Brand Architecture and Equity (Part 2)
4 March 2021
Think about why we need architects – large commercial buildings are complicated and have to be designed carefully so that they are functional, for example people need to be able to enter and exit efficiently, goods need to be delivered to tenants and the facilities need to be accessible easily. In other words, things must not get in the way of each other.
The same is true with brands – disorganized portfolios are inefficient and in the worst case, can result in brands from the same company cannibalizing each other in the market place – as demonstrated by the confused boundaries between the Chevrolet, Pontiac, Oldsmobile and Buick brands of General Motors in the late 1950s and 1960s, resulting in loss of market share for the parent company.
Strategic brand management favors an architectural approach to keep the portfolio neat and in alignment with the corporate strategy of the firm, with three common frameworks being popular to organize the brands:
- Branded house
- House of brands
- Hybrid house
A branded house is built around one very strong brand and any sub-brands do not detract from the master brand, which provides a focal point for the consumer. An example of a branded house is FedEx, the logistics company, which is recognized by most people in many countries due to its strong logo and house colors. Although FedEx has sub-brands, the master brand is powerful.
The house of brands works in a complete way, with the company owning the brands being relatively anonymous and relying on the individual brands to connect with the consumer – this is particularly noticeable in the business to consumer market, where large organizations such as Procter and Gamble and Unilever own large and diverse portfolios of brands that are highly popular.
This approach has the added benefit of flexibility – brands are often bought and sold between their owners, as their strategic focus changes, allowing the parent company shape shift without having to re-invent itself in terms of corporate branding, which would be the case with a branded house.
Although strategists often like to choose positions that provide clarity, there is a third way in the field of strategic brand management and that is to run a hybrid house, which has a strong master brand, but also has other strong brands in its portfolio.
An example is Pepsi, where the strong cola brand is complemented by other brands such as Quaker Oats, Doritos and Walkers Crisps.
Brand equity is a measure of consumer reaction to the brand and associated marketing, resulting in a potential range from unfavorable to favorable. It goes without saying that a favorable response is sought.
The formula for brand equity is Consumer Perception X Consumer Response – think about the market leading baked beans brand and the premium pricing compared to own liable supermarket brands. This is built on the foundation of superior brand equity.
Strategic brand managers seek to increase equity, by careful marketing campaigns that the consumer comes to associate with the brand.
The Oxford Management Centre offers Strategic Brand Management training course that will provide participants with the fundamental understanding of how to manage the brands strategically, as well as provides useful set of tools and techniques to help achieve their goals.
This training course will cover the following topics:
· Introduction, Brand Position and Brand Values
· Brand Equity and the Consumer
· Brand Marketing
· Brand Performance
· Maintaining Brand Equity