For the last year, I’ve been teaching a Brand Strategy Workshop at General Assembly. The three-hour class covers basic definitions and a range of brand-related topics like market research, brand positioning, and naming. Given the time constraint, I can only dedicate about five slides to brand architecture—barely enough to cover the basics of what’s arguably the most complex area of brand strategy. If you know anything about brand architecture, you won’t be surprised by my first slide, which depicts three classic approaches to brand architecture: the branded house, house of brands, and hybrid models.
Each approach comes with an example. FedEx is a branded house, because every FedEx sub-brand carries a version of the FedEx logo (more or less). Proctor & Gamble is a house of brands, because none of the company’s portfolio brands are P&G-branded (i.e., you buy Crest toothpaste, not Proctor & Gamble toothpaste). And Marriott uses a hybrid approach, in that you can stay at a Marriott hotel or The Ritz-Carlton, which Marriott owns but do not overtly brand as such.
I’ve seen many presentations purporting to explain various aspects of brand strategy in which this is the first and last slide about brand architecture. Presenters may mention the high-level pros and cons of each approach and the overarching goals of brand architecture (e.g., clarity, efficiency, and relevance), but rarely go further. For those who’ve had to sit down and think about creating, improving, or fixing brand architecture at an organization, the oversimplification of the “houses” borders on useless. To solve a brand architecture challenge, you must also consider organizing principles.
The brands in the portfolio have a relationship with each other. What is the logic of that structure?” – David Aaker, Brand Portfolio Strategy
Defining the logic of the relationship(s) between brands in a portfolio requires the identification of one or more organizing principles. In other words, if we arrange three portfolio brands on an imaginary line, how would we label that line? What is the dimension along which the brands are different from one another? For example, do the brands differ by the segment they address, product design, quality, or product category (groupings used by Polo Ralph Lauren, according to Aaker’s Brand Portfolio Strategy)? More broadly, do they differ by what they are, who they’re for, how they’re used, or why they’re used?
Decisions around organizing principles for a portfolio can seem obvious after the fact but paralyzingly difficult in the moment. Imagine: You’ve created a popular new cola called Fizzit. Building on the product’s success, you’re about to produce three variations: sugarless cola, an orange-flavored soda, and soda that is both sugarless and orange flavored. You’re now faced with at least three reasonable brand architecture possibilities:
- All four soft drinks carry the Fizzit brand name, with modifiers denoting sugarless and orange flavored (i.e., Diet Orange Fizzit).
- The orange-flavored soda gets a new brand name (e.g., Citrio) and sugarless is conveyed through a modifier (i.e., Diet Fizzit and Diet Citrio).
- The sugarless sodas get a new brand name (e.g., Nada) and orange-flavored is conveyed through a modifier (i.e., Fizzit Orange and Nada Orange).
Interestingly, more established brands demonstrate the potential success of options #2 and #3. Keurig Dr. Pepper owns the Crush brand, known as an orange-flavored soft drink, and 7UP, known for its lemon-lime flavor. In the context of these two brands, the portfolio’s primary organizing principle is flavor. But each brand has diet versions, denoted through the “Diet” modifier, making diet/non-diet, or sweetener type, a secondary organizing principle.
Conversely, Fresca, owned by The Coca-Cola Company, is a brand known for having zero grams of sugar—even in its original flavor, it’s sweetened with aspartame. Fanta, also owned by Coca-Cola, is sweetened with good ol’ high fructose corn syrup. Thus, in the context of these two brands, Coca-Cola seems to have arranged its portfolio around a primary organizing principle of sweetener (diet or non-diet). Both the Fanta and Fresca brands are associated with citrus flavor (Orange, in the case of Fanta) but have other fruit flavors, such as cherry (Black Cherry Citrus, in the case of Fresca). Flavor, communicated in product names through descriptive modifiers, seems to be the secondary organizing principle in this subset of the Coca-Cola portfolio.
Of course, reality is not so simple. As often happens, these companies’ brand and product portfolios have proliferated, through both acquisition and organic growth. As of this writing, Crush is available in lime flavor, seemingly cannibalizing 7UP, and Fanta has two flavors of aspartame-sweetened soda, dubbed “Fanta Zero” (including an orange flavor).
In a vacuum, there is no “right” answer to the hypothetical posed above or any given brand architecture challenge. Allowing for a bias toward simplicity and capitalizing on existing brand equity, you might identify option #1 as your null hypothesis. In other words, all else being equal, stick with fewer brands. But extending a single brand too far too fast can backfire. If Coca-Cola extended the Fresca brand to include non-diet drinks, for example, they could damage the brand by breaking consumers’ expectations that “Fresca equals diet soda.”
The safest path to solving a real-world brand architecture challenge is to base your answer on an understanding of customer perceptions and desires, the competitive landscape, and costs associated with launching new brands, among other factors. Only by understanding and thinking carefully about organizing principles—along with other aspects of brand architecture beyond “house of brands” and “branded house”—will you find the best path forward.
Rob Meyerson is a brand consultant, namer, and author of the upcoming book, Brand Naming: The Complete Guide to Creating a Name for Your Company, Product, or Service. He also runs Heirloom, an independent brand strategy and identity firm, and hosts the podcast How Brands Are Built.