A coherent international brand architecture is a key component of the firm's overall international marketing strategy as it provides a structure to leverage strong brands into other markets, assimilate acquired brands, and rationalize the firm's international branding strategy.
Developed frameworks of Branding Structure or Brand Architecture:
Olins (1989) has identified three branding structures
- Monolithic, i.e. a corporation uses one name and identity worldwide, for example, Kellogg or Shell;
- Endorsed, where the corporate name is used in association with a subsidiary or product brand, for example, Cadbury's Dairy Milk, and
- Branded, which emphasizes multiple product-level brands, for example, P&G with brands such as Tide, Camay, etc.
As the firm expands in international market, issues relating to brand architecture or brand structure become even more complex. In addition to considering the number of levels in the hierarchy, another dimension, namely the degree of brand coordination or standardization across countries, needs to be determined. Especially if the company expands through acquisition or strategic alliances, the question of whether and how brand architectures of different firms are merged, arises. Irrespective of the expansion process, companies have to determine an appropriate brand architecture that transcends national boundaries and how far branding is integrated or standardized across countries.
Development of International Brand Architecture:
A field study of consumer goods companies based in Europe was conducted to gain some insights into international brand structures, how these were evolving and the underlying drivers of brand structure. Of particular interest was whether or not the firm had an explicit international brand architecture and if so, how this was managed. The study was based on semi-structured interviews conducted with senior executives at the product division level in companies, as well as executives in advertising agencies, market research companies, and consulting companies who were responsible for international brands and branding strategies.
Consistent with the findings of Laforet and Saunders, the study revealed three major patterns of brand architecture: corporate-dominant, product-dominant and hybrid or mixed structures.
Corporate-dominant architecture tended to be most common among firms with a relatively limited range of products or product divisions, or with a clearly defined target market, e.g. Shell, Kelloggs, Nike, Benneton, etc. Product dominant architecture, on the other hand, was typically found among firms such as Akzo Nobel with multiple national or local brands, or firms such as P&G or Mars that had expanded internationally by leveraging "power" brands.
The most common were hybrid or mixed structures, consisting of a mix of global corporate, regional and national product-level brands, or corporate endorsement of product brands or different structures for different product divisions.
Both corporate and product dominant structures were evolving towards hybrid structures. Firms with corporate dominant structures were adding brands at other levels, for example, the house or product level, to differentiate between different product divisions. Product-dominant structures, on the other hand, especially where these emphasized multiple local (national) brands were moving toward greater integration or co-ordination across markets through corporate endorsement of local products. These companies also varied in the extent to which they had a clearly articulated international brand architecture to guide this evolution. Some, for example, laid out the different levels at which brands were to be used, the interrelation between brands at different levels, the geographic scope of each brand and the product lines on which a brand was to be used, while others had few or no guidelines concerning international branding.
Drivers of International Branding Strategy:
Brand architecture is essentially fashioned by three major factors:
- firm-based characteristics,
- product market characteristics and
- underlying market dynamics
Firm-Based drivers:
In the first place, the firm's administrative heritage and in particular, its organizational structure, establish the template for its brand architecture. Secondly, the firm's international expansion strategy and notably the mode of expansion, i.e. via acquisition or organic growth affect how brand structure evolves over time.
Administrative heritage: The firm's administrative heritage is central to understanding its branding strategy (Bartlett and Ghoshal 1989). A firm that has historically operated on a highly decentralized basis where country managers have substantial autonomy and control over strategy as well as day-to-day operations is likely to have a substantial number of local brands. In some cases, the same product may be sold under different brand names in different countries, e.g. Unilever's yellow fat brands, Promise and Flora. In other cases, a product may be sold under the same brand name but have a different positioning or formulation in certain countries e.g. Haagen-Daz.
Firms with a centralized organizational structure and global product divisions, such as Sony or Siemens, are more likely to have global brands. Both Siemens and Sony adopt a corporate branding strategy emphasizing the quality and reliability of their products. Product lines are typically standardized worldwide, with minor variations in styling and features for local country markets.
Expansion strategy: Closely related to the firm's administrative heritage is its international expansion strategy. Here of particular importance in determining the number and composition of the brands owned by the firm is its mode of expansion, i.e., whether it has expanded through organic or greenfield growth or through acquisitions and strategic alliances.
