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Brand Architecture: The Most Misunderstood Concept in Branding

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Brand Architecture: The Most Misunderstood Concept in Branding

Brand architecture may be the most misunderstood concept in branding.
 

As a business professional, you’re probably familiar with the term “brand”. You may also be conversant with the expression of a brand through your “brand identity.” But we find that many professional services leaders are far less familiar with “brand architecture” and all that it implies.

If brand architecture is a blind spot in your firm, it can cost you big time. In this post, I cover the basics so you can be prepared to navigate these tricky waters and make better decisions for your firm.

Brand Architecture Defined
 

Brand architecture is essentially a blueprint. It refers to the structure of brands within an organization. Think of it as a hierarchy, a way of considering the relationship among brands and sub-brands. Brand architecture provides structural clarity and helps both employees and clients better understand the most important components of your brand and how they interrelate.

Companies typically have a main brand for the overall organization. They may also have related sub-brands or one or more independent brands. How these various entities fit together and are positioned in the marketplace is the essence of brand architecture.

Brand architecture is about managing change. It has both internal and external implications. From the outside, it can help people make sense of a multidimensional organization and differentiate a firm’s key services. Internally, brand architecture has value as a business strategy tool. For example, brand architecture usually comes up in the context of a transition, such as:

  • The launch of a new product or service line
  • A merger or acquisition
  • Firm rebranding or repositioning
  • Preparation for a liquidity event

Brand architecture is an important value driver in these kinds of common situations, so it deserves strategic attention. In this post I’ll examine the basic approaches to brand architecture and the advantages of each as well as key considerations in choosing a brand architecture strategy that’s right for your professional services firm.

Brand Architecture and Your Growth Strategy
 

The true role of brand architecture may not be obvious at first to many professional services management teams. That’s because it affects so many areas of your growth strategy.

For example, brand architecture impacts a firm’s organic growth strategy and firm profitability. Of course, your firm’s ability to grow and its profitability impacts the value of your firm.

There are other strategic considerations as well. For example, your decisions can affect your ability to leverage a new acquisition or sell a subsidiary. These have a profound effect on the success of your merger and acquisition strategy.

Before we get into the three basic brand architecture options, let’s take a closer look at some key brand architecture terms and concepts:
 

1. Firm Brand
 

This is the overall company brand, also called an umbrella brand, parent brand, or corporate brand. It can be dominant and associated with all of a firm’s practice areas and service lines. In some cases, it can also be recessive, allowing the individual services brands to dominate.

A firm brand is generally associated with the “branded house” model discussed below. However, in its extreme form it aligns with the “house of brands” model.

2. Sub-Brand
 

These often include the firm’s name as part of each sub-brand name, such as Apple TV and Apple Watch. In contrast to a parent brand, sub-brands are also known as child brands or endorse brands.They may be closely or loosely associated with the parent brand. For a prominent example in the professional services, take a look at Accenture and how they’ve built sub-brands around key practices. 

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3. Product Brand
 

Product brands have their own distinct, unique identity with a recessive main brand acting as a holding company. Product brands are also called stand-alone or independent brands. Think Procter&Gamble and its product, Tide.

Another example is the recently rejiggered Google corporate structure. The parent brand is now known as Alphabet, which is essentially a corporate holding company operating quietly in the background, virtually unrecognized by consumers. Look at it this way — you won’t hear about anyone “Alphabetting” anytime soon.

Product brands work well in situations in which a firm operates in diverse markets and has decentralized marketing and business development functions. This brand strategy is not widely used in the professional services world, but it might be applicable when there’s a spin-off technology or service going to a very different market.

4. Unbranded
 

While it is unusual to hear about unbranded services in a brand architecture discussion, unbranded is the norm for professional services. In fact, most service firms don’t brand individual practice areas.

However, just because unbranded services are common, does it make sense? After all, branding a service or area of practice can highlight your specialization and add credibility to your firm. This is especially valuable if you offer the same service to two different industries, such as healthcare and hospitality. Individually branding your services can make them more distinctive and, potentially, add value.

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3 Brand Architecture Options

Now that we’ve described the basic concepts, let’s examine the three fundamental brand architecture options:

Branded House
 

A branded-house architecture features a cornerstone firm brand, such as Apple and FedEx, from which all services spring forth as extensions – Apple TV & Apple Watch, FedEx Ground & FedEx Express, and so on.

A branded-house architecture is ideal for business strategies focused on such things as brand equity transfer, spend efficiency, and speed-to-innovation traction.     

House of Brands
 

In a house-of-brands model, individual products or companies can focus on what each does best without limiting the broader group’s businesses growth trajectory. The classic example is Procter&Gamble. Highly visible P&G consumer brands such as Gillette, Pampers, and Tide all operate in very different markets. 

In this case, individual product brands rule and there’s no advantage to maintaining a firm brand across diverse markets.

Flexibility is a large part of the reason why a house-of-brands model may be adopted – it’s well suited for maintaining acquisition equity or optimizing cross-category potential.

