Chapter

11. Designing and implementing brand architecture

strategies
Chapters B-D of the book examined strategies for building and measuring brand equity. The fifth part, this
part, considers how to sustain, nurture, and grow brand equity under various circumstances. Launching
new products successfully is vital to firm’s long-term financial prosperity. Brand equity across the whole
brand portfolio must be maximized. The brand architecture strategy determines which brand elements
are applied across all new and existing products and services.

Developing a brand architecture strategy

A firm’s brand architecture strategy helps marketers determine which products/services to introduce,
and which brand names, logos, symbols etc. to apply to new and existing products. It defines both the
brand’s breadth/boundaries and depth/complexity. Its role is to clarify brand awareness and to improve
brand image. Steps for developing this kind of strategy:

1. Define the potential of a brand in terms of its ‘market footprint’;

2. Identify the product and service extensions what will allow the brand to achieve that potential;
3. Specify the brand elements and positioning association with the specific products/services for
the brand.

Step 1: Defining brand potential

This potential is defined by considering the brand vision, boundaries, and positioning. Brand vision =
management’s view of the brand’s long-term potential, which is influenced by how well the firm is able to
recognize the current and possible future equity. Brand vision is related to the ‘higher-order purpose’ of a
brand, based on a good understanding of consumer aspirations and brand truths.

Brand boundaries = the products or services the brand should offer, the benefits it should apply, and the
needs it should satisfy. These are defined based on the brand vision and positioning of the brand. Spandex
rule: ‘Just because you can, doesn’t mean you should!’, meaning that marketers must evaluate extending
their brand carefully and launch new products selectively. Each brand should be clearly differentiated
and appeal to a sizable market segment to justify its costs.

The key ingredients of brand positioning are competitive frame of reference, PODs, POPs, and brand
mantra. The mantra should offer rational and emotional benefits and be robust enough to permit growth,
relevant enough to drive interests, and differentiated enough to sustain longevity.

Step 2: Identifying brand extension opportunities

Step 1 helps define the brand potential and provides a clear sense of direction for the brand. This step is
to identify new products/services with potential. Line extension = new product introduction within an
existing category. Category extension = new product introduction outside an existing category. Equity
implications of each extension in terms of POPs and PODs need to be well understood.

Step 3: Branding new products and services

Now there has to be decided on the specific brand elements that will be used for any new product/service
associated with the brand. The brand’s overall clarity and understanding must be maximized.

Branded house = when a company is employing an umbrella corporate/family brand for all its products
(often B2B industrial firms). House of brands = a collection of individual brands all with different names
(often consumer product companies). Many firms are somewhere in the middle, employing sub-brands =
when the new product carries both the parent brand name and a new name (e.g. Apple iPad). This way
similarities and differences with existing brands can be emphasized. However, sub-branding should be
only used when there is a distinctive, complementary benefit and when there are enough financial
commitments possible.

To successfully execute the brand architecture strategy, brand portfolio analysis should be used in step 1,
and brand hierarchy analysis should be used in step 2 and 3.

Brand portfolios

Brand portfolio = all brands sold by a company in a product category. It is judged by its ability to
maximize brand equity. Each brand should maximize equity in combination with all other portfolio
brands. The main reason for offering several products in one category, is market coverage. Multiple
brands allow a firm to pursue different price segments, distribution channels, geographic boundaries, etc.
The relevant consumer segments and their overlap must be defined at first. Other reasons for introducing
multiple brands in a category:

• To increase shelf presence and retailer dependence in the store;

• To attract consumers seeking variety;
• To increase internal competition within the firm;
• To yield economies of scale.

The portfolio is too big when profits increase in case products are deleted and too small vice versa. So
market coverage must be maximized so no potential customers are ignored, while brand overlap is
minimized so there is no competition between the brands in the portfolio. Brands can play different roles
in the portfolio:

Flankers, often discount brands or repositioned existing brands, create stronger POPs with competitors’
brands so that more important flagship brands can retain their desired positioning. These fighter brands
must not be so attractive that they take away sales from the flagship brands, but cannot be so cheaply that
they reflect poorly on the other brands.

