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 Brand hierarchy

Stand-alone intimacy brands

The most precise way to develop brands is to have each brand supported by a stand-alone set
of trademarks that will build a special relationship of intimacy with the target customer, as well
as one of trust that will build over time. In this way, the brand stands or falls on its own merits,
without putting any other brand on the line as its guarantor of quality and trust.

This approach has clear advantages. There is less confusion over what the brand stands for
than where a customer-specific intimacy brand is backed by a trusted house brand. There is
also less risk to the house brand - often the name of the manufacturing corporation. The role of
the brand is clean and unadulterated.

However, there are also disadvantages. It is rumoured that Proctor & Gamble, the company
most associated with the "one brand per proposition" approach, estimates that it costs around
US$1 billion to establish a global stand-alone brand in a consumer market. It is therefore no
coincidence that the most aggressive of the Internet brands, such as Amazon, AOL, Yahoo etc.,
have invested some 75% of their total expenditure in brand-related marketing activities.

Combination brand architectures

So, unless you are ready to bet the company, there are other options:

• multiple trademarks with the same trademark-root, e.g. Nes +café, tea/quick etc. for
Nestle
• a combination of trademarks, e.g. Ford + Sierra, often followed by a series of
descriptors of engine size, performance and possibly special edition, all of which may
not be, or cannot be, trademarked

Many companies combine approaches. Ford has "the Ford Corporation" to describe the
company, "Ford" as the house brand, stand-alone intimacy brands such as Aston Martin, Jaguar
and Volvo, and car brands such as Focus, Sierra, Ka. Nestle operates in a similar way.
Sometimes it uses the Nestle house brand with different logos, at other times it uses a
trademark-root brand, such as "Nescafe", and sometimes it builds stand-alone intimacy brands,
such as "Carnation".
The extent to which customers associate the different brands will vary. Jaguar is not officially
endorsed by Ford but, at a guess, most current and prospective Jaguar owners are aware of
Jaguar's parentage, and appreciate it as a guarantee of quality. Not everyone will associate
Nescafe with Nestle, but many will. They may or may not know that Carnation is a Nestle brand.
The objective of supporting a customer-specific intimacy brand with a trusted house brand is to
transfer the equity between the two. When you are building a new brand, supporting it with a
trusted house brand will give it a kick-start. At a later stage, the new brand may add freshness
and vitality, or another angle, into the house brand. This is what British Airways intended to do
with Go, and KLM with Buzz. Go stands for a new way of flying cheaply (in competition with
Easyjet), BA guarantees that the plane will stay in the air. The danger is that one brand will
adulterate the other. Is Go quite so fresh when associated with BA, and what happens if the Go
proposition starts undermining the BA pricing structure? This apparently troubled the business
team within BA for a long time, and for good reason - it is a question of calculating the trade-off.
Easyjet in its turn has started to use the trademark-root approach, taking the word and styling of
Easy to make the same proposition for car rental under the name of Easycar.

It is all a trade-off

Much of business is a trade-off, and branding is about business. Ideally, each brand would
make a clear proposition and, if you want to make a slightly different proposition (perhaps
because you have developed a new technology), you would create a new brand.

Many established companies have used this approach in the past, ending up with many
thousands of trademarks aspiring to be brands. But in branding terms, this approach does not
work. Legally protecting several thousand trademarks alone is punitively expensive, giving each
one the investment it needs to reach its full potential is impossible. It may work where people
are buying products, but not where people are buying relationships. Thus Proctor & Gamble
recently announced it would focus on 80 brands.

So, inevitably brands will have to be stretched. The more emotionally-based the central
organising thought, the easier it will stretch into new markets; Virgin is a good example of this.
The more specific the brand to a particular feature or hard benefit, the more risky it is to stretch
it because the legacy connotations may not fit the new market. It is hard to imagine Snickers
motor oil.
Issues

Some issues you may wish to address are:

• How much money do you have? - brands cost a great deal of money to build, especially
on a global basis. Using a trusted house trademark, or trademark-root, will get
recognition & gain respect faster, but may dilute the clarity of the brand.
• How many separate thoughts are you trying to get across? - one thought should equal
one trademark, at a cost.
• How quickly do you need to build respect and trustworthiness into your brand? - brands
gain trust over time. If you want immediate trust, you will need to link the new trademark
with a trademark which is already a trusted brand (which need not be your own).
• Do you want to grow and sell your brands? - trademarks cannot easily be sold in
sections. Buyers normally want the whole trademark or not at all. If your trademark
architecture is based on a house trademark, a trademark shared across a product
family or several product families, or a trademark-root, this makes it difficult to sell
except as a job lot. As with licensing or franchising, you would need to build into all
agreements the ability to confiscate the brand if the other parties do not uphold the core
values of the brand, and then you would have to police their performance.
• Are any parts of your business risky in PR terms? - the larger the span of a trademark,
the cheaper it is to run, but also the more at risk it is from damage to its reputation from
one area of the business. It is more costly, but safer, to have different trademarks to
cover different areas of the business as well as different thoughts.
• Do you want to rejuvenate your "house" brand? - Go enlivens BA; Egg adds youth to
Prudential. Trademarks working in combination borrow from each other's equity.
• Introduction

“But surely the more established
• brands you have the better?”
• The brand portfolio includes all the brands and
• sub-brands attached to product-market
• offerings, including co-brands with other
• brands. In order to distribute your investment
• most effectively it is important to look at the
• relationships between all the sub-brands and
• their strategic importance in overall brand
• building. This will help you answer the
• following questions:
• > What is the logic of the structure?
• > Does it provide clarity to the customer
• rather than complexity and confusion?
• > Does the logic promote synergy and
• leverage?
• > Does it provide a sense of order, purpose
• and direction to the organisation?
• > Or does it suggest ad-hoc decision making
• that will lead to strategic drift and an
• incoherent jumble of brands
Why managing a brand portfolio is
important
“Lack of focus means that energy and
resources are dissipated. Focus, in contrast,
ensures that people and resources are
concentrated where they can add greatest
value.” [Fitzgerald, 2001]
Portfolio management will influence the
following areas:
Resource
Resources such as R&D and marketing spend
need to be allocated to areas of best return.
Each brand requires brand-building resources.
Without a clear picture of the portfolio, it will
be harder to identify how best to support the
brands that will bring the best returns. If each
brand is funded solely according to its profit
contribution, high-potential brands with
modest current sales could be starved of
resources.
Efficiency
Create synergy with your brand portfolio –
strong associations can not only benefit all the
brands but also be cost efficient by creating
economies of scale in both manufacturing and
communications. Looking at brands as standalone
silos is a recipe for confusion and
inefficiency. Are there too many or too few
brands? Could some be consolidated,
eliminated or sold?
Growth
Davidson [August 2002 a] identifies six ways
in which portfolio management enhances
growth:
> Clear prioritisation of future focus by major
market
> Prioritisation by brand and product
> Concentration of spend on priority market,
brands and products
> Operational cost savings through simplified
business
> Disposal of brands which don’t fit
> Gap filling by product development and
• acquisition.

6. BRAND PORTFOLIO AND ARCHITECTURE


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Leverage
Leverage your brand equity. Leveraging brands
makes them work harder. A proper portfolio
analysis can highlight which brands are best
suited to extension, for instance. The more
effective and powerful your brands, the
stronger your leverage and the bottom line.
Clarity
Clarity of product offerings will underpin a
consistent brand identity with all the
• stakeholders.

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