Let’s build a new house, shall we?

Traditional brand architecture frameworks need a refresh. Brand architecture strategies need to be revamped from the point of view of how brands are managed these days. The ‘Branded House’ and ‘House of Brands’ architecture framework and the continuum between them need to be approached with a fresh perspective.

Let’s try and understand in-depth some factors that have strongly influenced how brands are built and managed. Nowadays brands have more owners in their lifecycle than they previously ever had. Consolidation is a significant global force and is causing upheaval in both traditional and emerging industry segments. As I write this piece, Bayer is in advanced talks for a global acquisition of Monsanto. In my previous LinkedIn Pulse article, I have discussed some of significant M&A activities and their impact on brand equity. Here is the link to the article:

 

https://www.linkedin.com/pulse/riding-waves-uncertainty-sandeep-das

We are in an age where brand management strategies are increasingly being influenced by short-term revenue and profit targets rather than creation of long-term growth and value. More importantly, and linked to the increase in the number of owners that a brand has in its lifetime, there is now no guarantee that brands will be managed and built using a consistent set of principles. The surge in global M&A activity is proof that lack of growth opportunities and the increasing complexity of operating in fast-moving and dynamic industries is pushing organisations to find synergies. There is significant impact of individual brands and brand portfolios when synergies are found and organisations decide to merge or get acquired.

Brand architecture frameworks, in their purest forms, are a set of guiding principles for managing brands. For these guiding principles to act as enablers of brand portfolio strategies, requires long-term thinking and disciplined application. Even though intentions might be noble, but marketers are struggling to think and implement long-term. Branding and marketing, and all their interconnected nodes, are suffering from short-termism. But even with all the darkness engulfing branding and marketing, there is always ‘light at the end of the tunnel’. These lights of hope are in the form of increasing consciousness and popularity of ‘value and purpose driven marketing’‘sustainable brand building’ and ‘ethical marketing’.

A combination of the above factors makes a re-think of brand architecture frameworks a necessity. There is a strong push and pull happening in the global branding industry in terms of the different spectrums of brand management. Organisations like Coca Cola have moved away from individual brand building strategies to a global masterbrand strategy. According to recent news, this strategy is showing initial signs of success:

https://www.marketingweek.com/2016/09/07/coca-cola-sees-green-shoots-as-one-brand-strategy-yields-promising-results/

On the other hand, we have organisations like Birds Eye Iglo who are increasingly realising the redundancy of their masterbrand strategies and have started to focus more on individual products in the portfolio:

http://www.campaignlive.co.uk/article/birds-eye-scraps-ten-year-masterbrand-strategy-focus-product/1407583

In between these two strategies, are myriad examples of hybrid brand architecture frameworks with high levels of complexity. British Telecom acquired EE, but has allowed the brand to continue as is, thereby making available to the customer an expanded portfolio of brands (BT, EE, Plusnet or a combination across the three). Due to the acquisition of EE, BT also had to introduce EE as a completely separate line of business. The origin of the EE brand is a saga in itself:

http://home.bt.com/news/bt-life/bt-to-retain-ee-brand-as-acquisition-confirmed-11364037422234

The above is just one of the many examples where companies have allowed acquired brands to operate unchanged, but have added complexity in their internal brand portfolio management functions.

Some key trends are emerging in the world of M&As:

  • Assimilation of brands within existing architecture frameworks is becoming more and more difficult
  • The risk of tinkering with established brand positioning and equity is much higher than ever before, which essentially means that organisations cannot overhaul their brand architecture even when their portfolios are burgeoning
  • Last but not the least, with a decline in the average time period of brand ownership, brands are now experiencing more architecture frameworks, differing brand management perspectives and more diverse brand building strategies than ever before

In light of the above trends, some soul searching on the ‘axes’ of brand architecture is required. I introduce the word ‘axes’ here because it is important to understand that brand architecture as a pivotal brand strategy tool hasn’t lost relevance. Fresh thinking is required in the design and implementation of architecture frameworks in the organisation. The good news is that the thinking train has already left the platform and is gaining in speed.

