Brand hierarchy, otherwise known as brand architecture, refers to the brand strategy behind the relationships between various parts of a business. Broadly speaking, this strategy is best summarized by grouping products and services according to their associated similarities and differences.
Aspect | Explanation |
---|---|
Brand Hierarchy | – Brand Hierarchy is a strategic framework used by companies to organize and structure their brand portfolio, products, and services in a way that clarifies their relationships and significance to consumers. It helps manage and communicate brand identity effectively. |
Levels | – Brand hierarchy typically consists of several levels, which can include Corporate Brand, Family Brand, Individual Brand, and Product Brand. Each level has a distinct role in the overall branding strategy. |
Corporate Brand | – At the top of the hierarchy is the Corporate Brand, which represents the overarching identity and values of the company. It often carries the company name and is associated with its reputation and heritage. |
Family Brand | – Below the corporate brand, there may be Family Brands, which encompass a group of related products or services. These brands share common attributes and values, and their association can enhance consumer trust and recognition. |
Individual Brand | – Individual Brands are specific brands within the family that represent distinct product lines or categories. They have their own identities but still benefit from the trust and reputation of the family brand. |
Product Brand | – At the lowest level are Product Brands, representing individual products or services. They may carry their unique names and identities but can also leverage the credibility of both the individual and family brands. |
Benefits | – Clarity: Brand hierarchy provides clarity to consumers, helping them understand the relationships between various products and their parent brands. – Consistency: It ensures consistent messaging and brand values across the portfolio. |
Flexibility | – Companies can adapt their brand hierarchy to accommodate new products, enter different markets, or reposition existing offerings. This flexibility allows for strategic growth and diversification. |
Brand Equity | – An effective brand hierarchy can enhance the overall brand equity of a company. Strong corporate and family brands can positively influence the perception of individual products or services. |
Examples | – The Coca-Cola Company: Coca-Cola is the corporate brand, and beneath it, there are family brands like Diet Coke and Coca-Cola Zero Sugar, which further extend to individual product brands like Coca-Cola Classic and Sprite. |
Challenges | – Maintaining consistency and relevance across all levels of the hierarchy can be challenging, especially as brands evolve and consumer preferences change. – Overcomplexity can confuse consumers if not managed effectively. |
Conclusion | – Brand hierarchy is a strategic tool that helps companies organize their brand portfolio, convey relationships to consumers, and build trust and recognition. It’s a dynamic framework that adapts to the changing needs and goals of the business. |
Understanding brand hierarchy
As companies grow, so too do their product ranges. Brand hierarchies help businesses and indeed consumers communicate vital brand elements and feature differences between individual products in a range.
Brand hierarchy is important for the simple fact that many businesses overlook the strategy entirely.
These businesses tend to have a preoccupation with releasing products and services without first thinking about the relationship between them.
As a result, the association between offerings is vague and not reflective of the wider brand. Consumers then become confused and unable to make a purchasing decision, which negatively impacts revenue and profits.
Establishing a robust brand architecture is not difficult and can be performed at any stage of business development.
However, those who focus their initial efforts on product development at the expense of brand hierarchy may encounter a costly rebrand in the future.
The three types of brand hierarchy
Corporate, umbrella, and family brands
The highest level of the hierarchy is corporate, family, or umbrella brands.
This level uses cohesive and consistent naming and identity structures, ensuring that individual products and services are homogenous throughout the range.
The corporate strategy is particularly useful for large parent companies that have many divisions or subsidiaries.
For example, Heinz Cream of Tomato Soup and Heinz Tomato Ketchup both share similar visual branding on their labels.
They also feature the corporate brand Heinz in their names, reducing confusion among consumers, and increasing brand equity in the process.
Endorsed brands
Endorsed brands are those that have been endorsed by a parent brand that is either a corporate, umbrella or family brand itself.
In theory, the endorsement from the parent brand adds credibility to the endorsed brand in the eyes of consumers.
In this approach, products are linked or grouped according to brand identity itself and do not rely on homogeneous naming or aesthetics.
For example, parent company Microsoft lend its brand identity and credibility to Office, Xbox, Windows, and Bing.
But each endorsed brand in isolation is distinct in the sense that it is not immediately recognizable as being owned by Microsoft.
Individual
Individual brands are consumer-facing brands where no explicit link between the product and its parent brand is promoted.
In many cases, there is also no link between individual brands themselves.
This is a common occurrence when parent brands acquire smaller brands with high equity among consumers.
Here, the parent brand is irrelevant and often detrimental to brand equity compared to the individual products it takes ownership of.
Coca-Cola uses this strategy to their advantage, having acquired brands such as Fanta, Sprite, and Dasani that were successful in their own right.
Those who are motivated to do so can discover the connection of these brands to The Coca-Cola Company, but they nevertheless continue to exist in original, recognizable forms.