Cash cows are kept around despite dwindling sales because they are still profitable with virtually no
marketing support.

Low-end/entry-level brands may attract customers to the brand franchise. High-end/prestige

brands can add prestige and credibility to the entire portfolio.

Each brand-name product must have a well-defined role to fulfill for the firm, and thus a well-defined
positioning indicating the benefits/promises it offers.

Brand hierarchies

Brand hierarchy = a useful means of graphically portraying a firm’s branding strategy by displaying the
number and nature of common and distinctive brand elements across the firm’s products, revealing their
explicit ordering. Products can be branded in different ways depending on how many new and existing
brand elements are used and how they are combined.

Levels of brand hierarchy are:

• Corporate/company brand;
• Family brand;
• Individual brand;
• Modifier (designating item/model);
• Product description.
Corporate/company brand = the one brand at the highest level of the hierarchy. This brand (the
company name) is almost always present somewhere on the product/package. Corporate image = the
consumer associations to the company/corporation making the product/service.

Family/range/umbrella brand = used in more than one category but is not necessarily the company
name. Therefore associations with the company may be less salient. When the corporate brand is applied
to a range of products, it functions as a family brand too. Reasons for using family brands are products
becoming more dissimilar and wanting to evoke specific associations across a group of related products.
The failure of one product may hurt other products sold under the same brand.

Individual brand = restricted to essentially one product category where products may differ in
packaging, model, flavor, etc. With individual branding, brands and their supporting marketing activities
can be customized to meet the needs of a specific target market. If an individual brand fails, risks to other
brands are minimal. Creating individual brands, is however very difficult, complex, and expensive.

Modifier = a means to designate a specific item/model type/particular version of a product. This can
signal refinements/differences between brands related to factors like quality levels (e.g. Johnnie Walker
red, blue, and black label), attributes (e.g. different flavors of chewing gum), function (e.g. different fits of
clothes), etc. A modifier can help make products more understandable and relevant to consumers, and
become a strong trademark if it can develop unique associations with the parent brand.

Product descriptor helps consumers understand what the product is and does and defines the relevant
competition in their minds. Example: midsize luxury sport sedan automobile.

Designing a brand hierarchy

Steps for setting up a brand hierarchy:

1. Decide on which products are to be introduced by looking at the potential growth, survival, and
synergy with the parent brand;
2. Decide on the number of levels by looking at simplicity and clarity;
3. Decide on the levels of awareness and types of associations to be created at each level by looking
at relevance and differentiation;
4. Decide on how to link brands from different levels for a product by looking at the relative
prominence of brand elements;
5. Decide on how to link a brand across products by looking at commonality: the more common
elements shared, the stronger the linkages.

Specific products to introduce:

Principle of growth = investments in market penetration or expansion versus product development for
a brand should be made according to ROI opportunities. Firms must make cost-benefit calculations for
investing resources in selling more of a brand’s existing products versus launching new ones.

Principle of survival = brand extensions must achieve brand equity in their categories (‘me too’
extensions must be avoided).

Principle of synergy = brand extensions should enhance the equity of the parent brand.

Number of levels in the hierarchy: each successive branding level allows the firm to communicate
additional information about its products. At lower levels this allows the firm flexibility in communicating
the uniqueness, while at higher levels it is an economical way of communicating common information and
providing synergy.

Principle of simplicity = based on the need to provide the right amount of branding information to
consumers. The desired number of levels depends on the complexity of the product line/mix. The higher
the complexity, the more levels.
Principle of clarity = When more than three levels of brand names are needed, it is better to introduce
multiple family brands and expand the depth of the branding strategy in order to avoid confusing
consumers.

