Brand Architecture:

Designing Your Brand Portfolio for Success

September, 2014
Agenda

AGENDA
 Brand Architecture Defined
– Why Brand Architecture
– Brand Portfolio Roles

 Brand Architecture Solutions

– Types of Brand Architecture
– Strategic Considerations

 Brand Architecture Development Process

 Application: McDonald’s Masterbrand Under Fire
 Conclusion

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What’s In a Name?

BRAND ARCHITECTURE DEFINED

Naming a company is just the first of many business decisions - and
may not even be the most important!

Products, business units, specific

services, marketing programs,
features, line extensions, apps, web
sites and more all need monikers.

How these names relate is the

difference between brand coherence
and brand confusion.

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Architecture Rules

BRAND ARCHITECTURE DEFINED

Brand architecture provides the rules for naming assets in the brand
portfolio and specifies the relationships between them. It also determines
marketing investment priorities and whether and how new acquisitions
should be integrated to the portfolio.

A clear architecture contributes to brand

health and company value.

 Makes it easier for customers to navigate

offerings and avoid confusion
 Ensures the masterbrand is leveraged
without overstretching
 Guides new product and innovation
development
 Ensures customer considerations are is
central to naming decisions
 Provides direction for where to focus Each naming decision has
marketing investments implications for future decisions,
so it’s important to have a plan.

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Brand Architecture = Face of the Business

BRAND ARCHITECTURE DEFINED

Brand architecture represents the brand to external stakeholders. The
optimal architecture may not line up neatly with internal organizational
structures – and that’s okay!

Brand Architecture Is Organizational Structure is

Externally Facing Internally Facing

Masterbrand
A Corporate

Business Business
Unit Unit

Brand B Sub- Sub- Products Products

Endorsed by A brand C brand D

Business units are not brands.

Ingredient or Feature

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Architecture Basics: Brand Roles

BRAND ARCHITECTURE DEFINED

Each portfolio brand asset needs a clear role that links it to other assets.

Brand Role Descriptions

Corporate Company name and legal entity. Often used Master Brand
Brand as endorser but may not be customer facing
at all.
Master Drives purchase decision and defines user Sub-Brand
Brand experience. Most strongly represents the
(Driver) differentiation inherent to the offer.

Endorser Provides approval, credibility or guarantee to

Brand a range of products, but is usually not the
driver.

Sub- Derives equity from another brand, usually

Brand the Master.
Endorser
Brand
Ingredient Features, materials, components or parts
Brand that are contained within other branded
products. Not an equity driver, often an Clear roles simplify decisions
equity energizer. about brand expression

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Brand Roles Assigned Based on Business Need

BRAND ARCHITECTURE DEFINED

“Sony” plays multiple roles in its portfolio. Some offerings have stand-alone
brands.
Corporate Brand

Master Brands Sub-Brand Stand-Alone Brands

Master Brand: Allows equity to Sub-Brand: Leverages the Stand-Alone Brand:

be shared among brand assets strength of the master brand Separates offerings, creates
when used in either driver or while helping to separate and new sources of equity or
endorser role. organize the offerings. targets new audiences.

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Brand Architecture: What’s Not Included?

BRAND ARCHITECTURE DEFINED

Branded elements live outside the architecture. They may be trademarked
or licensed and can enhance equity by providing uniqueness and
memorability, but they are not offerings.

Brand Elements Live Outside the Architecture

Celebrities lend Characters create Sponsorships

meaning likeability build affinity

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Signs of Trouble

BRAND ARCHITECTURE DEFINED

Brand architecture is built to last. It needs to be revisited when companies
change strategic direction or the business has added important capabilities
that go beyond its existing brand structure.
Triggers for Revisiting Architecture

 Merger or acquisition
 Too many brands and offerings are competing for
attention and investment dollars

 Corporate brand and product brands have the

same name, hard to distinguish

 Brands are losing relevance with consumers

I have a problem
 Brand meaning has been diluted or stretched
beyond credibility and effectiveness

 Programs, elements, features or sponsorships are

asking to be treated as brands

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Example: Kellogg’s

BRAND ARCHITECTURE DEFINED

In 2012, Kellogg’s restructured its brand portfolio to better leverage its
master brand, acquired stand-alone brands and its Olympics sponsorship.

