brand architecture Tag

Brand Diversification: When Is it a Good Idea?

Brand Diversification: When Is it a Good Idea?In April I posted a SlideShare presentation (below) about tech startups and key brand considerations as they grow. In it I described Facebook’s decision to retain the WhatsApp and Instagram brands as part of a brand diversification strategy. Retaining acquired brands (rather than renaming and assimilating them into the parent brand) can be useful if they appeal to audiences, or deliver services that are not aligned with your core brand. While Facebook has 1.2 billion users, both Instagram and WhatsApp have hundreds of millions of loyal users. Since many of these users prefer these acquired apps over Facebook, it may make sense to keep those brands separate.

I also remarked that Facebook could continue to grow by following this type of diversification strategy, although it risks cannibalizing some of the popularity of its flagship brand. Now Facebook has publicly committed to this diversification strategy, which has been dubbed by some as “unbundling.”

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4 Questions to Ask When Developing a Brand Architecture Strategy

4 Questions to Ask About Your Brand Architecture as Your Organization GrowsLet’s imagine you are Facebook. When you first started, you had a clear idea. You created messaging, a user experience and an identity platform to guide it as it grew. You made the hard decisions to whittle your brand’s message down into one clear, coherent thought.

But now, you’re acquiring additional brands at a very high cost, adding complexity to your brand. Now you’ve got Instagram and WhatsApp. You say you are committed to preserving their independence. We say it’s time to revisit those hard decisions, to keep your brand architecture intact and your brand strong.

We see organizations—especially those in the technology and digital fields—take a “ready, fire, aim” approach to acquiring brands and working them into their brand architecture. As a result, any of the following situations may occur, creating a complex and unwieldy environment:

  1. You’ve brought in a little monster that’s unlike the rest of the monsters in your zoo, but you love it anyway.
  2. You decided to preserve the equity of an acquired brand because you don’t want to “mess it up.”
  3. You are developing a new brand in response to a short-term market need or competitive threat.

So how does a growing company develop a brand architecture strategy?

Developing a Brand Architecture

There are four questions you can ask of your company that will guide your brand alignment through this transition:

  1. “How many promises do we want to make to our audiences?”
  2. “How elastic is our current brand in making these promises to these audiences?”
  3. “How many brands do we eventually want to have, and need to support?”
  4. “How does the introduction, or cancellation of a brand, affect the rest of our portfolio?”

These questions must not be thought of in a vacuum; rather, they should be thought of as a connected part of the organization. While some organizations are disciplined about this, others could stand to use some help. Even the most disciplined companies have to revisit this over time.

IBM, for example, is a technology giant and appears to be a master-branded company, but if you look at IBM over time, they have struggled with supporting the master brand in exchange for some autonomy at the sub-brand level. IBM acquired a number of sub-brands over time, such as Lotus, Rational Software and Tivoli. Progressively each company began using more and more of IBM’s resources until the organization made a decision to rein these brands in. Lesson learned: when they acquired PwC Consulting, it rather quickly became IBM Global Business Services.

On the other hand, GE has done a remarkable job of maintaining the GE brand. It’s very simple; it covers everything from light bulbs and toasters to aircraft engines and nuclear reactor services. How did they manage that? GE focused its brand promise on excellent management and ceaseless innovation. Anytime you see that GE brand, that’s what it means. That’s a pretty powerful model. If I were Facebook, I would take note.

Learn more about our brand architecture services.

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What Is Brand Architecture?

What Is Brand Architecture?One of the corporate branding disciplines that we receive the highest number of inquiries about is brand architecture. We find that for many clients however, it’s hard to grasp what brand architecture really means. Some organizations think of it as market segmentation, others think of it in terms of rationalizing portfolios or acquisition strategy. These are all important concerns, but we think about it at a higher level. Brand architecture explains the degree of relationship that should exist between the corporate brand and its various product and service brands. Should they go with a monolithic Master Brand strategy, corral multiple brands into a “house of brands,” or some combination of the two? What is the strategic rationale for an approach? Without clarity on these issues, your brand promise can become unclear, which creates confusion and can even reflect a lack of confidence.

What is Brand Architecture?

Let’s First Understand The Root of Brand Complexity

Anything that is ever created, whether it’s an app, a product or a service, wants a brand. And why not? Every creator wants to draw attention to his or her creation. By this philosophy, however, one company could easily have numerous brands. Companies often revert to micro-market segmentation as a surrogate for brand architecture. Google, for instance, has set an unusual precedent. The tech giant has many independently moving parts (read: brands) within its organization, but the sum total of those parts doesn’t necessarily create a comprehensive sense of what is “Google.” This is the most common problem we see with brand architecture.

The 3 Questions That Lead to a Strong Brand Architecture

What you call your product and how you identify it is only a tiny percent of the brand experience. Brand meaning and value is based on the promise each product fulfills and how it delivers that promise. Creating a strong and sustainable brand architecture requires answering these three questions:

  1. Do your various different offerings add up to fulfill a promise?
  2. What does each offer say about you as a provider?
  3. How does each one of those offerings help you build your audience, or deliver on your promise?

In our experience, when a new brand is created, there’s not much consideration for the greater whole until it’s too late. A number of tech companies have spent years and millions of dollars cleaning up their brand messes. For example, we saw Sony lose its position as a premium brand partly because its many sub-brands fragmented product teams and distracted consumers from Sony’s core promise. We look at Amazon’s recent purchase of WholeFoods and wonder how strongly Amazon will want to associate their technology and commerce brand with a brick and mortar grocer. Any obvious association is likely to change perceptions of both brands.

Relatively few companies make the hard decisions that we think are necessary to grow their brands responsibly. By doing so, companies can avoid wasted investments and confusion among their audiences.

Contact us to learn more about creating successful brand architectures.

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