Blended House
 

A blended-house strategy provides the flexibility to use the corporate brand as a market-facing brand, but it can include a variety of product brands as well. In the case of Alphabet, Google — recently demoted from parent brand to sub-brand —will continue to operate in the sphere which it knows best: to be singularly focused on search and advertising. YouTube can focus on video content, while smaller operations such as Nest Labs home appliances, Verily life sciences, Wing drone deliveries and venture capital business GV will all operate as individual companies in their own specialized areas.

Somewhere in the middle are the concepts of endorsed brands, which lean toward the house-of-brands model, and sub-brands, which lean toward the branded-house end of the spectrum.

A house-of-brands model requires significant investment in dedicated resources because each brand operates as its own company, generating distinct messaging, brand elements (such as logos and other brand identity tools) and promotion. For highly visible, unique brands that are fine standing alone (consider the Procter & Gamble product portfolio again), the investment is well worth it.

According to our research, the branded-house strategy is better suited for most professional services firms. Highly successful services-based companies have rock-solid reputations and significant visibility in their marketplaces. To achieve both of these objectives requires a strong brand, which is easier and more cost-efficient to build when you’re focused on promoting just one brand. 

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Developing Your Brand Architecture

Now that you’ve gained some insights into brand strategies and architecture, it’s time to start consideringyour brand architecture.

There are a number of key factors to consider: 

1. Business Strategy
 

What is the overall business strategy you’re pursuing? Are you planning to acquire multiple firms and consolidate them under a single brand? Or perhaps your strategy is to acquire specialty firms that retain their unique, well-known niche brands. These two strategies would benefit from very different brand architectures.

2. Audience Overlap
 

Another important consideration is the audience for your brand. On one hand, different audiences may benefit from different brands. Let’s say your firm generally targets top management. You decide to introduce a new practice that targets the IT department. It may seem intuitive to create a new brand for that endeavor. After all, the product and service benefits are distinct.

But wait a minute. Suppose the overall positioning of your offerings is the same: superior quality at a premium price. Launching unrelated brands might add confusion and slow down internal client referrals, not to mention adding significant costs. You might do better to build a single brand around a common characteristic. So different audiences don’t automatically require independent brands.

3. Brand Positioning
 

The example above illustrates an important point: the positioning of various brands can drive a brand architecture strategy. For a branded-house model to work, the various sub-brands must share a common positioning. Every Virgin sub-brand, for instance, stands for the same things: hip, affordable, and a bit cheeky — whether it’s music, air travel, or soda.

4. Brand Permission
 

Different professional services brands are associated with different kinds of services in clients’ minds. That association creates an expectation about what types of services you might find at a firm. This concept is often referred to as brand permission. Does your brand give you permission to offer that type of service? Does it fit with client expectations?

Let’s take the example of an accounting firm. Their brand may easily give them permission to offer strategy advice or even a service that installs enterprise accounting software. On the other hand, a CPA firm that offers, say, graphic design services would seem out of character and violate brand permission.

5. Brand Building
 

Building a brand from scratch, sometimes referred to as brand development, is a big undertaking. It often requires a major investment of time and money. But since your brand is your firm’s most valuable asset, developing a strong brand is your most important task.

It’s a lot quicker and less costly to promote a sub-brand of an already well known firm than to build one from scratch. Why is brand development more expensive? Because you need to produce an entire marketing infrastructure, from a name and identity to a website and marketing collateral. And that’s only the beginning. Next, you have to increase its visibility and perceived expertise.

Obviously, there are benefits to avoiding, or at least minimizing, these expenses. A sub-brand can achieve immediate, new-brand benefits from its association with the main brand through something called “the halo effect.” The halo effect allows a brand with strong, positive name recognition to pass significant credibility on to a new branded product or service.

So what does this mean for a professional services firm? In many cases, it’s faster and easier to build the entire firm’s reputation and credibility by developing and promoting the capabilities of just one or two partners or employees. For example, a client that develops a favorable impression of just one partner is likely to have a good impression of the entire firm based on his or her interactions with that one person. That single touch point helps strengthen the entire firm’s brand.

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How Brand Research Drives Brand Architecture — and More
 

There are a lot of high-impact decisions to make when developing your brand architecture. You’ll recognize that many of these decisions are strongly influenced by variables that are not well known or easily measured. For example, how do you judge a brand’s visibility within a certain niche audience? Or how can you tell whether your brand has “permission” to offer a certain service?

The answer is brand research. Studies show that firms that conduct brand research grow faster and are more profitable, on average, than firms that do not. Brand research can give you solid answers to questions you were guessing at before — the differentiators that matter most to your clients, say, or the services they would most like to see you offer. In short, brand research can inform what services to offer and how to offer them. Better understanding your brand positioning goes a long way toward helping you develop the right brand architecture.

But wait, there’s more. Brand research can improve the go-to-market strategy for all your brands. A thoughtful, well researched go-to-market strategy will help you better connect with potential clients, offer a compelling value proposition, clearly distinguish your firm from the competition, and deliver on everything you promise.

By now you should have a pretty good idea why effective brand architecture is important. The benefits it can provide contribute directly to the bottom line. And it can even be the difference between success and failure.

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