Triggers for revisiting architecture:

 Had acquired multiple new

brands – Keebler, Kashi,
“If you look at our portfolio we have a number of master
Morningstar – and needed to brands: and we had to start separating out the
elevate Kellogg’s corporate Kellogg’s brand from the Kellogg company …we then
brand above its cereal master needed to be very clear about what Kellogg’s the brand
brand stood for and provide the north star for all the sub-
 Needed to strengthen the brands that kind of sat underneath it.”
meaning of the Kellogg’s
brand - it’s about the power of “Kellogg’s is a truly iconic brand …We felt that having a
breakfast, not just cereal. stronger brand, driving a stronger point of view, a more
 Wanted to leverage powerful identity and have at the center an umbrella to
investment in 2012 Olympics talk about our portfolio more holistically, to talk about
the power of breakfast, to talk about the value of
to benefit all Kellogg’s sub- cereal.”
brands

http://www.forbes.com/sites/jenniferrooney/2012/05/10/kelloggs-embarks-
on-major-brand-overhaul/

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Types of Brand Architecture

BRAND ARCHITECTURE SOLUTIONS

Brand architecture solutions fall on a spectrum. Most are hybrid solutions,
falling somewhere between branded house and house of brands.

House of Brands Hybrid Branded House

Builds equity in strong Leverages strong master Results in strong master

stand-alone brands across brand while allowing flexibility. brand.
a wide range of categories

Requires significant Requires careful planning to Can be difficult to extend

marketing investment avoid confusing customers or beyond the expertise of
Cons diluting the master brand. the master brand.

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Hybrid Solutions Are Most Common

BRAND ARCHITECTURE SOLUTIONS

Disney uses a mix of brand architecture solutions to build and protect its
businesses.

Stand-Alone Brands Hybrid Branded House

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Determining the Optimal Architecture

BRAND ARCHITECTURE SOLUTIONS

Architecture decisions have investment implications, so selection of the
optimal solution is determined by business strategy.

House of Brands Branded House

Do the brands address the Target multiple Target single or few
same or different customer segments segments
segments?

How important is it to Address individual Reinforce a global

represent the brand the same geographies organization mindset
way in different geographies?

Are there synergies that can Few synergies to be Many synergies to be

be leveraged between different leveraged leveraged
brands or business units?

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Brand Architecture Principles

BRAND ARCHITECTURE SOLUTIONS

Three guiding principles help to ensure brand architecture has the optimal
business impact.

Right Number Sufficiently cover the market and target

customer segments with the fewest
brands possible.

Clear Separation Make it easy for customers to find the

solution they seek by ensuring
“daylight” between brand offerings.

Highest Profit Fulfill customer needs (and generate

revenue) while minimizing brand
development and management costs.

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Architecture Decisions Are Strategic

BRAND ARCHITECTURE SOLUTIONS

Not all brands are equally important. Architecture guides decisions about
innovation and investment as portfolio brands compete for resources.

Example
Strategic Significant contributor to company’s future sales,
perceptions or market position.
Brand

Distinguisher Enhances the differentiation of another brand. Also

referred to as ‘branded energizer’ or silver bullet.
Brand

Cash Cow Money making brand that does not represent

future significant growth.

Corporate Low visibility to customers, but important to

regulatory bodies, investors, employees, trade
Brand groups, partners.

Fighter/Flank Addresses competitive threat. Protects share of

other brands in the portfolio.
er Brand

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Example: Samsung’s Architecture Directs

BRAND ARCHITECTURE SOLUTIONS

Investment
Samsung has strategically separated the Galaxy brand from its consumer
electronics and enterprise brands through an endorser strategy, and invests
primarily in Galaxy.