Benefits of incorporating brand hierarchy strategy
- Reduces customer confusion. Businesses offering a line of unrelated products confuse consumers as to the brand they are trying to create and convey. Establishing a proper brand hierarchy lessens this confusion, establishes consistency, and leads to increased brand equity.
- Reduces competition. In some cases, sub-products achieve such popularity with consumers that the weaker core brand loses popularity. Brand hierarchy strategies focus on strengthening the primary brand so that products under its “umbrella” do not compete with or undermine each other.
- Provides clarity. When brands are visually or otherwise segregated with a hierarchy, it allows businesses to develop a marketing strategy for each. Since each brand will have its own target audience and brand story, clarity reduces the chances of brand dilution or improper messaging.
When to Use Brand Hierarchy:
Brand hierarchy is suitable in various business scenarios:
- Large Brand Portfolios: When an organization manages a diverse range of products, sub-brands, and extensions under one brand umbrella.
- Brand Extension: For introducing new products or services that leverage the existing brand equity.
- Market Expansion: When entering new markets or segments, brand hierarchy helps in positioning and differentiation.
- Rebranding: During rebranding efforts, to redefine the relationships and significance of brand elements.
- Global Brand Management: In the context of global brands, where consistency and adaptation to local markets are crucial.
How to Create an Effective Brand Hierarchy:
To create an effective brand hierarchy, consider the following steps:
- Identify Brand Elements: Start by identifying all brand elements, including the master brand, sub-brands, and individual products or services.
- Define Relationships: Determine the relationships and levels of importance among these elements. What is the core brand, and how do sub-brands and products relate to it?
- Hierarchy Structure: Create a visual representation or written documentation of the brand hierarchy structure, specifying the role and significance of each element.
- Consistency Guidelines: Develop guidelines that ensure all brand elements adhere to the brand’s core values, personality, and positioning.
- Communication Strategy: Plan how to communicate the brand hierarchy to internal stakeholders, marketing teams, and consumers to ensure understanding and alignment.
- Feedback and Adaptation: Continuously review and adapt the brand hierarchy as market dynamics and strategic goals evolve.
Drawbacks and Limitations of Brand Hierarchy:
While brand hierarchy is a valuable tool for brand management, it also has drawbacks and limitations:
- Complexity: In large organizations with extensive brand portfolios, the brand hierarchy can become complex and challenging to manage.
- Risk of Dilution: Introducing too many sub-brands or extensions can risk diluting the master brand’s equity and confusing consumers.
- Market Perceptions: Consumer perceptions of brand hierarchy may not always align with the intended structure, leading to potential misinterpretation.
- Adaptation Challenges: Adapting the brand hierarchy to global markets or changing consumer preferences may be challenging and require significant resources.
What to Expect When Implementing Brand Hierarchy:
When implementing brand hierarchy, expect the following outcomes and considerations:
- Clarity and Consistency: A well-defined brand hierarchy enhances brand clarity and consistency in communication.
- Brand Equity Preservation: It helps preserve and strengthen the equity of the master brand while leveraging it for sub-brands and products.
- Consumer Understanding: Consumers can better understand the relationship between different brand elements, which can influence their purchasing decisions.
- Resource Allocation: Properly structured brand hierarchies guide resource allocation, marketing efforts, and product development.
Brand hierarchy examples
Now that we’ve explained the theory behind brand hierarchy, let’s take a look at some real-world examples.
FedEx
FedEx operates an umbrella brand hierarchy where the master brand is linked to all products and subproducts.
The company has many business branches across various services such as FedEx Office, FedEx Ground, FedEx Freight, FedEx Trade Networks, and FedEx Express.
While these branches perform different functions and operations, they remain united under the core FedEx brand.
Proctor & Gamble
Proctor & Gamble utilizes an individual brand hierarchy with a vast portfolio of strong product brands that have no overt connection to the company itself.
Below is a look at just some of these brands arranged by product category:
- Fabric care – Bounce, Cheer, Ariel, Tide, and Gain.
- Grooming – Braun, Gillette, Gillette Venus, and The Art of Shaving.
- Haircare – Head & Shoulders, Herbal Essences, Old Spice, and Pantene.
- Home care – Dawn, Ambi Pur, Febreze, and Cascade.
- Oral care – Crest, Fixodent, Oral-B, and Scope.
Marriott
Marriott is the world’s largest hotel chain, with 30 different brands across more than 7,000 properties in 132 countries and territories.
The company utilizes a mixture of individual and endorsed brands that are arranged according to luxury and exclusiveness:
- Classic Luxury – The Ritz-Carlton, St. Regis, and JW Marriott.
- Distinctive Luxury – Ritz-Carlton Reserve, The Luxury Collection, and W Hotels.
