Brand architecture: building brand portfolio value

Abstract

Corporations must routinely ask “how should we allocate existing financial and human resources among our brands to grow shareholder value?” Firms should focus on getting the most from existing brands through better organizing and managing brands and brand inter‐relationships within the existing portfolio. “Brand architecture” is the way a company organizes, manages, and markets their brands. It must align with and support business goals and strategies. Different business strategies require different brand architectures. The two most common types are: “Branded house” architecture – employs a single (master) brand to span a series of offerings that may operate with descriptive sub‐brand names and “House of brands” architecture – each brand is stand‐alone; the sum of performance of the independent brands is greater than they would be if under a master brand. Neither type is better than the other. Some companies use a mix of both. The key is to have a well‐defined brand architecture strategy. Steps to maximize brand architecture: take stock of your brand portfolio from the perspective of customers because their view is the foundation for your strategy; do “brand relationship mapping” to identify the relationships and opportunities between brands across your portfolio. Check for these criteria: the perceived or potential credibility of the brands in that space – the perceptual license; whether or not the company currently has or can develop competencies in that space – the organizational capabilities; and whether the size and current or potential growth of the market is significant enough to merit exploitation and investment – the market opportunity. Mine the opportunities where all three criteria are met (aka, the “sweet spot”). Or use these innovative strategies if all criteria do not intersect: “pooling” and “trading,” branded partnerships’, strategic brand consolidation, brand acquisition, new brand creation. Continuously emphasize the portfolio‐wide thinking and business‐wide implications of brand‐oriented decisions. Create a brand council. When managed strategically and used as a structure to anticipate future business and brand needs, concerns, and issues, brand architecture can be the critical link to business strategy and the means to optimize growth and brand value.