Brand architecture: how to choose the best strategy

Elisabetta Pettenuzzo

agosto 2024 - 6 minuti

In his latest book, branding expert Gaetano Grizzanti describes the brand as a response to the uniformity of supply in the market: “Consumer goods today are easily cloned and increasingly rarely constitute the real competitive differentiator in the corporate market. In the current scenario, the first product to be sold is in fact one’s own brand. ” Itis only thanks to the brand, with its baggage of values and meanings, “ continues Grizzanti, “that it is possible to distinguish an offer or a company in a panorama overflowing with competitors.

The brand as a competitive lever

The brand thus becomes a competitive lever in the construction of a unique proposition that is impossible to imitate, because it is based on the set of personalities, values and vision that the company decides to make itself the bearer of. Thanks to this scheme, the brand becomes the individual’s number one ally, because it is able to respond to the innermost needs of the human being, “linking companies and products to a psychologically inner aspect and not to an explicitly commercial context” (Grizzanti, 2020).

When companies become aware of what a brand can be and of the benefits derived from it, this is the moment when they have to think strategically about their brand architecture: the organisation of the portfolio of brands held by the same company, each of which may have a specific role, target and objectives, and not always necessarily related to those of the corporate brand, i.e. the brand of the company or industrial group that is in charge of the individual brands.

The brand architecture that will be adopted will outline the way the company decides to organise itself hierarchically and present itself to the market. Correctly orchestrating the set of realities involved is important for:

rationalise the product/service lines or companies of a group;
make explicit the positioning of each entity;
facilitate possible future integration of new business opportunities.

How to organise the different brands of a single company?

The main distinction to be made in these cases is between Branded House and House of Brands.

In the first case we are dealing with a parent company whose sub-brands are immediately traceable to the corporate brand, because they bear its name and logo. In the second case, on the other hand, each brand acts as a single company and the corporate brand is often unknown to customers.

The strategies for developing an appropriate brand architecture may be varied, each with its own strengths and weaknesses, but all should always start from the desired end goals, e.g. generating an increase in sales or making a certain product more attractive than those of the competition.

Let us take a closer look at them.

Branded House

This is the most common form of brand architecture. The main examples come to us from giants like Google, Apple, FedEx where sub-brands are marketed and managed by the corporate brand, but do not operate independently of each other and never overshadow the main brand.

The advantages of a ‘Branded House’ architecture are:

Efficiency: a common area is created between all brands, leaving space for individual sub-brands to position each one while continuing to benefit from the stability and authority of the corporate brand. This also translates into a profitable management of economic resources, thanks to less dispersion of those allocated to communication.
Single and complete offer: by exploiting the same audience, a synergy is created between the various sub-brands, with a minimum dispersion of investments and avoiding cannibalism between them.
Evolution: a strong brand can be more successful with future offers and/or new products, as customers will be more willing to accept change if it comes from brands they already trust.

Issues to consider when adopting this strategy include:

Reputation: products and services are interlinked, and so is their reputation. If one sub-brand fails, it can potentially be detrimental to others as well. Worse still is if it is the reputation of the corporate brand that is damaged, which will cascade to its offspring brands.
Unique platform: it may happen that new audiences often need a different value proposition from those they already know, leading them to consciously avoid the brand because it does not meet their needs, and they will be sceptical to consume in a new space already created by the existing brand.

House of Brands

The opposite structure to the previous one, the House of Brands houses numerous brands, each independent of the other and each with its own audience, its own branding and marketing strategy and its own value asset. P&G and Unilever are good examples of House of Brands.

The advantages of a ‘House of Brands’ brand architecture are:

Coverage: maximise the impact on a market, category or target group and you want to have a clear and targeted positioning and value proposition for each brand.
Shield effect: individual brands can take more risks and come up with new products or new offers without having to worry about negative spill-over effects or being limited by the associations that other parallel brands have established in the audience.
Polarisation: the public hardly knows the corporate brand, always guaranteeing sub-brands a form of independence in the eyes of customers.

Negative aspects include:

Sustainability: maintaining one brand is not easy, maintaining many brands can seem almost impossible if proper planning has not been carried out; creating and implementing multiple marketing strategies and managing individual service lines can be difficult and costly.
Isolation: The parent company may hold too much power, slowing down or negatively influencing the individual activities of sub-brands. It is often more likely to eliminate it in order to avoid unnecessary expenses and investments.
Image: There can be considerable confusion about the corporate brand. Do you represent the sub-brands or do the sub-brands represent the corporate brand?

Questions to ask yourself before you start

By examining the pros and cons of each structure, it will be possible to find the most suitable one for your company. However, building brand architecture should not be approached as a static activity, producing an immutable result, but rather should be continuously monitored and modified as necessary, especially given the dynamic nature of international markets and changing competitive environments.

By evaluatingbrand architecture on an ongoing basis, it will be easier:

Identify brand positioning opportunities before competitors;
avoid high rebranding costs or premature closure of certain brands;
launch new brands that can survive longer;
discover new markets and target groups, often faster than competitors;
maintaining brand consistency over the long term, thus creating so-called ‘lovebrands’.