The Strategic Imperative of Brand Architecture

In today’s competitive marketplace, the power of branding is widely acknowledged. Companies are keenly aware that a strong brand can be the difference between success and failure, with branding efforts becoming central to business strategy. As a result, significant time and resources are dedicated to developing, maintaining, and marketing brands. 
 

However, despite this understanding, many companies still struggle with a crucial aspect of brand management: defining and executing an effective brand architecture and brand portfolio strategy. The lack of clarity in this area often results in billions of dollars of wasted investments, with companies either spreading their resources too thinly across too many brands, or focusing on too few brands, or supporting the wrong kinds of brands.

Brand architecture, the organizational structure of brands within a company’s portfolio, is often an afterthought for most businesses, and a Frankenstein-like mess, variously shaped by acquisitions, the randomness of organizational culture and structure, internal politics and turf wars, or the spawning of new product and service offerings without defined brand strategy. These factors can contribute to a haphazard brand architecture, driven by rearview-mirror assessments of brand equity rather than forward-looking strategy. Without a well-defined brand architecture, companies risk investing in brands that do not align with their long-term business goals, thereby diluting their market impact and wasting valuable resources.

Do you have enough brands? Do you have too many brands?

One of the fundamental questions in brand architecture is: how many brands should a company have? My team and I at Metaforce advocate a simple yet powerful rule when defining the optimal number of brands: as few brands as possible, as many brands as necessary. This principle is rooted in the understanding that the fewer brands a company manages, the more efficiently it can allocate resources, ensuring that every dollar spent on branding delivers maximum value.

A mono-brand strategy, where a company focuses all its efforts on a single brand, represents the most investment-efficient approach. By concentrating on one brand, all investments, communications, and actions reinforce that brand’s equity, making it stronger and more recognizable in the marketplace. This should be the default starting point when re-evaluating brand architecture.

However, while a mono-brand strategy is investment-efficient, it may not always be the most effective in addressing diverse customer needs or market conditions. Different products or services, each with unique attributes, might require distinct branding to effectively reach and resonate with their target audiences. Similarly, varying price points or market segments might be better served by different brands. In such cases, expanding the brand architecture beyond a single brand becomes necessary.

To determine the optimal number of brands, companies must undertake a careful strategic analysis. This involves understanding consumer needs and assessing every brand through their eyes. The goal is to strike a balance between minimizing the number of brands for efficiency and ensuring that each brand serves a distinct purpose within the overall portfolio.

A well-structured brand portfolio should be lean, with each brand playing a clear and strategic role. Redundancies should be eliminated, and brands that no longer align with the company’s long-term goals should be phased out. This not only streamlines brand management but also strengthens the remaining brands by focusing resources on those with the greatest potential for growth.

Did you let acquisitions take over your brand architecture?

One of the most common challenges in brand architecture arises from acquisitions. Companies often acquire other firms to expand their market presence, gain new capabilities, or enter new markets. However, with these acquisitions come additional brands, each with its own legacy, identity, and market positioning, and these brands are often retained. But while acquired brands might have been previously successful in their own right and while it is tempting to retain them, managing them can lead to overlapping offers, inefficiency, and conflicting messages to consumers. The result is a fragmented and overextended brand portfolio that fails to maximize the potential of each brand or the overall company. 

Henkel Adhesives, for example, found itself with 55 acquired adhesive brands, with overlapping market and customer segments. Similarly, the accounting giant RSM had nearly 75 brands worldwide, and Allianz Insurance SA managed close to 100 different insurance brands. These sprawling brand portfolios became a burden, causing confusion among customers and diluting the company’s brand equity.

Less is most often more.

We guided these companies through a radical rethinking of their brand architecture. Henkel Adhesives consolidated its portfolio from 55 to just five brands, each representing a specific adhesive technology, enabling it to focus its resources on strengthening these core brands. RSM undertook an even more drastic transformation, reducing 75 brands to a single, unified global brand. Allianz, too, carefully reduced its brand count, ultimately achieving a mono-brand strategy that positioned it as one of the world’s strongest and most valuable financial services brands.

