This contribution is by Francesco Galvani, CEO of Deep Marketing, scientific communicator, exponent of the anti-hoax movement and teacher of branding strategy.
What are Branding architectures
In the world of marketing and branding, brand architecture plays a crucial role in defining a company's strategy and structure. Brand structure determines how brands are organized, positioned and communicated to consumers . Choosing the right brand architecture is essential to creating a coherent and recognizable presence in the market, as well as maximizing the effectiveness of marketing campaigns.
In this article, we will explore the different types of brand architecture, analyzing their pros and cons. We will also provide specific advice for small and medium-sized businesses (SMEs), highlighting the importance of using a professional marketing agency like Deep Marketing to avoid common mistakes, such as having too many brands.
Note that more and more often in our country there is a blatant and chronic misunderstanding of these topics, often trivialized with suicide advice derived from brand positioning, a pseudoscientific theory developed by Al Ries and Jack Trout at the end of the 70s and repeatedly falsified by research. The biggest problem with this school of thought is the incentive to build many different brands even for small companies. In this article, you'll understand why this is a bad idea and why so many companies that follow this guideline go bankrupt.
Let's see the different possible brand architectures.
Branded House
Branded House architecture, or “House of Brands,” is characterized by a single umbrella brand that covers all of the company's products and services. This approach allows you to concentrate marketing and communication efforts on a single brand, creating a strong identity and recognisability.
Not only small, but also large companies skilfully exploit this path.
Google is an excellent model of Branded House. All of the company's products and services, such as Gmail, Google Maps, YouTube and Android, are associated with the main brand "Google", both in terms of the logo and reference in the brand name. This approach has allowed Google to create a consistent and recognizable brand identity around the world.
Advantages of the branded house
Strong brand recognition
Marketing and communication synergies
Transfer of value between products and services
Economies of scale in brand promotion
Disadvantages of branded house
Risk of brand dilution if products are too different
Difficulty in differentiating products within the same range
Potential confusion for consumers if products are too different
It is clear that these disadvantages are mainly borne by the larger players and represent a decidedly limited risk for small brands.
Sub-Brands
The architecture of Sub-Brands (i.e. a set of "sub-brands") provides for the existence of a main brand which acts as an umbrella for a series of secondary brands or sub-brands. These sub-brands are often associated with specific product or service lines within the company.
Virgin is a classic example of Sub-Brands architecture. The main brand "Virgin" is supported by a number of sub-brands such as Virgin Atlantic (airline), Virgin Mobile (mobile), Virgin Holidays (travel) and Virgin Money (financial services).
Each sub-brand has its own logo with independent concepts, fonts and graphic aspects, although the continuous inclusion of the parent brand (such as "Virgin") still tends to always bring the perception back to a unique family of expectations and brand assets stored by customers .
Advantages of sub-brand architecture
Differentiation of products and services
Flexibility in market positioning
Possibility of expansion into new sectors while maintaining the link with the main brand
Disadvantages
Potential confusion for consumers if sub-brands are too different
Need for marketing investments to promote both the main brand and sub-brands
Risk of dilution of the main brand if sub-brands are not managed correctly
As can easily be seen, moving from a branded house to sub-brands implies an initial important visual branding effort. Not only must we create different brands with their own identities, but these brands must in turn be able to accommodate the parent brand in a way that is easy, coherent and pleasant to life.
An extremely difficult task even for a very experienced art director.
House of Brands
The "House of Brands" architecture involves a company managing a series of independent brands, each with its own identity and market positioning. This strategy is often adopted by large companies with a diverse portfolio of products and services.
Procter & Gamble is an emblematic and very famous example of a House of Brands. The company operates a wide range of independent brands such as Tide, Pampers, Gillette, Pantene, Oral-B and Bounty, each with its own identity and market positioning.
Depending on the sources, the main brand corresponds to the "corporate brand", which often uses its own communication and marketing budget.
It is very interesting to note that consumers often do not know that behind one of the product or service brands there is a corporate brand like P&G. Have you ever thought about Oral-B and Procter & Gamble?
In my career path I worked for 4 years in one of the most well-known Italian House Brands, Luxottica. Luxottica is the corporate brand behind product brands such as Ray-Ban, Persol, Vogue Eyewear.
House of Brands Benefits
Deep differentiation of products and services
Flexibility in market positioning
Possibility of acquiring new brands without impacting the company's identity
Possibility to cover more and more markets in a natural way
Disadvantages of the House of Brands
High marketing costs to promote each individual brand
Potential cannibalization across company brands
Difficulty in creating marketing and communication synergies
Need to spend a lot of resources and energy to also build the corporate brand
It is easy to understand how the House of Brands only makes sense for extremely important, rich and competitive companies. The aim is to have in your hands a "monstrous" machine capable of easily and continuously absorbing new market segments and new markets without any risk for the rest of the company.
Endorsed Brands
The Endorsed Brands architecture combines elements of the Branded House and House of Brands strategies. In this approach, a master brand acts as an endorser or guarantor for a number of secondary brands, which maintain some independence.
