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.

Marketing Glossary

Affiliate Marketing

affiliate-marketing
Affiliate marketing describes the process whereby an affiliate earns a commission for selling the products of another person or company. Here, the affiliate is simply an individual who is motivated to promote a particular product through incentivization. The business whose product is being promoted will gain in terms of sales and marketing from affiliates.

Ambush Marketing

ambush-marketing
As the name suggests, ambush marketing raises awareness for brands at events in a covert and unexpected fashion. Ambush marketing takes many forms, one common element, the brand advertising their products or services has not paid for the right to do so. Thus, the business doing the ambushing attempts to capitalize on the efforts made by the business sponsoring the event.

Brand Building

brand-building
Brand building is the set of activities that help companies to build an identity that can be recognized by its audience. Thus, it works as a mechanism of identification through core values that signal trust and that help build long-term relationships between the brand and its key stakeholders.

Brand Equity

what-is-brand-equity
The brand equity is the premium that a customer is willing to pay for a product that has all the objective characteristics of existing alternatives, thus, making it different in terms of perception. The premium on seemingly equal products and quality is attributable to its brand equity.

Brand Positioning

brand-positioning
Brand positioning is about creating a mental real estate in the mind of the target market. If successful, brand positioning allows a business to gain a competitive advantage. And it also works as a switching cost in favor of the brand. Consumers recognizing a brand might be less prone to switch to another brand.

Business Storytelling

business-storytelling
Business storytelling is a critical part of developing a business model. Indeed, the way you frame the story of your organization will influence its brand in the long-term. That’s because your brand story is tied to your brand identity, and it enables people to identify with a company.

Content Marketing

content-marketing
Content marketing is one of the most powerful commercial activities which focuses on leveraging content production (text, audio, video, or other formats) to attract a targeted audience. Content marketing focuses on building a strong brand, but also to convert part of that targeted audience into potential customers.

Digital Marketing

digital-marketing-channels
A digital channel is a marketing channel, part of a distribution strategy, helping an organization to reach its potential customers via electronic means. There are several digital marketing channels, usually divided into organic and paid channels. Some organic channels are SEO, SMO, email marketing. And some paid channels comprise SEM, SMM, and display advertising.

Growth Marketing

growth-marketing
Growth marketing is a process of rapid experimentation, which in a way has to be “scientific” by keeping in mind that it is used by startups to grow, quickly. Thus, the “scientific” here is not meant in the academic sense. Growth marketing is expected to unlock growth, quickly and with an often limited budget.

Guerrilla Marketing

guerrilla-marketing
Guerrilla marketing is an advertising strategy that seeks to utilize low-cost and sometimes unconventional tactics that are high impact. First coined by Jay Conrad Levinson in his 1984 book of the same title, guerrilla marketing works best on existing customers who are familiar with a brand or product and its particular characteristics.

Inbound Marketing

inbound-marketing
Inbound marketing is a marketing strategy designed to attract customers to a brand with content and experiences that they derive value from. Inbound marketing utilizes blogs, events, SEO, and social media to create brand awareness and attract targeted consumers. By attracting or “drawing in” a targeted audience, inbound marketing differs from outbound marketing which actively pushes a brand onto consumers who may have no interest in what is being offered.

Integrated Marketing

integrated-marketing
Integrated marketing describes the process of delivering consistent and relevant content to a target audience across all marketing channels. It is a cohesive, unified, and immersive marketing strategy that is cost-effective and relies on brand identity and storytelling to amplify the brand to a wider and wider audience.

Marketing Mix

marketing-mix
The marketing mix is a term to describe the multi-faceted approach to a complete and effective marketing plan. Traditionally, this plan included the four Ps of marketing: price, product, promotion, and place. But the exact makeup of a marketing mix has undergone various changes in response to new technologies and ways of thinking. Additions to the four Ps include physical evidence, people, process, and even politics.

Marketing Personas

marketing-personas
Marketing personas give businesses a general overview of key segments of their target audience and how these segments interact with their brand. Marketing personas are based on the data of an ideal, fictional customer whose characteristics, needs, and motivations are representative of a broader market segment.

Multi-Channel Marketing

multichannel-marketing
Multichannel marketing executes a marketing strategy across multiple platforms to reach as many consumers as possible. Here, a platform may refer to product packaging, word-of-mouth advertising, mobile apps, email, websites, or promotional events, and all the other channels that can help amplify the brand to reach as many consumers as possible.

Multi-Level Marketing

multilevel-marketing
Multi-level marketing (MLM), otherwise known as network or referral marketing, is a strategy in which businesses sell their products through person-to-person sales. When consumers join MLM programs, they act as distributors. Distributors make money by selling the product directly to other consumers. They earn a small percentage of sales from those that they recruit to do the same – often referred to as their “downline”.

Niche Marketing

microniche
A microniche is a subset of potential customers within a niche. In the era of dominating digital super-platforms, identifying a microniche can kick off the strategy of digital businesses to prevent competition against large platforms. As the microniche becomes a niche, then a market, scale becomes an option.

Relationship Marketing

relationship-marketing
Relationship marketing involves businesses and their brands forming long-term relationships with customers. The focus of relationship marketing is to increase customer loyalty and engagement through high-quality products and services. It differs from short-term processes focused solely on customer acquisition and individual sales.

Sustainable Marketing

sustainable-marketing-green-marketing
Sustainable marketing describes how a business will invest in social and environmental initiatives as part of its marketing strategy. Also known as green marketing, it is often used to counteract public criticism around wastage, misleading advertising, and poor quality or unsafe products.

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