Did you create a labyrinth only you can navigate?

In many companies, brand architecture evolves into a complex system that only insiders can navigate. Employees who dedicate their careers to understanding the company’s offerings may create sub-brands and brand variations to signpost the differences in their products. While these distinctions might be clear to the internal audience, they typically confuse customers.

For instance, subtle differences between sub-brands such as Brand ‘X Standard’ and Brand ‘X Professional’ might be lost on customers who are not intimately familiar with the company’s offerings. Similarly, minor variations like Brand ‘Y Navigo’ and Brand ‘Y Naviga’ can create unnecessary complexity, leading to disengagement or frustration among consumers who do not have the time or inclination to decipher these subtle differences.
 

To avoid this, brand architecture must be created strictly from the customer’s perspective. Companies should focus on how their customers navigate their offerings and what they need to understand a brand’s message. The goal is to simplify, not complicate, the brand experience for consumers, ensuring that the brand architecture is intuitive and easy to navigate. Remember, your customers only give you 10 second to understand what you are trying to tell & sell them. 

Do you mark your territory like a dog? Don’t let internal tribalism express itself externally.

Another challenge in brand architecture arises from internal dynamics. It is human nature to want to be part of something, and human nature to want to be part of a group, a team, a common goal. This is true in our private lives as well as in our work lives. In work environments, teams, groups and departments often to want to sign-post externally who they are and what they do, and they create sub-brands as a way of marking their territory. We observe this especially in global businesses where teams want to signal their regional identity through a sub-brand, and in innovation-driven companies, where new products or services are often seen as unique and deserving of their own brand identity. Similarly, teams in partner-driven firms often insist on creating sub-brands to signify their relationships with specific clients or markets. 

At one of the largest global investment banks, the proliferation of sub-brands reached a point where even the internal security department had its own sub-brand and logo. While these sub-brands may make your internal teams feel great, they often lead to internal fragmentation and external confusion. 

In such cases, it is essential to exercise discipline in brand management. Companies must be willing to say no to internally driven sub-brands and ensure that everyone is aligned with the chosen brand architecture. By doing so, they can foster a sense of unity across the whole business, both within the company and in the eyes of customers.

Don’t let Darwin decide your brand architecture.

When redefining brand architecture and reducing the number of brands you are going to market with, companies must resist the temptation to focus solely on brands with the strongest current equity. It can’t simply be about survival of the fittest. While it might seem logical to build the future around today’s most successful brands, this approach is akin to driving by looking in the rear-view mirror. Instead, brand architecture decisions should be based on a forward-looking strategy that aligns with the company’s long-term business goals and areas of growth.

This means identifying which brands are best equipped to help the company achieve its future objectives. It might involve phasing out legacy brands that no longer serve a strategic purpose, even if they have strong current equity. Conversely, it could mean investing in emerging brands with the potential to drive future growth, even if they are not yet fully developed.

For example, a company focused on expanding into new markets might choose to prioritize a brand that resonates with those markets, even if it is not the strongest brand in the current portfolio. Similarly, a company looking to innovate in a particular product category might invest in a brand that embodies that innovation, even if it is less established than other brands in the portfolio.

Brand architecture is an untapped force-multiplier.

Brand architecture is the critical interface between a company and its customers. Its sole purpose is to help customers navigate the company’s offerings and understand what the brand represents. To optimize the efficiency of brand investments, companies must strive to minimize the number of brands needed to communicate their offerings, while retaining enough brands to clearly convey the differences among products or services.

A well-defined brand architecture allows companies to focus their resources on building strong, impactful brands that align with their long-term business goals. It enables them to avoid the pitfalls of overextended brand portfolios, internal fragmentation, and customer confusion. By taking a strategic, customer-centric approach to brand architecture and linking brand architecture closely to business strategy, companies can ensure that their brand investments deliver maximum value, both today and in the future.

In a world where brand equity is a key driver of business success, having a clear and future-focused brand architecture strategy is not just a luxury—it is a necessity. It is the foundation upon which strong brands and businesses are build, the lens through which investments should be judged and the key to unlocking a company’s full potential.
 

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