Desired awareness and image at each hierarchy level:

Principle of relevance = based on the advantages of efficiency and economy. Associations that are
relevant to as many brands nested at the level below as possible should be created, especially at the
corporate or family brand level. The greater the value of an association in the firm’s marketing, the more
efficient and economical it is to consolidate this meaning into one brand linked to all these products. The
more abstract the association, the more likely it is to be relevant in different settings.

Principle of differentiation = based on the disadvantages of redundancy. Brands should be

distinguished at the same level as much as possible. Also, not all products should receive the same
emphasis at any level of the hierarchy. Flagship product = one that best represents the brand to
consumers and is often the first product by which the brand gained fame, a widely accepted best seller, or
a highly admired product.

Combining brand elements from different levels:

Principle of prominence = the prominence of a brand element is its relative visibility compared with
other brand elements. It depends on factors like order, size, and appearance. The relative prominence of
the brand elements determines which become the primary (which should convey associations such as
POPs of additional PODs) and secondary ones (facilitating awareness). Marriot’s Courtyard would be seen
as more of a Marriot hotel than Courtyard by Marriot. With the latter, consumers should be less likely to
transfer corporate/family brand associations and the success/failure of the hotel should less likely affect
the corporate/family image.

Brand endorsement strategy = a brand element (often the corporate brand name/logo) appears on the
package, signage, or product in some way but is not directly included as part of the brand name. This
establishes the maximum distance between the corporate/family brand and the individual brand,
suggesting that it would yield the smallest transfer of associations, but minimizing the likelihood of any
negative feedback effects.

Branding strategy screen if a potential new product is strongly related to the parent brand with high
likelihood of equity carryover, and if there is little equity risk, a product descriptor or parent-brand-first
sub-brand can be used. However, if a potential new product is more distanced from the parent brand with
low likelihood of equity carryover, there is higher equity risk and a parent-brand-second sub-brand or a
new brand may be more useful. This can help determine whether to use a branded house or house of
brands. Also consumer brand knowledge and their wants, needs, and usage are important.

Linking brand elements to multiple products:

Principle of commonality = the more common brand elements products share, the stronger the linkages
between them. E.g. McDonald’s using ‘Mc’ to name every product or brands like Donna Karan (DK) and
Calvin Klein (CK) using initials to mark each product. Nike places its logo very prominent on each
product, American Express uses colored cards and BMW offers 3-, 5-, and 7-series to affect consumer
perceptions/preferences and to develop brand migration pathways for customers to switch among the
brands offered by the company.

Corporate branding

A corporate brand differs from a product brand in that it can encompass a much wider range of
associations, which can have an important effect on the brand equity and market performance of
individual products. A firm needs to keep a high public profile in order to build and manage a strong
corporate brand. The CEO must be willing to maintain a public profile and provide a symbol of current
marketing activities. Also, the firm must be extremely transparent in its values, activities, and programs.
Marketing winners in the future will be those firms that carefully build and manage corporate brand
equity = the differential response by consumers, customers, employees, other firms, etc. to the words,
actions, communications, products, or services provided by an identified corporate brand entity. The
more favorable that response, the more positively the corporate brand equity is affected.

Corporate image dimensions

Different types of associations are likely to be linked to a corporate brand and can affect brand equity:

Common product attributes, benefits, or attitudes: a corporate brand may evoke a strong association to a
product attribute, type of user, usage situation, or overall judgment in consumers. The strongest
associations are intangible when the brand is linked to several categories.

A high-quality corporate image association creates consumer perceptions that a company makes
products of the highest quality.

An innovative corporate image association creates consumer perceptions of a company as developing

new and unique marketing programs, especially with respect to product introductions or improvements.
Different image strategies can affect corporate credibility and benefit the firm by increasing the
acceptance of brand extensions.

People and relationships: traits that employees exhibit will (in)directly influence consumers about the
products the firm makes or the services it provides.

