What Every Startup Needs to Know About Brand Architecture

It's in the nature of many startup businesses to quickly grow beyond their initial remit. Sometimes that's a good thing, like the successful development of a whole new product category based on customer feedback. Other times the reasons aren't so healthy, perhaps rooted in a fear of missing business opportunities and trying to be all things to all people. Whatever the reason, exploring new business avenues is going to have some kind of impact on your brand.

There's a book you may have read (and if you haven't, I'd strongly recommend it) called Positioning: The Battle for Your Mind. It's widely considered to be required reading for business people, and a cornerstone of modern brand management and marketing practice. In it, the authors put forward a convincing case that line extensions (i.e. new products and services) dilute brands and cannibalize the existing product offering. I don't think anyone would argue that no business should ever try to introduce a new product or service, but if you want to avoid the pitfalls covered in the book, it's vitally important to do so in a considered and responsible way. Part of that process should involve thinking very carefully about your brand architecture.

Brand architecture is a way of defining the relationship between the different products, categories and divisions within a business or organization. When constructed properly, it provides a road map for the successful introduction of new products, giving them the best possible chance of success without undermining what you already have. Broadly speaking there are three typical structures and each has a number of different names:

1: The Branded House

Also known as the 'corporate brand' or the 'umbrella brand'. This is the structure used by Virgin and Heinz, in which every product carries the name of the business and draws its identity almost entirely from the parent brand (products within this structure tend to have simple, descriptive names). Every product benefits from all of the positive associations and brand equity of the parent brand. Another benefit is that supporting new products tends to be cheaper, as customers are already familiar with the brand, and any marketing for one product in the range indirectly benefits the others by raising overall brand awareness. On the downside, any issue with one of the products has the potential to reflect poorly upon the whole organisation and product portfolio.

2: The House of Brands

Also know as 'individual product brand', this is the structure used by Proctor & Gamble and Unilever. While both of these corporations are huge, they're not really household names, because all of the products in their portfolios have their own identities entirely separate from the parent company. The advantages and disadvantages are very much an inversion of the 'branded house'; each product must stand on its own, and doesn't benefit from any shared brand equity, making the portfolio more expensive to maintain. That said, an issue with one of these products is far less likely to impact upon the others; the average customer will never know that the products are even connected. The parent company may even have multiple competing brands within its portfolio, to target different demographics and increase overall market share - something that's almost impossible to achieve under the 'branded house' structure.

3: The Blended House

Also known as 'endorsed brands' or 'sub brands', this structure is a blend of the 'branded house' and 'house of brands'. Many different flavours of blended house exist, but Nestle and Cadbury are typical examples. Under this structure, each product has its own unique name and identity, but still benefits from a close association with the parent brand. So, for example, Cadbury has many different chocolate bars catering to various demographics, but the whole range is tied together by the distinctive Cadbury purple and iconic logo. Whether they're buying a Freddo or a Marvellous Creations bar, the customer knows exactly what kind of chocolate quality and taste experience they can expect to enjoy. The 'blended house' structure entails all of the advantages and disadvantages of both the 'branded house' and 'house of brands', but to a lesser extent than both.

The vast majority of organizations operate somewhere along the spectrum between the branded house and the house of brands, meaning that most are some species of blended house. The key factor that all successful businesses have in common is not they share a particular structure, but that they have a structure at all. Careful consideration of the relationship between their various products and services, between the parent brand and sub brands, ensures that they play to their strengths and maximize the success of each offering.

This is something that's particularly pertinent to a business in its early stages. All of the product diversification is yet to come, and if you're not prepared then in a few years time you may find yourself juggling an unplanned portfolio of disparate offerings that, far from working together in support of your business objectives, actually pull your resources in different directions, dilute your hard-won brand equity, and confuse the customer.

The only truly wrong structure when it comes to brand architecture for your startup is no structure at all.

The first step to effective brand architecture is having a strong parent brand. If you'd like to learn more, get in touch with Brandsworth for a FREE consultation.