Category — Positioning
Brand Architecture is a key strategic tool to organize a business so that audiences will understand what you offer and how they can engage.
The rules for organizing brands today are evolving. There are important forces that have changed how external audiences engage with brands. Probably the most important is technology and how it has enabled people to know more, purchase more efficiently, and decide more quickly. The consequence is that a company and its products and services need to be communicated with a new simplicity so that all key audiences easily understand the business you are in, how they can find what they need, and at the same time understand the breadth of value your company brings. This is the goal of building a strong brand architecture.
Why it is an Imperative?
Muddled Offerings. The most common branding issue we see today is that corporations have a very muddled array of products and services that are not well organized and therefore difficult to figure out. This is caused by a variety of circumstances:
- Consolidation through acquisition, merger or organic reorganization
- Evolution of a business into new areas that are either completely new or adjacent to existing capabilities
- Expansion into higher margin businesses from a legacy offering
- Spin-offs that require new levels of explanation.
Need for New Understanding. The shakeout from the economic trough we experienced, while difficult for most businesses, has presented the opportunity to look at the resulting business through a new lens and to sharpen focus to generate new levels of interest and generate higher revenues. Further, this sharpening can have enormous benefit for the financial community, helping them not only understand the business better, but also have more confidence in a company as it moves forward.
Galvanize and Engage Employees. In addition to the obvious outward value of a clear and easy-to-understand brand architecture, in many cases the employee base doesn’t always understand the breadth of what their own company offers, how the parts are interrelated, and the opportunities to expand customer relationships. Just imagine the power if every employee more fully understood your business and could be a true brand ambassador.
So focusing on a clearer and more understandable framework is an essential task in the new economy. The good news is that there is a disciplined process to determine the best way to organize and communicate a business’s offerings to more easily engage with key audiences.
Organizational Architecture Should Not Drive Brand Architecture.
Brand architectures should be designed for external (outside) audiences to “explain” a company’s business so that they can understand and engage. The easier it is for an external audience to understand, the greater the chances they will respond, whether it is a customer audience, a business or trade editor, or a financial analyst.
Companies are often organized for reasons that may not make sense to external audiences. The drivers of internal organization can include:
- Legal requirements
- Tax circumstances
- Financial reporting
- Legacy business history
- Acquisition complexity
- Leadership opportunities
But often these organizational decisions are not the way outside audiences see a company’s business. From their standpoint, they want to engage to find a specific product or service, and really don’t care how the company is organized. The consequence is that a company needs to have a “brand” architecture constructed from the outside in. While this sounds relatively obvious, getting internal leaders to agree is usually a significant challenge.
Below are some helpful ideas about how to engage the leaders to successfully develop an appropriate brand architecture.
What kind of Brand Architecture?
A Brand Architecture is a systematic means of focusing and organizing your brand assets to ensure that target audiences understand the breadth and depth of value you offer them.
There are several basic types of brand architectures that, in a pure or hybrid form, are the underpinnings of clarity. Each is developed by determining the best way to express the business vision through the lines of business.
A Masterbrand Architecture is a monolithic structure where, from a branding standpoint, all business units, subsidiaries and divisions share the same brand. The “Masterbrand “ is also sometimes referred to as the “Corporate, Umbrella, Parent or Mono” brand. Good examples of this strategy are FedEx and GE. In general, everything carries the FedEx and GE Masterbrand and sub-units are defined by descriptive language.
An Endorsement Brand Architecture uses a common endorsement for all of the operating units, and the parent brand functions in a subordinate manner to each operating unit brand. For example, United Technologies operates as a parent brand as it faces Wall Street, but each operating unit is identified by its own brand with an endorsement. The Sikorsky business is branded Sikorsky, “A United Technologies Company,” but uses the iconic “gear wheel” symbol, as does Hamilton Sundstrand, etc. To make matters more complex, sometimes the sub-brands of United Technologies use a legacy identity when facing specific customer audiences.
A Portfolio Brand Architecture, sometimes called a “Free-Standing Brand Architecture”, keeps separate identities for many or all of its brands. Particularly if there is sufficient marketing support for individual brands and it is believed the parent does not provide any brand equity that would benefit the individual brands, a portfolio architecture is appropriate. Procter & Gamble manages a portfolio brand architecture. General Motors also manages a portfolio of brands with little overt brand equity supplied by the parent.
An Ingredient Brand Architecture uses a principle brand (e.g., Intel or NutraSweet) as a common element in supporting and qualifying other brands. The premise is that if the ingredient is good, the brand it amplifies is better than without it. In the case of purchasing a PC, there is research that indicates that consumers look first for the “ingredient”, the (Intel) processor, before the brand it is within.
How do you decide which type of architecture is best? If you remember the golden rule (from the “outside in”), that should be the starting point. You start by determining which are the most important audiences. For most companies it is customers. But for others, it is financial & industry analysts, key trade media, and even governments. Therefore, the first task is to determine audience priority. The next step is to determine what each discrete audience needs to “hear” or understand in order to engage with your brand. You must look at your company from their point-of-view. This often requires outside help and research so that you can have an objective view of the marketplaces you serve. Almost every company we work with has a belief about how external audiences view them, and this view is naturally biased and often incorrect. Having objective insights also helps put in perspective internal beliefs that have built up over the years.
How do you engage the line of business and other leaders? Evolving to an external facing brand architecture is a process. It not only requires audience research, but also leadership team involvement so everyone understands their role in how the company speaks outwardly. Today, when companies have many different lines of business and products and services, it becomes imperative for the key stakeholders to work together to arrive at a brand architecture that serves both their individual need, but more importantly the corporate vision.