Liwu Hsu, Susan Fournier and Shuba Srinivasan have published a paper in the March 2016 edition of the Journal of the Academy of Marketing Science outlining the risks / return trade-offs of sub-branding, hybrid branding and other forms of branding (core elements of brand architecture). For those who are interested, the abstract and a link to buy the whole article can be found below:

http://link.springer.com/article/10.1007/s11747-014-0422-5

I talked about the lights at the end of the tunnel earlier in the form of ‘value and purpose driven marketing’‘sustainable brand building’ and ‘ethical marketing’. Do any of these have the potential to become the new axes of a brand architecture strategy? Are there any new and potential ways of defining brand architecture frameworks? There could be ones, which can become remarkably effective for organisations. Instead of writing another thousand words to justify the propriety of each of these as guiding principles of brand architecture, let’s look at some interesting (and relevant examples):

  • Shunning the portfolio management approach altogether: Brand architecture guides brand portfolio management. So what will happen if organisations stop managing brands as part of ‘portfolios’, but manage them as individual entities? BT’s decision of leaving EE to continue as normal and SABMiller’s decision to allow Meantime to operate as an independent brewery after acquisition are examples of wherein the portfolio management thinking was resisted. Is Unilever going to adopt the same approach for Dollar Shave Club? Currently, the Dollar Shave Club brand has no opportunity to fit into Unilever’s House of Brands architecture in any way
  • Flipping the axes: Traditional brand architecture strategies rely strongly on ‘endorsement’ (or its absence) as a primary guidance tool for brand management. After that brands are fitted into layers with sub-brands and variants coming below individual brands. After the brands were arranged in terms of how they will be managed from a masterbrand, endorser brand or co-branding perspective, positioning platforms were developed for brands. So, how about managing brands through platforms and not via their internal branding / endorsement strategies? Organisations do this as secondary to brand architecture frameworks, but it is important that experiments / pilots are done with platforms as primary brand management frameworks. Food manufacturers commonly define strategies through a combination of ‘sweet’, ‘savoury’ and ‘snacking’ platforms. If brands can be managed within these platforms with consistent positioning, then organisations have more effective ways of ensuring long-term viable growth. Platform strategies give birth to disruptive innovation, allow the identification of significant growth strategies, and also open up significant brand stretch opportunities

Here is an interesting example of platform strategy at play:

http://dupress.deloitte.com/dup-us-en/focus/business-trends/2015/platform-strategy-new-level-business-trends.html

  • Taking some inspiration: It is always interesting to monitor how brands are acquired and assimilated in the technology industry. Are there some important lessons that traditional industries can learn in terms of brand architecture? Yes, there are multiple. First of all, acquisitions in the technology industry involve brands that do not have a strong consumer face. This makes it easier to assimilate the brand, but not how you manage its functionalities and how it fits into the wider ecosystem. Technology brand builders look for synergies in their acquisitions – in the form of ‘complements’ or ‘expansion’. Traditional industries look at acquired brands from a negative perspective – ‘threat of cannibalisation’ and ‘difficulty of assimilation’. This mindset needs to change, which, will then fundamentally alter brand architecture frameworks. The thinking behind brand architecture needs to respect the lowest hierarchy, which essentially means a ‘bottoms-up’ approach

If we look at how brand architecture is used by organisations, the element of force fitting one level or branch of the tree is almost inevitable. The fundamental difference in thinking towards brand management in the new world is that we cannot ‘force fit’ any more. If any established brand, post acquisition, is force-fitted into an existing brand architecture framework, it is sure to fail. Consequently, we need to change our thinking towards brand architecture as a strategy tool. Without the risk of over-simplification, we need to look at brand architecture more as a fluid enabler rather than a rigid enforcer.

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