Cash Cow Strategic Brand Flanker/fighter Corporate Brand

Brand

Windows Smartphones Solutions Exchange

Feature Mobile Phones Android Smartphones

Digital Cameras and Android Tablets Windows Tablets Samsung Knox

Camcorders
Android Cameras Windows Laptops Enterprise Solutions
Wearable Tech
Android Wearables Windows Desktops Enterprise Ready Devices
Tablet PCs

Home Theater and Audio

Home Appliances

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*Not Sub-Branded
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Amazon’s Architecture Also Directs Decisions

BRAND ARCHITECTURE SOLUTIONS

 Amazon keeps its acquired strategic businesses separate through a stand-
alone strategy. It uses an endorsed approach for all other brands.
Amazon.com is the closest thing the company has to Cash Cows, though it
appears to still have healthy growth potential.

Cash Cow Strategic Brands Stand-Alone Brands

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Starbucks is Expanding to Meet Business Needs

BRAND ARCHITECTURE SOLUTIONS

 Starbucks is thoughtfully expanding its portfolio to separate its high growth
and premium businesses from its mainline coffeehouses and new
Starbucks Express stores.

Cash Cows Strategic Brands Flanker/fighter

Brand

Starbucks coffeehouses Express format Starbucks Reserve

stores (2015) Roastery and Tasting
Room (Seattle)
Starbucks Reserve
stores (2015)
http://news.starbucks.com/news/starbucks-accelerates-growth-of-store-formats
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Assessing Brand Architecture Options

BRAND ARCHITECTURE SOLUTIONS

When selecting the optimal architecture, it’s important to evaluate options
using agreed criteria.
Business Brand Customer
Strategic Fit? Build Equity? Maximize Clarity?
Help achieve and support Fit with/protect Minimize customer
strategic priorities? existing equities or confusion?
create new ones?
Business Support? Address Multiple
Create Synergies? Stakeholders?
Support different business
units and/or market Create synergies Meet the needs of
segments? across the portfolio? multiple
Flexibility? Provide Leverage? stakeholders?

Accommodate changing Enable marketing and

market conditions? brand-building
efficiencies?
Implementation?
Ability to execute
successfully?

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The Way Forward

BRAND ARCHITECTURE DEVELOPMENT

Effective brand architecture directly impacts the market value of a business,
so it’s worth taking the time to get it right.

Brand Architecture Development Process

Strategic Brand Architecture Alternatives Evaluation of

Business Analysis Mapping Development Alternatives

How closely aligned How aligned are What are the Which architecture
are the brand and external and internal various ways the alternative best fits
business strategies? perceptions of brands portfolio could be the short and long-
and their roles? configured going term business and
forward? brand objectives?

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The Branded House McDonald’s Built

MCDONALD’S CASE STUDY

Through consistency and careful brand-building, McDonald’s became an
American icon. Using the arches, color palette and “Mc” to identify and link most
of its offerings to the master brand, it is a prime example of a Branded House
architecture.
“[McDonald’s] gave millions of Americans their first jobs
while changing the way a nation ate.”
Bloomberg Businessweek, 3/2/03

Tightly associated with

burgers, fries and soft drinks,
the brand thrived in the ’80s
and early ’90s.

http://mrktspnkr.wordpress.com/2012
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Signs of Trouble Starting in Late 1990s

MCDONALD’S CASE STUDY

New menu items
Record
like the low-fat
number of
Spun off Chipotle .
McLean Deluxe in 2006 to refocus U.S. comp store sales
franchisees slipped 1.7% in Q1
and Arch Deluxe on core
left the and 1.5% in Q2 of
burgers, meant to hamburger
system in 2014
appeal to adults, business
2002
bombed

1995 2000 2005 2010 2015

Sales In 2004,
In an effort to Salads represent only 2-
stagnated while “Supersize Me”
regain relevance, 3% of McDonald’s sales in
costs increased brought attention
McDonald’s the United States. CEO
as the product to what too much
acquired Chipotle Don Thompson admitted “I
offering McDonald's does
Mexican Grill and don’t see salads as being a
expanded/beca to your body and
Boston Market in major growth driver in the
me more how it makes you
1999 near future.” (5/13)
complex feel.

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Strategic Direction

MCDONALD’S CASE STUDY

Brand Architecture Development Process

Strategic Brand Architecture Alternatives Evaluation of

Business Analysis Mapping Development Alternatives

How closely aligned How aligned are What are the Which architecture
are the brand and external and internal various ways the alternative best fits
business strategies? perceptions of brands portfolio could be the short and long-
and their roles? configured going term business and
forward? brand objectives?

