How do you manage brand architecture and hierarchy in a portfolio strategy?

1 Brand architecture

Brand architecture is the structure and relationship of the brands within a portfolio, which defines how the parent brand, sub-brands, endorsed brands, and product brands are linked and differentiated. Monolithic brand architecture is when the parent brand is the dominant identity for all products and services, with minimal or no sub-branding, such as Apple, Google, and IKEA. Endorsed brand architecture is when the parent brand provides credibility and endorsement to the sub-brands, which have their own identities and positioning, such as Marriott, Nestlé, and Unilever. Pluralistic brand architecture is when the parent brand is less visible or irrelevant, and the sub-brands operate independently and target different segments, such as Procter & Gamble, L'Oréal, and Volkswagen.

3 Portfolio strategy

Portfolio strategy is the process of deciding how to allocate resources and investments among the brands within a portfolio. It involves evaluating the performance, potential, and role of each brand, and aligning them with the business objectives and customer needs. There are four main roles of brands in a portfolio: cash cow, star, question mark, and dog. For instance, Coca-Cola Classic is a cash cow brand for Coca-Cola, Amazon Web Services is a star brand for Amazon, Google Stadia is a question mark brand for Google, and Volkswagen Beetle is a dog brand for Volkswagen. Cash cows have a high market share and low growth potential, generating steady cash flow and profits with minimal investment. Stars have a high market share and high growth potential, requiring high investment to maintain or increase their position and fend off competitors. Question marks have a low market share and high growth potential, generating low or negative cash flow and profits, and requiring high investment to capture market share. Dogs have a low market share and low growth potential, generating low or negative cash flow and profits, and requiring low investment, and may be divested or discontinued.

4 Benefits and challenges

Managing brand architecture and hierarchy in a portfolio strategy can offer several benefits and challenges for brand managers. Benefits include creating clarity and consistency for customers and stakeholders, leveraging the equity and reputation of the parent brand, fostering synergy and efficiency among the brands, and enabling differentiation and innovation. Challenges include creating confusion and conflict for customers and stakeholders, undermining the equity and reputation of the parent brand, creating complexity and redundancy among the brands, and limiting differentiation and innovation.

5 Best practices

To manage brand architecture and hierarchy in a portfolio strategy effectively, brand managers should ensure that the portfolio strategy is aligned with the business strategy, vision, and mission. It is also important to understand customer needs, preferences, and behavior, as well as assess the market dynamics, opportunities, and threats. Additionally, optimizing the portfolio structure, size, and scope is essential, as well as monitoring and evaluating the portfolio performance, impact, and value. By following these best practices, brands can deliver relevant and meaningful benefits and experiences, while avoiding cannibalization and overlap.