Where we have seen the most resistance is in situations where the broad leadership is not deeply involved. Because how a company portrays itself is so critical to the future, developing a strong, outward-facing brand architecture is a strategic mandate. Get the leadership involved and keep them involved.
Who should manage the process? Development of brand architecture is a strategic initiative and should be managed by the most senior corporate leader who can rise above line-of-business interests. In some cases it is the CEO, but more often it is the Chief Strategy Officer or Chief Marketing Officer. Among other values, strong brand architectures usually signal a new future while creating clarity. Thus, if a specific line-of-business leader is tasked with the initiative, the solution often becomes weighted in favor of that business unit, and not reflective of where the long-term business is headed.
Brand architecture can be a powerful tool to help a company accelerate its growth. Investing the time and effort to optimize a company’s brand architecture can deliver higher near and long-term revenues and profits.
For deeper insights, contact:
John K. Grace
President & Managing Partner
April 26, 2018 Comments Off on Why Brand Architecture is a Critical Strategic Imperative
It is tough enough to stand out from the crowd when you sell something tangible – a product. But it is exponentially harder to distinguish your business from its competitors when what you sell is intangible – a service, or advice. That’s the challenge facing professional services firms, such as management consultants, law firms, accounting firms, architects, design firms, leadership development firms, executive recruiters, etc.
Professional Services are Big Business in the U.S.
The professional services sector is very large and growing. Of the U.S. services sectors, IT consulting alone accounts for US$354b, followed by law firms and management consulting firms. These firms are large and aggregately employ millions of associates. And, with the exception of executive search, are all growing.
As the market grows and competitors proliferate, professional services firms face the commoditization of services and downward pressure on fees. The best defense against this is a strong brand that signals why your firm is unique in a meaningful and credible way that your clients, prospects and staff will value. Then, and only then, can you command a fee premium. [Read more →]
November 14, 2014 Comments Off on Differentiation: The Key Challenge For Professional Service Firms
Riddle me this: how do you boost sales by almost one third while telling your customers to buy less from you?
Sustainability and authenticity are the twin brand values that can power this exemplary business growth, and Patagonia is the current exemplar.
For some time now, Patagonia has been urging customers to repair and keep their $700 Patagonia parkas rather than buy new ones. The result? Sales increased almost one-third to $543 million last year, which included about nine months of the “Buy Less” marketing campaign.
October 4, 2013 Comments Off on Sustainability and Authenticity Present Huge Opportunities for Brands
“Long-term brand equity and growth depends on our ability to successfully integrate and implement all elements of a comprehensive marketing program.” – Timm F Crull, Chairman & CEO of Nestle
Branding and public relations (PR) professionals have a great deal in common. Branding professionals develop and communicate a promise. PR professionals bring that promise to life through stories, case studies, videos, events and points-of-view. Despite the common ground, branding and PR professionals don’t always collaborate. In some cases, this is because accountabilities reside in different departments. In other cases, it’s because each discipline has its own way of doing things.
May 1, 2012 Comments Off on What Branding and PR Professionals Can Teach One Another
Kraft’s decision to name its soon-to-be-stand-alone snack division, “Mondelez” is a very smart move in more ways than one. “Monde” is derived from the Latin word for “world” and “delez” means “delicious”. By separating the snack division from the North America focused grocery division and giving it a name that is clearly not America centric, Kraft is establishing a business that will have global appeal.
March 26, 2012 1 Comment
Who would have predicted that in the year 2012, a silent movie would win the Oscar for Best Picture? The fact that “The Artist” defied the odds is a manifestation of consumers’ demand for “less is more”. Consumers are rejecting the “bigger is better” culture that dominated the late nineties and 2000’s and came crashing down with the global economic crisis. Add to that the daily barrage of information, advertising, news, social media and politics and you have a consumer audience begging for simplicity, less clutter, honesty and integrity.
February 28, 2012 Comments Off on “Less is More” is the New Paradigm in Building Brands
David Brooks insightful Op-Ed article about now living “in the middle of an amazing era of individualism” reveals many emerging truths. For branders, understanding that we live in an increasingly individualistic society puts the burden on brands to position themselves to fit onto someone’s life. Said another way, we can no longer rely to the same degree on the social structures of family, church, community, etc. to validate and help us form preference. Brands need to focus on this more on our own than ever before.
February 22, 2012 1 Comment
There is only one way for a brand plagued with a negative brand perception to survive – tackle it head on. Acknowledge shortcomings, address the issues externally and internally and take significant actions to fix things. There are many brands that should take this advice to heart. One example is the United States Postal Service.
August 17, 2011 2 Comments
Brand marketers are in the throes of deciding how transparent their brand must be. This is a significant issue in many boardrooms around the globe. A close friend was in Turkey last week, and sent me the photo below of the Oscar Watch store in Istanbul… they actually sell “Genuine Fakes”. Talk about transparency… they are making money on telling the truth.
June 15, 2011 Comments Off on Brand Transparency Taken to the Limit
General Motors recently announced that it was dropping Mr. Goodwrench, their ubiquitous brand for service across all their products. They are now moving to brand-focused service for their remaining four car lines; Buick Certified Service, Cadillac Certified Service, Chevrolet Certified Service, and GMC Certified Service. This is, finally, the right direction for them to be taking.
November 11, 2010 5 Comments