Firms that expand internationally by acquiring local companies, even where the primary goal is to gain access to distribution channels, will typically also acquire local brands. Where these brands have high local recognition or a strong customer or distributor franchise, the company will normally retain the brand. This is particularly likely if the brand does not occupy a similar positioning to that of another brand currently owned by the firm. Best Foods typically expands internationally through acquisitions and has, for example, acquired Pfanni, a German company selling mashed potatoes and dumplings, Telna, a soup company in Israel and a sauce company in Chile. These companies are then used as a platform to distribute Best's other brands.
Sometimes, a company expands by acquiring companies in the same or related product businesses. For example, when Kimberley Clark acquired Scott Paper, it also acquired a number of paper product companies in Europe, some of whom had strong local brands. Kimberley Clark decided to adopt a transition strategy, gradually changing local brands to the Kleenex brand. For example, Kimberley Clark acquired Page, the leading Dutch brand of tissues, toilet paper and paper towels, and placed the Kleenex brand on all Page products. The Kleenex name and little dog logo was also used in all promotional campaigns. Over time it is expected that the local brand will become smaller and possibly eventually be phased out.
Other companies have expanded and diversified at the same time through a strategy of acquisition. Nestlé, for example, has expanded by acquiring companies in a range of different product markets, mostly food and beverage. These range from well known global brands in mineral water such as Perrier and San Pellegrino, confectionery companies such as Rowntree and Perugina, to pet food companies and brands such as Spillers and Alpo and grocery companies such as Buitoni, Crosse and Blackwell and Herta. The proliferation of brands obtained through this acquisition from 1960-1990 generated a need to consolidate and integrate company branding structures. Consequently, the Nestlé branding tree was established (Figure 2). This consists of ten worldwide corporate brands, such as Nestlé, Carnation and Buitoni; 45 worldwide strategic product brands such as KitKat, Polo and After Eight (these are always endorsed by a corporate level brand); 25 regional corporate brands; 100 regional product brands, such as Contadina and Stouffer; 700 local strategic brands, and approximately 7,000 local brands (Parsons 1996).
Firms that have expanded predominantly by extending strong domestic brands into international markets tend to have a product-level brand strategy. For example, Procter & Gamble has rolled out a number of its personal products brands such as Camay, and Pampers, into international markets. This strategy appears most effective, where customer interests and desired product attributes are similar worldwide and where brand image is an important cue for the consumer.
Importance of corporate identity: The relative importance placed by the firm on its corporate identity, also influences brand structure. Companies such as IBM and Apple, place considerable emphasis on corporate identity (Schmitt and Simenson 1997). In the case of IBM, "Big Blue" is associated with a solid corporate reputation and reflects the company's desire to project an image of a large reliable computer company, providing products and services worldwide. The IBM logo is featured on products and advertising worldwide in order to convey this image. Equally, Apple used its colored apple logo to project the image of a vibrant challenger in the personal computer market.
Japanese companies also frequently emphasize corporate identity as a means of reassuring customers and distributors that the company is reliable and stands behind its products. As a result, even companies with highly diverse product lines such as Kao with detergents, personal care products and computer floppy disks and records, rely on the corporate brand name (and its logo) to project an image of reliability.
Product diversity: A fourth issue concerns the diversity or conversely, the interrelatedness of the product businesses in which the firm is involved. Firms that are involved in closely related product lines or businesses that share a common technology or rely on similar core competencies, often emphasize corporate brands. GE, for example, is involved in a range of product businesses worldwide from aerospace and electric generators to medical equipment. All rely heavily on engineering skills. Use of the GE name provides reassurance and reinforces the firm's reputation for engineering competency and reliable products worldwide.
Conversely, when firms are involved in a range of diverse product businesses that target different customer segments, and have different associations, they sometimes opt to develop separate identities and associations for individual product businesses or products. For example, Unilever has no corporate brand and emphasizes either product or house brands, thus establishing separate identities for its businesses such as food, personal care, and detergents. It was considered particularly desirable to avoid association between the (now sold) chemicals business and foods products. Similarly, Procter and Gamble has emphasized product brands in its detergents business in order to target distinct market segments, and avoid creating an impression of market dominance.
Three factors play an important role in brand architecture:
- the nature and scope of the target market,
- the degree of market integration, and
- the cultural embeddedness of the product.
