off by offering chemical and toxin free products for babies and has now seamlessly stretched into categories like skin and body care for adults, all under a single umbrella brand. In the process, it grew multifold to become a unicorn.
Brand architecture design is quite difficult and complex, and it is the reason why firms devote a lot of effort to getting it right. A strongly laid out brand architecture can help lower marketing costs, give the brand the ability to build its consumer awareness quickly and efficiently, and help ready the brand for future product/service extensions.
We hope you enjoyed this primer on brand architecture. Every month, FreeFlowing will take a look at marketing concepts and explain them in our Marketing 101 section.
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