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Brand Strategy

Why Too Many Brands Threaten The Strategy

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Brand Architecture Strategy

If there are two hot topics that surmount all others when it comes to brand strategy, they are surely brand architecture and brand portfolio. At first sight these may appear to be relatively minor, rather superficial topics. The vast majority of organizations have never actually explicitly considered how many brands they need (their portfolio) or the manner in which those brands are combined or kept separate in the consumer’s mind (brand architecture).

And yet, despite the relative lack of corporate attention placed on them, portfolio and architecture issues are the main source of brand pain and profit trauma within most of the companies I have worked with. The reason most marketers underestimate their importance is simple – neither presents itself explicitly as a problem. You don’t wake up one morning and realize you need to trim your portfolio.

Instead, you uncover a problem with internet landing pages or business cards or cannibalization or sales force conflict, and eventually, after much sleuthing, you realize the issue is either down to too many brands or that they are organized in an inappropriate manner.

In more severe cases, you never work out that the wrong portfolio or architecture is killing your marketing effectiveness. I remember one tragic chief marketing officer at a very a large car brand that continued to extol the fact that “we don’t have too many brands, we just don’t market them well enough” until he was eventually fired. To this day, he does not realize that the second part of his observation was directly related to the first.

There are strong clues to the importance of trimming the portfolio. The best case studies are Procter & Gamble and Unilever. When I was a marketing undergraduate, these two beasts had more than 2,000 brands between them. Today they make most of their profits from a combination of 30 brands. I worked recently for an Australian organization that had 42 brands. The easiest way to point out the madness of their approach was to point out that despite enjoying less than 0.2 per cent of the profits of Unilever, they were operating more than double the number of brands.

There are equally clear examples of the importance of brand architecture. I always cite McKinsey – a pure branded house that runs everything under a single brand. If the world’s greatest strategy firm has opted for a single branded house approach, perhaps there is something to be said for less being more.

The big problem for many companies is they think more brands will make them more successful but they have neither the architecture nor the ability to manage a multiplicity of brands well. When God created branding, he intended it to be executed using a brand house and a single brand derived from the name of the founder.

Remember that, because although there is much to be said for sub-branding and big brand portfolios, most companies should stick with the more basic, original approach. As McKinsey has long appreciated, the single branded house approach presents clear strategic advantages related to economies of brand, strategic focus, a single employer brand and a clear and efficient internal operation.

In contrast, have a look at Accor Group. It’s like a jungle inside its operational chart. It has 14 brands, many formed from sub-brand structures and all of which are endorsed by the mother brand. So its ad campaigns feature brands endorsed by the Accor master brand. I call the technical name for this approach a “dog’s dinner” and it is usually achieved when you employ a naive brand manager fresh out of a textbook or have engaged a brand consulting firm that is being paid by the yard.

Whatever the reason, Accor will struggle because it has too many brands and its architecture is a big old mess and it will eventually feel the pain. Its marketing will appear dull and ineffective because it is spread too thinly. Profitability will suffer as too many brands suckle from the corporate teat. And the organization will suffer as internal confusion and contradiction erupts around the muddled design. Architecture might look relatively simple, but like a blockage in the windpipe, it will soon cause much more serious complications to arise.

The crucial challenge for organizations facing the explicit questions of how many brands and which structure is to start with a single brand in a branded house structure and then ask: do you need more?

The answer might, and I underline might, be yes. But you’ll be surprised how few brands you actually really need to get the job done. If you like complexity, organizational charts and inflated sales figures, the more brands the merrier. But if, like me, you prefer impactful marketing, strategic focus and disgustingly impressive profits (despite potentially lower revenues) – less is invariably more.

This thought piece is featured courtesy of Marketing Week, the United Kingdom’s leading marketing publication.

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5 Comments

Mickie Kennedy
Twitter: ereleases
on February 04th, 2015 said

Mark, it sounds like you’re encouraging folks to put all of their eggs in one basket. Isn’t this a bit of a dangerous strategy to take?

Darren Coleman
Twitter: onthewavelength
on February 05th, 2015 said

Interesting and relevant post Mark. Thank you. As you say, less is often more with brand architecture. It’s frequently the case with brand communications, product design and experience creation to name a few. Clutter equates to chaos. Many moons ago someone (on a LinkedIn group discussion) stated a statistical technique existed which helped branding folk objectively optimise architecture. They were reluctant to share this information. Are you aware of such a technique? I’d be very interested to know your thoughts on this. It would help brand marketers objectively address the issue you outline above.

Hilton Barbour
Twitter: ZimHilton
on February 10th, 2015 said

A delightful op-ed urging common sense. If more companies took a long hard look at their current brand assets BEFORE dashing off to launch something bright, new and shiny the messes you outline above would seldom happen. Unfortunately there is more allure, prestige and promotion attached to adding to the portfolio than rationalizing it.

Sandra Pickering
Twitter: opento
on February 10th, 2015 said

Thanks, Mark.
This is one of my favourite topics.
Portfolio management is a delicate balance of pruning and nurturing.
Architecture is a powerful tool – and its use goes beyond clarity and simplicity of decision-making.
It is also a tools for managing meaning in markets.

Mickie, you are right to be concerned about putting all the eggs in one basket but, as Hilton implies, a more common problem in marketing is having too many spinning plates and dropping one 😉

Darren, there are two statistical approaches that I have come across on optimisation. I have used various types of TURF analysis many times in the past(http://en.wikipedia.org/wiki/TURF_Analysis)mainly for range optimisation. And I believe that Affinova have a proprietary algorithm for range optimisation too. Happy to discuss offline.

Claudia Fisher
Twitter: LemonGarden
on February 17th, 2015 said

Hi Mark,
From my experience it is generally true that companies need fewer brands than they think and that sometimes new brands are created in order to avoid answering some really hard strategic questions.

However, I think the post is also a bit misleading – not all businesses are organised like McKinsey and in some cases, additional brands are warranted by the underlying business strategy and structure – for example, to address channel conflicts, to cater to different or even conflicting needs, to address risk or simply because the master brand cannot credibly extend into new areas.

Secondly, the dynamics of M&A need to be considered. In my experience, mergers and acquisitions typically account for a large portion of additional brands in a given portfolio – simply because companies do not actively and timely address the question of what to do with newly acquired brands.

What I find most remarkable in this context is that the House of Brands strategy (typically employed by the likes of Unilever or PG) is morphing – with the increasing importance of the Corporate Brand, rendering the 2 poles of the brand relationship spectrum increasingly irrelevant…comments most welcome.

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