One of the most interesting and challenging aspects of corporate and brand strategy is brand architecture, which is establishing the rules by which a company's brands should fit together, if at all. It is a bit like drawing an organisation chart or a family tree for brands.
Brand architecture basically asks a company if it wants to be a 'branded house' or a 'house of brands'. A 'branded house' is a situation where the company brand is regarded as the most important in terms of strategic value and all product and service brands are related to it in some way, to show that they are from that house. A 'house of brands' is different and this approach basically says that any of its product or service brands should stand alone and not necessarily reveal to which company they belong.
At first sight this may seem reasonably straightforward but that is not necessarily the case, and often companies have different ways of relating brands along a continuum from true corporate branding to true product branding. Let's take the branded house as an example. If the house really wants to project the corporate brand all the time then it will always put the corporate brand name forward strongly. BMW, Nokia, Apple, Microsoft and Virgin are examples here. However, the way in which they relate to their product brands may be different.
For instance, BMW and Nokia merely use alpha-numeric descriptors for their products as is the case with the BMW 5 series (BMW 520i). Nokia does the same, with a huge range of products such as the Nokia E90. These companies give their products a relatively low profile apart from advertising their features and attributes, and the corporate brand name is strongly projected. Microsoft and Virgin however, link their product brands to their corporate brand name by giving each one a brand name and placing them directly after the corporate brand name. Virgin Atlantic and Microsoft Windows are examples. This approach, linked sub-branding, leverages both the corporate and product brands and gives the product more brand strength. Another option is to go for the endorsement brand architecture approach, where a company such as Johnson & Johnson signs off in a corner area of product packaging such as BandAid, giving the product the 'glory' but reminding customers of its parent brand and heritage to add a touch of trust.
The main advantages of the 'branded house' approach are that it delivers marketing synergies across the brand portfolio and adds the trust dimension. The main disadvantage is that if the corporate brand image takes a hit then so do the related product brands, and vice versa.
By contrast, the 'house of brands' approach tends to allow product brands to stand on their own. P&G and Unilever have traditionally taken this route insisting that each brand stand or fall on its own merit, but even they are now beginning to link some of their product brands to their corporate brand names via endorsement to gain leverage and help maximise corporate image power and market capitalisation. The main advantage of the stand alone model is that if the product does badly, the corporate brand image will suffer much less than if they were more directly linked. However, there are no marketing synergies and so it is an expensive route to take.
The challenge for any company with deciding on which particular type of architecture is that there are no firm rules that apply. What is needed from top management is a well considered decision, and some companies use different more than one approach, dependent on strategic objectives and market circumstances.
Another brand insight from Paul Temporal