Organic supermarket chain Whole Foods is diversifying. Last week, it announced that alongside its existing 400 Whole Foods locations it was launching a new chain of branded stores in the US under the brand name ‘365’.
For superficial, tactically oriented marketers who like shiny things and new launches this is positive news. But wiser, strategic marketers should be more circumspect. Launching new brands is always a tricky corporate moment.
On the positive side, Whole Foods’ new brand allows it to access a different market segment from the one it serves. Co-CEO Walter Robb says the new stores will be “geared toward millennials”. That sounds trendy but behind the statement is a ton of shopper research that shows a younger generation searching for better quality, natural products but are not looking for it among the aisles at Whole Foods. According to Supermarket News editor Jon Springer: “[It has] identified millennial shoppers, younger shoppers who are very particular about what they eat, but also tough about what they can spend on food.”
That is an important observation because aside from opening up a new segment of the market it also demonstrates another advantage of a second brand – the ability to play at a different, lower level of the value curve. Whole Foods has been remarkably successful at not only building brand and attracting customers but also maintaining premium prices. If you have visited one of the company’s UK locations, you will know that its excellent assortment of organic offerings does not come cheap. That’s true back on home turf too where Whole Foods typically enjoys a 15% to 20% premium over its US rivals. The introduction of the 365 brand allows the company to enjoy two distinct points on the pricing elasticity curve.
Society is accelerating. In the digital world, time and geography are of little relevance. People can be anywhere and everywhere. As lines blur providing some separation between “real life” and “digital life”, it becomes increasingly difficult to maintain distinct parts of our lives.
Earlier this week on Branding Strategy Insider, Mark Ritson shared, The Rise of The One Brand Strategy citing the recent announcement that Coke (UK, NW Europe) was consolidating all of the Coke sub-brands (Coke Zero, Coke Life, etc.) under the Coca Cola brand. And as he notes, this approach to brand architecture isn’t new, but what is new is the amount of companies who are departing from portfolios of independent brands, and moving towards a more singular corporate focus.
If we consider people as brands, there are similarities in the Brand Relationship Spectrum that can be used to describe what is happening in the culture. This is important to consider because it’s a move which aligns to the way more and more people work. When a brand works the way people work, it’s easy to grow and nurture a relationship at the personal level.
The single most important piece of brand theory of the past quarter century was published in the California Management Review in 2000.
‘The Brand Relationship Spectrum’ was not especially revolutionary and yet the paper, by academic legend Professor David Aaker and his co-author Erich Joachimsthaler, became an instant classic.
The reason for its resonance lies in the paper’s first diagram. Splashed across page two are a series of innocuous looking boxes that, on closer inspection, reveal the titular spectrum. Starting with a ‘House of Brands’ and concluding with a ‘Branded House’, this diagram lays out the complete geography of brand architecture.
Most companies have more than one brand in operation and yet most have rarely contemplated how best to link, or separate, those brands for maximum effect. This question of brand architecture became one of the fundamental challenges of contemporary branding and, when allayed with the equally important issue of brand portfolio, came to represent perhaps the biggest single challenge to successful brand management in the early 21st century.
Brand architecture is the logical, strategic and relational structure for your brands or put another way, it is the entity’s “family tree” of brands, sub-brands and named products. As organizations grow through mergers and acquisitions they are faced with many important decisions regarding brand architecture, including how many brands should be managed. Here are the reasons a company might want to maintain different brands or sub-brands:
1. If there are channel conflict issues, especially if key customers who resell to the end consumer want to offer something different from competitors
2. If the same (or very similar) products are sold at different price points – separate brands or sub-brands create more distance between the offerings
3. If one set of products are upscale or premium, while the other are standard or value products
4. If one brand appeals to a very different market segment with different needs from the other brand (making the messaging different)
Regarding linking brands, usually, there is no significant danger, especially if one is endorsed by the other. (The exception to this is if one brand’s associations somehow detract from the other brand.) Brand endorsement indicates the linkage but also creates some distance between the two brands. Endorsed brands make the parent brand relevant (or at least increases its awareness) to the market served by the endorsed brand.
The advantage of using fewer brands or a singular brand is marketing efficiency in brand building and customer communication.
Brand architecture strategy and the issues that arise from growth can be quite complex, for that we have developed this comprehensive guide to brand architecture. For those brands that need one-on-one help The Blake Project developed The Brand Architecture Workshop.
Sponsored By: The Brand Architecture Workshop
Brand architecture is the logical, strategic and relational structure for your brands or put another way, it is the entity’s “family tree” of brands, sub-brands and named products. Brand architecture addresses each of the following:
- What the overarching branding approach is – master brand, brand/sub-brand, endorsed brand, stand alone brands or some combination of these
- How many levels of branding should exist
- What types of brands exist at each level
- How brands at different levels relate to each other, if at all
- Decision rules for creating new brands
- Which brands’ identities are dominant and which ones are recessive
- What types of names the organization uses – coined, associative descriptive or generic descriptors – and in which circumstances (usually controlled by decision rules)
- Which brands are features in each and every media, vehicle, situation and circumstance (e.g. business cards, stationery, product catalogs, website, shipping boxes, vehicle signage, employee uniforms, building signage, etc.)
Organizations often find themselves at a stage in their development in which the number of brands and named products that they are managing has gotten out of control. This could be due to a series of mergers and acquisitions or just the continuous growth of new products and services over time. These organizations find that their portfolios of brands and other named entities have gotten too difficult or expensive to manage. Frequently, there are no naming standards. Each new product or service is named as it is created, with no view to the overall picture. And sometimes, employees are creating variations or new versions of existing brands for entities and programs such as internal training programs, company picnics or employee reward programs. If some or all of this applies to your organization, you likely need help clarifying and simplifying your branding structure.