brand-hierarchy

What Is A Brand Hierarchy And Why It Matters In Business

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.

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.

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.

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.

Read also: Microsoft Business Model, Brand Pyramid, Brand Essence, Brand Building.

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