- Classic Premium – Marriott Hotels, Sheraton, Marriott Vacation Club, and Delta Hotels.
- Distinctive Premium – Le MERIDIEN, Westin, and Renaissance Hotels.
- Classic Select – Courtyard Hotels, Four Points, and SpringHill Suites.
- Distinctive Select – AC Hotels, Aloft Hotels, and Moxy Hotels.
- Classic Longer Stays – Marriott Executive Apartments, and Residence Inn.
- Distinctive Longer Stays – element, and Homes & Villas by Marriott International.
Mondelez International
Mondelez International is an American multinational food and beverage company that specializes in chocolate, cookies, powdered beverages, confectionery, and gum.
The company has a more complex brand hierarchy with various family brands, individual brands, and modifiers (models) under the core Mondelez brand. To explain this structure in more detail, consider these examples:
- Cadbury (family brand) – Dairy Milk, 5 Star (individual brands), Dairy Milk Hazelnut, Old Gold, Caramilk (models).
- Nabisco (family brand) – Oreo, Ritz Crackers, Chips Ahoy! (individual brands), Ritz Bits, Chocolate Oreo, Chips Ahoy! Reese’s Pieces (models).
Volkswagen
Most consumers think of the Golf or Beetle when they think of German auto-manufacturer Volkswagen, but the company owns multiple vehicle brands with each having many model designations.
Given the pedigree of some brands among car enthusiasts, Volkswagen’s hierarchy is comprised of individual brands with little relationship to its core brand aside from perhaps some minor style similarities.
Some of these individual brands include:
- Audi – with models such as the A3, A5, A7, and R8.
- Porsche – with models such as the Cayman, Boxster, and Macan.
- Lamborghini – a premium sports car manufacturer with models such as the Huracan, Aventador, and Urus.
- Volkswagen Commercial Vehicles – these include the Caddy, Amarok, and Transporter.
- Ducati – a motorcycle brand with models including the Superleggera, Scrambler, Streetfighter, and Multistrada.
Additional Case Studies
- Unilever:
- Corporate Brand: Unilever
- Individual Brands: Dove, Axe, Lipton, Ben & Jerry’s, Hellmann’s, among others. Each of these brands has its own identity and stands on its own, though they all fall under the Unilever corporate umbrella.
- PepsiCo:
- Corporate Brand: PepsiCo
- Family/Umbrella Brands: Pepsi, Lay’s, Quaker, Tropicana, Gatorade.
- Individual Products: Within the Lay’s brand, for instance, you have flavors/varieties like Classic, Salt & Vinegar, and Barbecue.
- Sony:
- Corporate Brand: Sony
- Endorsed Brands: Sony PlayStation, Sony Pictures, Sony Mobile.
- Individual Products: Within Sony PlayStation, you have PlayStation 4, PlayStation 5, and PlayStation VR.
- The Gap Inc.:
- Corporate Brand: The Gap Inc.
- Individual Brands: Gap, Banana Republic, Old Navy, Athleta, Intermix. Each of these brands targets a different market segment, from casual wear to upscale fashion.
- Volkswagen Group (beyond the previously mentioned brands):
- Corporate Brand: Volkswagen Group
- Individual Brands: SEAT, Škoda, Bentley, Bugatti. Each of these caters to a different market segment, from affordable to luxury.
- Estée Lauder Companies:
- Corporate Brand: Estée Lauder Companies
- Individual Brands: Estée Lauder, Clinique, M·A·C, Bobbi Brown, La Mer, among others. Each brand focuses on different beauty and skincare niches and demographics.
- Alphabet Inc.:
- Corporate Brand: Alphabet Inc.
- Individual Brands/Subsidiaries: Google, YouTube, Waymo, DeepMind, Verily. Although Google was the original company, it was restructured to become a subsidiary of Alphabet, allowing the conglomerate to diversify its business ventures.
- Adidas Group:
- Corporate Brand: Adidas Group
- Individual Brands: Adidas (with its own sub-brands like Adidas Originals and Adidas Performance), Reebok.
- Procter & Gamble (P&G):
- Corporate Brand: Procter & Gamble
- Individual Brands: Pampers, Ariel, Gillette, Head & Shoulders, among many others. Each of these caters to different consumer needs, from baby care to personal grooming.
- LVMH (Moët Hennessy Louis Vuitton):
- Corporate Brand: LVMH
- Individual Brands: Louis Vuitton, Dior, Sephora, Givenchy, Moët & Chandon, among others. This luxury conglomerate encompasses various sectors from fashion and leather goods to wines and spirits.
Key takeaways:
- Brand hierarchy is a means of organizing different brands and their associated products under a larger, parent brand.
- Brand hierarchy can be divided into three main types: corporate, endorsed, or individual. Each has a different organizational structure based on real or perceived relationships between a parent company and its various brands.