A customer-focused corporate image association creates consumer perceptions of a company as

responsive to and caring about its customers.

Values and programs: corporate image associations may reflect company values and programs that do
not always directly relate to the products.

A socially responsible corporate image association portrays the company as contributing to

community programs, supporting artistic and social activities, and generally attempting to improve the
welfare of society as a whole.

An environmentally concerned corporate image association projects a company whose products

protect or improve the environment and make more effective use of scarce natural resources.

Corporate credibility: this measures the extent to which consumers believe a firm can design and deliver
products and services that satisfy their needs and wants. It’s the reputation of the firm in the market
place and depends on corporate expertise, corporate trustworthiness, and corporate likability.

Many intangible brand associations can transcend the physical characteristics of products, providing
valuable sources of brand equity and serving as critical POPs and PODs. Companies have a number of
(in)direct ways of creating such associations. They must communicate to consumers and back up claims
with concrete, easy to understand/experience programs.

Managing the corporate brand

Three issues are considered: corporate social responsibility, corporate image campaigns, and corporate
name changes:

Corporate social responsibility (CSR): consumers are increasingly using their perceptions of a firm’s role
in society in their purchase decisions. Therefore, much marketing activity has been used to establish the
appropriate corporate image. Some firms are even putting CSR at the core of their existence.
Corporate image campaigns: are designed to create associations to the corporate brand as a whole and
tend to ignore individual products/brands. A strong campaign can provide invaluable benefits by
allowing the firm to polish up the meaning of its corporate brand and associations for its individual
products. To maximize the chance of success, the objective of the campaign must be clearly defined and
the results carefully measured.

A corporate image campaign can enhance awareness, create a more positive image of the corporate brand
and increase the equity associated with individual products. Other objectives can be to make a favorable
impression to possible investors/shareholders, motivate employees, and to influence public opinion on
issues.

Brand line campaigns promote a range of products associated with a brand line by showing consumers
the different uses/benefits of the products. This can be very useful in building brand awareness, clarifying
brand meaning, and suggesting additional usage possibilities.

Corporate name changes: a merger or acquisition is often a reason to reevaluate naming strategies. A new
corporate name arising in an M&A can be a combination of two existing names. If there is an imbalance in
brand equity, the name with more equity is often chosen. If neither name has the desired equity, a new
name (signaling new capabilities) will be the choice.

Corporate names can also change because of divestures, leveraged buyouts, or the sale of assets.
Sometimes they are changed to correct public misperceptions about the nature of the business. When the
corporate strategy is significantly changed, a new name can also be part of the deal. Other reasons to
change the corporate name can be that the current name cannot be legally protected, is linked to a
scandal, or just shouldn’t have been chosen to begin with.

Renaming is very complicated, time-consuming, and costly. Once a new name is chosen, it must be
communicated to employees, customers, suppliers, investors, and the public. The better-known the
company is, the more costly the change will be. Initial reaction to rebranding will be almost always
negative, but over time, if properly chosen and managed, the new name will gain acceptance and
familiarity.

Brand architecture

It is important to establish rules and to be consistent, but at the same time, it is also good to be flexible
and creative. ‘The best’ solution to a brand architecture challenge has not been found and hybrid
strategies prevail often within firms. Problems arise because corporate objectives, consumer behavior,
and competitive activity are not symmetric and may dictate significant deviations in branding strategy.
Brand elements may receive more or less emphasis, or not be present at all. Guidelines:

1. Adopt a strong customer focus: recognize what customers know and want, and how they will
behave.
2. Create broad, robust brand platforms: strong umbrella brands are desirable and synergies and
flow should be maximized.
3. Avoid overbranding and having too many brands.
4. Selectively employ sub-brands which can communicate relatedness and distinctiveness and are a
means of complementing and strengthening brands.
5. Selectively extend brands: extensions should establish new brand equity and enhance existing
equity.