Unlike the House of Brands, the corporate brand is also and above all a product or service brand and does not exist only as a financial and administrative entity.
Coca-Cola is probably the best-known example of Endorsed Brands. The main brand "Coca-Cola" stands behind and supports in the minds of customers and financially a number of secondary brands such as Fanta, Sprite, Dasani and Powerade, which maintain a certain independence but benefit from the association with the main brand.
The customer is not necessarily aware of the architectural association between Sprite and Coca-Cola, but it is constantly communicated to him more or less implicitly, and this transfer of "brand equity" greatly supports the less strong and famous brands. Even at a B2B commercial level.
Benefits of Endorsed Brands
Differentiation of products and services
Transfer of value from the parent brand to secondary brands
Flexibility in market positioning
Disadvantages of Endorsed Brands
Need for marketing investments to promote both the main brand and secondary brands
Risk of parent brand dilution if sub-brands are not managed properly
Potential confusion for consumers if sub-brands are too different
Extreme management complexity
Sophistication in marketing to combine distinction between brands and associations
It's clear: the endorsement solution is only for the highest and most complex levels of structured and multinational companies.
Advice for SMEs
For small and medium-sized businesses (SMEs), choosing the most appropriate brand architecture is critical to ensuring a consistent and recognizable market presence. In general, it is recommended to take a simple approach and rely on a professional marketing agency like Deep Marketing to avoid common mistakes, such as having too many brands.
Let's look at some thorny issues
Choose Branded House or Sub-Brands
For most SMEs, Branded House or Sub-Brands architecture is the most appropriate choice. These strategies allow you to concentrate marketing and communication efforts on a limited number of brands, creating a strong identity and recognisability.
The Branded House architecture is particularly suitable for SMEs with a relatively homogeneous product or service offering . This approach allows you to make the most of marketing and communication synergies, reducing costs and maximizing the impact on the market.
On the other hand, the Sub-Brands architecture may be an appropriate choice for SMBs with a more diversified product or service offering . This strategy allows you to differentiate products or business lines while maintaining the link with the main brand.
Recently the Deep Marketing agency found itself faced with a case that is now increasingly widespread among our potential Italian clients: a small company which the previous agencies (obviously burned by the pseudoscience of brand positioning) had created two independent brands despite the two underlying products were simply two industrial machines for two sub-segments of the same market. The typical textbook case of perfect ineptitude in strategic marketing.
For years this poor potential customer has found himself having an unnecessary double expense for everything, from social media, to advertising, even to the stand at the fair! An absurd and even counterproductive waste of energy because it does not allow the creation of stable and robust memory structures in the minds of customers.
We cannot always "save" these realities, especially if the excess of brands has existed for years and is rooted in the minds of some managers or in commercial processes. Many fail, some survive but with the handbrake on.
Avoid the House of Brands
For SMBs, adopting a House of Brands architecture is generally not recommended unless it is a company with an extremely diversified portfolio of products or services and lots and lots of money to spend. In fact, this strategy requires significant marketing investments to promote each individual brand and can lead to a fragmentation of the corporate identity.
Let us remember that the house of brands implies a corporate brand that must live its own life and with a mere corporate purpose. A simply ridiculous waste of resources for a small or medium-sized company.
Trust a professional marketing agency
Regardless of the brand architecture you choose, SMEs are highly recommended to rely on a professional marketing agency like Deep Marketing. Agencies like ours have professionals behind them with at least 20 years of sectoral expertise in strategy and do not follow "fads" and imaginative or pseudoscientific theories that come and go. In Italy there are many players with the experience and skills necessary to guide companies in choosing the most appropriate brand architecture and to develop a coherent and effective branding strategy. It's up to the customer to choose carefully, without being "fooled" by the sirens.
Working with a professional, guru-free marketing agency allows SMEs to avoid common mistakes, such as having too many brands or an inconsistent branding strategy. Additionally, agencies can provide an outside, objective perspective, helping companies make informed decisions and maximize the return on marketing investments.
Simple rule: if you know someone's face more than their arguments, and their fame more than that of their clients, you can be sure that you should stay away. The best marketers are far less visible than their customers. We are "entities" behind, not on stage. Our customers are on stage.
Conclusion
Brand architecture is a crucial element to the success of any company, regardless of its size or the industry in which it operates. Choosing the right brand architecture allows you to create a coherent and recognizable market presence, facilitating communication with consumers and maximizing the effectiveness of marketing campaigns.
In this article, we have explored the different types of brand architecture, analyzing their pros and cons. We've provided specific advice for small and medium-sized businesses, highlighting the importance of taking a simple approach and using a professional marketing agency to avoid common mistakes.
Remember, choosing brand architecture is not a decision to be taken lightly. It requires a deep understanding of the market, consumers and business objectives. However, with a well-planned strategy and the assistance of marketing professionals, it is possible to create a strong and distinctive brand identity, which will result in a lasting competitive advantage.
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