- A brand hierarchy strategy is most effective when implemented as a foundational element of business operations. It clarifies the future direction of a brand and avoids individual products within a brand potentially undermining each other.
Key Highlights
- Definition: Brand hierarchy (or brand architecture) is the structure and relationship between various parts of a business and its brands.
- Purpose: Helps businesses communicate vital brand elements and differentiate products or services, preventing consumer confusion and reinforcing brand identity.
- Hierarchy Types:
- Corporate, Umbrella, or Family Brands: Highest level, with consistent naming and identity across products or services. Example: Heinz.
- Endorsed Brands: Sub-brands that have the backing of a parent brand, adding credibility. Example: Microsoft’s endorsement of products like Office and Xbox.
- Individual Brands: Standalone brands with no explicit connection to the parent brand. Often seen in acquisitions. Example: Fanta under Coca-Cola.
- Benefits:
- Reduces customer confusion.
- Prevents internal competition between sub-brands.
- Provides clear branding and marketing direction.
- Real-world Examples:
- FedEx: Uses an umbrella brand strategy with different services like FedEx Office and FedEx Ground under the main FedEx brand.
- Proctor & Gamble: Employs an individual brand strategy with a vast range of products, each standing alone (e.g., Tide, Crest).
- Marriott: Combines both individual and endorsed brand strategies, categorizing its hotel chains based on luxury and exclusiveness.
- Mondelez International: Has a complex hierarchy with family brands like Cadbury, individual brands like Dairy Milk, and model variations.
- Volkswagen: Owns multiple vehicle brands (e.g., Audi, Porsche, Lamborghini) each with its own set of models, largely employing an individual brand strategy.
- Strategic Importance: Implementing a thoughtful brand hierarchy strategy from the outset can guide a brand’s future direction, ensuring clarity and consistency across the board.
Alternative Frameworks
Framework | Description | Key Features |
---|---|---|
Brand Architecture | Defines the structure and relationship between different brand elements within a brand portfolio, including parent brands, sub-brands, and product brands, to clarify brand positioning and maximize brand equity. | – Establishes a hierarchy of brand elements to provide clarity and coherence within a brand portfolio. – Defines the role and scope of each brand element to optimize brand positioning and differentiation. |
Brand Positioning | Determines the unique space a brand occupies in the minds of consumers relative to competitors, based on key attributes, benefits, and associations, to create a compelling and differentiated brand image. | – Identifies the specific attributes and values that distinguish a brand from competitors. – Aligns brand positioning with target audience needs and preferences to drive relevance and resonance. |
Brand Personality | Humanizes a brand by defining its distinctive character, tone, and manner, based on archetypal traits or personality dimensions, to establish emotional connections and build relationships with consumers. | – Defines a set of human-like characteristics or traits that embody the brand’s identity and voice. – Shapes brand communications and interactions to evoke specific emotions and perceptions in consumers. |
Brand Identity System | Encompasses the visual and verbal elements that represent a brand, including logos, colors, typography, imagery, and messaging, to create a consistent and recognizable brand identity across different touchpoints. | – Establishes guidelines for the consistent use of brand assets to maintain visual and verbal coherence. – Reinforces brand recognition and recall by ensuring a unified brand presence across channels and platforms. |
Brand Storytelling | Communicates the brand’s narrative, values, and purpose through compelling stories and experiences, engaging consumers on an emotional level and fostering brand loyalty and advocacy. | – Develops narratives that resonate with consumers and align with the brand’s values and identity. – Uses storytelling techniques to create memorable and immersive brand experiences that connect with audiences. |
Brand Equity | Represents the intangible value and strength of a brand, reflecting consumers’ perceptions, attitudes, and associations towards the brand, which influence purchase decisions and loyalty. | – Measures the financial and non-financial value of a brand based on consumer perceptions and preferences. – Builds and protects brand equity through strategic branding initiatives and consistent brand management practices. |
Read also: Microsoft Business Model, Brand Pyramid, Brand Essence, Brand Building.
What are the benefits of brand hierarchy?
If implemented as a foundational element of business operations, brand hierarchy can help clarify the future direction of a brand and avoid individual products within a brand potentially undermining each other. Thus, it helps improve the brand’s overall performance, both internally and externally, by:
- Reducing customer confusion.
- Reducing competition.
- Providing clarity.
What are the levels of a brand hierarchy?
Brand hierarchy is divided into three main types: corporate, endorsed, or individual. The highest level of the hierarchy is corporate. The second level is endorsed brands. The third level is individual brands consumer-facing brands.
How do you manage a brand hierarchy?
To correctly manage brand hierarchy, companies must focus their efforts on ranking their products, as their initial efforts on product development are executed, to avoid having costly rebranding in the future. Thus, it’s critical to incorporate a brand hierarchy framework within product development to properly organize a product portfolio.
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