Brand architecture is complicated. Intertwined financial, cultural, and strategic implications are part of the journey. And with human involvement, there is always the possibility that the irrational will take over.
The lack of a common vocabulary enables any deputized strategist to add their own terminology – masterbrand, source brand, endorsed brand, sub-brand, superbrand, branded house, house of brands, parent brand, flanker brand, monolithic, independent, asymmetrical, umbrella, standalone, invisible, corporate, aligned, blended house, free-standing, hybrid, product, core brand, extended brand, beacon, overbrand, flagships — the list goes on.
For most, the conversation will start around an individual’s definition of what brand equity is rather than simply starting with audiences and needs.
Most seasoned practitioners were first introduced to three simple structures by Wally Olins: corporate – one name and one identity, subsidiary – endorsing a subsidiary with the corporate name, and branded – freestanding brands with little or no connection to their corporate parent.
David Aaker sharpened the spectrum by defining the endpoints as a Branded House and a House of Brands, but also accounting for permeations that could exist between the two points. His thinking began to account for brands creating greater engagement with customers.
In real world examples, GE is often cited as the best practice for a masterbrand approach (as another term for a corporate or branded house). In the purist sense, the masterbrand has a singular brand focus and creates a halo across a company’s offerings. This model brings significant efficiencies with costs and resources.
Procter & Gamble serves as the standard for a free-standing approach (same as branded or branded house). With this approach multiple brands visually look and communicate differently from one another to connect with a broader range of audiences and needs. The tradeoff for flexibility is significantly greater costs and resources.
So, when you think about the characteristics of the two approaches B2B companies have gravitated towards the GE model while consumer oriented brands leaned towards P&G.
Size Has Benefits and Limitations
For many B2B companies, acquisitions are a significant part of a company’s growth strategy. For the serial acquirer, there are two paths. The easiest path is to keep the acquired brand and connect it to the parent with an endorsement line. While this strategy may have been effective in the 80’s and 90’s, in today’s world it tends to signal indecision, inefficiency, and a lack of focus. And the longer a company waits, the higher the integration hurdles in the longer-term. The market continues to punish holding companies that lack a brand portfolio strategy.
The alternative is a more pragmatic B2B response towards a masterbrand solution. This approach rallies everyone behind one message, one culture, and one vision. And while one brand can serve as a powerful alignment tool, over time the masterbrand will most likely weigh down responsiveness and move with complacency.
When United Airlines had to deal with the backlash of forcibly removing a passenger from one of its flights, the few that backed the airline often cited the complexities of managing a large, global airline. Ask a company that was spun off from a large multinational parent and the first thing they will talk about is the freedom to invest in their business. The reality is that there are a lot of companies that have become too big and too complex.
Synergies can look good on paper but the point of diminishing returns can be difficult to recognize. And with the pressures of managing financial performance from a monthly, quarterly, and annual perspective, a business can easily lose control of its brand(s) and the ability to create meaningful experiences for their customers.
With the exception of a handful of fine-tuned masterbrands, an unmanageable size will negatively impact responsiveness, investments, and culture.
The Need for Roles (and Not Just Rules)
While a brand architecture can help organize your assets, it is designed to assume a more structured, communicative role rather than a portfolio built around audience needs and experiences. With the rise of insurgent brands in the consumer space and an all-out, anti-establishment sentiment for traditional brands, B2B masterbrands with a history and predictable business pace are vulnerable. And there are many brands that fit this profile.
However, there is no such thing as a pure brand architecture model that can combat this phenomenon. Many businesses are evolving and adapting but not as quickly as the influx of the next generation of new customers that are digitally native, expect greater transparency, and have access to more options than ever. So there is a strong reason to have several strategic brands in a portfolio to cater to varying customer needs
Clayton Christensen, a professor at Harvard Business School, has a theory of disruptive innovation that can help focus a brand portfolio. The premise challenges the belief that one person can effectively do so many different jobs. The basic question is What is the Job to Be Done and do you have the ability to deliver on that job?
This theory is powerful because it forces brand owners to understand their target audiences, the key insights around needs and benefits, and the implications for what the experience should look like. By answering a simple Jobs to be Done question, a brand can more effectively drive relevance and differentiation as well as make sense of which assets are most valuable. A solid exercise to make sure your brand is fit for purpose.
Optimizing Your Brand Portfolio
While masterbrand strategies still have a lot of utility, they will be a liability if the primary benefit is driven by a cost containment need. Channel conflict, regulatory requirements, internal cultures, global footprint, HR policies, innovation, service models, and talent management are issues that constantly test the limitations of a masterbrand approach.
In today’s B2B environment it makes sense to have a tighter focus with greater flexibility. Maintaining several strategic brands in a portfolio can help protect the core, but also open up the organization to new opportunities with fresh thinking, bigger risk apertures, and much needed innovation. These brands can help shape a more compelling story for today and the future while providing the agility and speed the market demands. But be wary, too many brands in a portfolio will have the same effect as a larger, lethargic, masterbrand approach.
Whether your brand architecture needs immediate attention or you’re pivoting the business strategy, use the opportunity to rethink your brand portfolio and the experiences you are trying to create. And always make sure that your approach is strategically broader and not a logo optimization exercise.
A couple of things to keep in mind:
• Always start with audiences. Define the core target and build outwards from this group. If it’s a new audience segment spend the time to thoroughly understand them, their needs, and your relevance to them.
• Outline your strategic priorities and understand what you have. Have a clear definition of brand equity and bucket your brand assets into the roles they can play. Are they value creators for growth and expansion, catalysts to signal future experiences, mature businesses that generate cash, platforms for a collection of offerings, or protectors that insulate the brand portfolio?
• Invest in your strongest assets. Rationalize your portfolio and discourage the proliferation of brands. Align the culture with these assets and make sure that employees understand their responsibility in maintaining a brand’s integrity and the role they play in delivering the brand.
• Tell a simple but compelling story. Pick organizing principles that customers can relate to and employees can understand. Identify brands that can showcase what you do best and confidently speak to the future.
• Keep it simple. If employees can’t understand the brand portfolio then your customers will be even more confused.
The old paradigms for staying relevant are gone. Is your strategy built for the future?