Focused on health-centric global initiatives, putting food quality first.

Marketing now organized by consumer groups such as millennials,
families and adults rather than by product.
Stepping up digital, including e-commerce, fast-tracking testing of
mobile payments and ordering. In June it set up a "learning lab" at a
restaurant in Laguna Niguel, Calif., to better understand what people
want and to experiment with customizable burgers

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Brand Architecture Mapping

MCDONALD’S CASE STUDY

Brand Architecture Development Process

Strategic Brand Architecture Alternatives Evaluation of

Business Analysis Mapping Development Alternatives

How closely aligned How aligned are What are the Which architecture
are the brand and external and internal various ways the alternative best fits
business strategies? perceptions of brands portfolio could be the short and long-
and their roles? configured going term business and
forward? brand objectives?

Executives worry the master brand has lost

relevance with consumers as:
Millennials have defected to fast casual chains like
Chipotle and Five Guys.

Moms no longer see McDonald’s as a good place for http://www.businessweek.com/articles/2014-09-

kids. 09/mcdonalds-happy-meal-problem-kids-turn-away-
from-fast-food

http://www.chicagobusiness.com/article/20140906/ISSUE0
Last month, Consumer Reports said a survey of 1/309069980/mcdonalds-has-a-new-generational-problem-
kids#

more than 32,000 subscribers rated McDonald's http://online.wsj.com/articles/mcdonalds-faces-millennial-

challenge-
1408928743http://online.wsj.com/articles/mcdonalds-faces-
burgers the worst-tasting of 20 rival burger chains. millennial-challenge-1408928743

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Architecture Alternatives

MCDONALD’S CASE STUDY

Brand Architecture Development Process

Strategic Brand Architecture Alternatives Evaluation of

Business Analysis Mapping Development Alternatives

How closely aligned How aligned are What are the Which architecture
are the brand and external and internal various ways the alternative best fits
business strategies? perceptions of brands portfolio could be the short and long-
and their roles? configured going term business and
forward? brand objectives?

Branded House approach makes it difficult to change perceptions.

May need to reserve McDonalds as corporate brand and build equity
in new stand-alone brands and sub-brands.
Corporate brand could be focused on target-relevant purpose (e.g.,
transparency in food sourcing; championing clean, healthy foods and
ingredients; supporting a living wage for hourly workers) McDonald’s applied
Sub-brands or stand-alone brands for Kids or Millennials or other priority for a new trademark
targets may help separate new initiatives from current offerings. for a McBrunch brand
in September 2014
New digital initiatives provide a platform for a new, more relevant brand. http://adage.com/article/news/mcdonal
d-s-files-trademark-mcbrunch/294911/?
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Selecting the Optimal Solution

MCDONALD’S CASE STUDY

Brand Architecture Development Process

Strategic Brand Architecture Alternatives Evaluation of

Business Analysis Mapping Development Alternatives

How closely aligned How aligned are What are the Which architecture
are the brand and external and internal various ways the alternative best fits
business strategies? perceptions of brands portfolio could be the short and long-
and their roles? configured going term business and
forward? brand objectives?

Key evaluation criteria relate

to ability to support the
business, build new sources
of equity and better address
the needs of Millennials and
kids/Moms.

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Key Takeaways

CONCLUSIONS
 Brand architecture is a strategic business design solution that aligns
business and brand goals

 Architecture defines clear roles, relationships and investment priorities

among brands

 A coherent brand architecture makes marketing more efficient and effective

by ensuring customers and other stakeholders understand what the
business can do for them

 House of Brands and Branded House are just two of many possible
architecture solutions. Most companies used a hybrid approach.

 Brand architecture should be revisited periodically to ensure business

requirements are being addressed and the structure is optimal for supporting
the business strategy

 Identifying the optimal architecture is a 4-step process that begins with a

strategic business assessment and concludes with a recommended solution

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 CONTACT US
How Can We Help You Grow?

To Learn More, Contact Us:

Carol Phillips Judy Hopelain

carol@brandamplitude.com judy@brandamplitude.com
269-429-6526 415-810-8268

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