Interbrand’s explanation of brand architecture is: “The way an organization structures and names the brands within its portfolio.” The firm adds that: “There are three main types of brand architecture system:
- Monolithic, where the corporate name is used on all products and services offered by the company;
- Endorsed, where all sub-brands are linked to the corporate brand by means of either a verbal or visual endorsement;
- Freestanding, where the corporate brand operates merely as a holding company, and each product or service is individually branded for its target market.”
A great example for the monolithic structure is Four Seasons. From hotels, to spas, from residences to private properties, everything is branded as Four Seasons. You deal with one brand. No confusion. Easy to manage. Yet, quite limiting.
Endorsed structure is the most common one. Think about Nestle. It is the name of the corporation, but it is also a master brand (You can buy a Nestle chocolate bar.) It has sub-brands such as Nesquik, Nesfit. It also has products such as Nestle KitKat.
Finally, the freestanding structure… It is best explained by Viacom. You have freestanding brands such as MTV, VH1, Paramount Pictures and Nickelodeon. In the minds of consumer, these brands are not attached to Viacom (except if you are an investor.)
Of course you ask yourself the big question: “How do I decide which structure to use for my brand?” Unfortunately, there is no easy answers. But, I can give you a cheat sheet. Wearing three hats (in the right order) can help you pick the right structure:
- First, wear the consumer hat. We live in a world of over communication. Keep it simple. As Ian Wood of Landor says: “You should have as few brands as possible and as many as you need.” Do you think the consumer needs to build a relationship with a new brand? Or can you leverage your existing relationship with them?
- Second, wear the business strategist hat. What business are you in? What is your brand’s differentiator? Do you think the new brand is aligned with your business strategy? For instance, if your business strategy is to sell mass market olive oil, then you need a new brand should you decide to enter premium olive oil market. More specifically think about Toyota and Lexus.
- Finally, wear the financial analyst hat. Is it economically viable to create a new brand? Do you have resources (money, staff,and time) to invest in a new brand? Jack Trout once used the airplane analogy: “It takes 110 percent of rated power for a jet to get its wheels off the ground. Yet when it reaches 30,000 feet, the pilot can throttle back to 70 percent of power and still cruise at 600 miles per hour.” Launching a new brand is like an airplane taking off. Do you have what it takes to support a new brand?