Most of us don’t start out in the home of our dreams. Typically, we wait to see how our family evolves before we consider renovating or moving into a custom home. The same is true when it comes to building a marketing framework for your company’s brand portfolio.
When new companies emerge, it’s usually because they have one product or service that fits a niche in the marketplace. If they’re successful, they eventually identify new growth opportunities to boost their revenue and profitability. Often, they devote hours to developing and selling their new baby without thinking about where that offspring should be situated in the brand’s house.
It may seem that investing in an intentional, strategic brand architecture only makes sense for large consumer companies, but that’s not the case. Organizing any company’s portfolio of products can strengthen the parent company by:
- Clarifying its unique value proposition
- Enhancing its sales pipeline with cross-selling opportunities
- Signaling leadership and vision for investors
- Building a cohesive culture and business story
- Deepening client or customer trust
When a company begins to evolve beyond its original offering—that’s the time to consider how best to position assets to achieve the long-range vision. A thoughtful brand architecture defines how your brand, new products or services are structured now, while giving you options for evolving your portfolio strategically over time.
There’s no “one size fits all” framework for brand architecture, but here are five structures to consider:
Branded House model. Generally regarded as the default model, this is the most conservative option. It requires less marketing spend on the “baby brands” since they benefit from the halo of the established parent brand, aligning both in look and naming structures. This model works well unless the offshoot falters or fails. If that happens, there is risk to the parent brand. FedEx and GE are examples.
Sub-Brands model. This structure allows the master brand to extend its reach to new audiences. Lego is an example of a brand with many sub-brands. The marketing spend is still efficient since the parent brand dominates, but the sub-brands can appeal to new targets with latitude in their logo mark and positioning. This model still poses a risk to the parent if a sub-brand has problems since they are connected by name.
Endorsed Brands model. This structure takes the sub-branded strategy a step further toward independence. The offshoot brands are still tethered to the master brand, but in a way that suggests some transition. Marriott, for example, has many endorsed brands in its portfolio. This is a great model for companies that may see a sub-brand eventually taking on a life of its own—or for master brands that make a strategic acquisition that has valuable brand equity of its own. The risk is lower to the parent brand if an endorsed brand falters, but marketing costs are increased since each endorsed brand adopts a unique look and market position.
House of Brands model. As the name implies, this model allows for many disparate brands to reside under one “roof”, while the parent brand remains invisible (or nearly so) to consumers. Proctor & Gamble and Unilever are examples of this approach. This is the most flexible framework if the parent expects to buy and sell brands, but it requires separate marketing plans for each brand in the house—which is not the most efficient structure. There is little to no risk to the parent brand if a sub-brand has issues because consumers don’t often associate each individual brand with its parent.
Hybrid model. This structure accommodates a blended branding approach within the portfolio. For instance, a company might have a product or service that carries the visible parent brand, while also marketing an endorsed brand or a brand that stands on its own. This model gives the parent the marketing flexibility to decide what’s best for newly acquired or incubated brands. If the parent’s brand equity is helpful, a link can be established. If the acquired brand is already well-known, it may be best to let it reside autonomously as an “undercover brand” within the larger portfolio.
This undercover option is especially important if a parent company makes a strategic acquisition at the opposite side of its established market. AB InBev wisely made this decision when it began adding independent craft brewers to its portfolio, although it did spark the #takecraftback movement once consumers caught on.
What’s your brand’s story? Do you have the right architecture for your vision? Have you outgrown the marketing blueprint you originally established? It may be time to build a new house—or invest in a little remodeling.