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.

Consumers’ evaluation of brand portfolios

“…This is because a firm needs to identify potential opportunities to increase its overall value with its limit resources (Petromilli, Morison, & Million, 2002). Accordingly, in order to effectively manage a brand portfolio, management needs to understand clearly which brands customers perceive as being in the portfolio, what relationship customers see between brands in the portfolio, and whether customers transfer the value (positive or negative) that they see in one brand to another.…”

“…One key challenge in brand portfolio management is getting the most from the existing brands by managing brands and between-brands relationships within the same brand portfolio (Petromilli, Morison, & Million, 2002). They insist that "direct and indirect links or synergies between brands experienced in a similar context can present the greatest opportunity to increase the value of individual brands and of the overall portfolio" (p.23).…”

“…Studies indicate that it is important to understand brand portfolio and its individual products from the consumers' perspective, because consumers ultimately determine a brand's success (e.g., Kane, 1987;Klink & Smith, 2001 ;Petromilli, Morison, & Million, 2002). According to the American …”

How bureaucrats and bean counters strangled General Motors by killing its brands

“…For example, risk in minimized by creating and maintaining a minimally overlapping portfolio of brands within the same product category, because it reduces the likelihood that a negative event involving any single brand also hurts other brands (Petromilli et al 2002). By using strong central management GM also prevented its divisional managers from encroaching on each other's territory and blurring boundaries between brands (Pierce et al 2002).…”

Measuring CBBE across brand portfolios: Generalizability theory perspective

“…16 Sub-brands do benefi t from the halo effect of their master brands, and sub-brands within a portfolio have closer relationships with each other. 17 These relationships have not been accounted for in CBBE measurement literature, which still assumes brands are independent from each other. Given that brand portfolios are a commonly observed phenomenon and that subbrands have been identifi ed as a good strategy to leverage master brands ' equity, the lack of research in brand portfolio CBBE measurement may limit efforts to effectively and effi ciently manage brand portfolios.…”