Target market: Global branding is frequently an effective means of reaching target markets with relatively homogeneous needs and interests and similar sociodemographic profiles and media habits worldwide (Hassan and Katsanis 1996). Luxury brands such as Godiva, Moet and Chandon, Louis Vuitton and Aveda as well as brands such as Bodyshop or Benneton are all targeted to the same market segment worldwide, and benefit from the cachet provided by their appeal to a global consumer group.
Market integration: Another factor impacting the firm's brand architecture is the degree of product market integration. This can be viewed not only in terms of whether the same customers are present in different country markets or regions and have similar purchase needs and interests worldwide, but also whether the same competitors are present in these markets (Douglas and Craig 1996). Where markets are fully integrated and the same competitors compete in these markets worldwide, as in aerospace, use of global brands help to provide competitive differentiation on a global basis. Where the same competitors compete in all or most markets, but local competitors are also present, use of a multi-tier branding structure, including global corporate or product brands as well as local brands is desirable. Coca-Cola, for example, not only has its global brand of colas, but also numerous local and regional brands catering to specific market tastes.
Cultural embeddedness: A final, and in many cases, critical factor influencing brand architecture is the degree of cultural embeddedness of a product. As noted earlier, markets where demand is relatively homogeneous worldwide are likely to be prime candidates for global branding at either the corporate or product level. Products which are deeply culturally embedded, as for example, food or in some cases, household products are on the other hand, more likely to thrive as local brands. In some cases, they may be products which cater to specific local tastes, such as food products. Particularly, where these are traditional products and market tastes have evolved little over time, a well-established local brand name may have substantial value. In some instances, where the product is associated with local cultural habits and tastes, use of a local sounding brand name may be preferable.
Market integration: Another factor impacting the firm's brand architecture is the degree of product market integration. This can be viewed not only in terms of whether the same customers are present in different country markets or regions and have similar purchase needs and interests worldwide, but also whether the same competitors are present in these markets (Douglas and Craig 1996). Where markets are fully integrated and the same competitors compete in these markets worldwide, as in aerospace, use of global brands help to provide competitive differentiation on a global basis. Where the same competitors compete in all or most markets, but local competitors are also present, use of a multi-tier branding structure, including global corporate or product brands as well as local brands is desirable. Coca-Cola, for example, not only has its global brand of colas, but also numerous local and regional brands catering to specific market tastes.
Cultural embeddedness: A final, and in many cases, critical factor influencing brand architecture is the degree of cultural embeddedness of a product. As noted earlier, markets where demand is relatively homogeneous worldwide are likely to be prime candidates for global branding at either the corporate or product level. Products which are deeply culturally embedded, as for example, food or in some cases, household products are on the other hand, more likely to thrive as local brands. In some cases, they may be products which cater to specific local tastes, such as food products. Particularly, where these are traditional products and market tastes have evolved little over time, a well-established local brand name may have substantial value. In some instances, where the product is associated with local cultural habits and tastes, use of a local sounding brand name may be preferable.
Market Dynamics:
Advances in global communication technology and the internationalization of retailing further facilitate the growth of international branding and stimulate a shift towards international brands (de Mooij 1997). Increased consumer mobility enhances the value of establishing a global identity and potential synergies from establishing a global presence.
Political and economic integration: Increasing political and economic integration in many parts of the world has been a key factor stimulating the growth of international branding. As governments remove tariff and non-tariff barriers to business transactions and trade with other countries, and people and information move easily across borders, the climate has become more favorable to the marketing of international brands. Firms no longer need to modify products to meet local requirements, and develop specific variants for local markets, but can market standardized products with the same brand name in multiple country markets. In many instances, harmonization of product regulation across borders has further facilitated this trend.
Infrastructure: The growth of a global market infrastructure has acted as a major catalyst to the spread of international brands. Global and regional media provide an economical and effective vehicle for advertising international brands, particularly where these brands are targeted to focused global and regional market segments, as for example, upscale and more affluent consumers, teenagers, etc. (Hassan and Katsanis 1996). At the same time, global media play an active role in laying the groundwork for consumer acceptance of and interest in international brands by developing awareness of these brands and the life-styles with which they are associated in other countries. In many instances, this stimulates a desire for the brands consumers perceive as symbolic of a coveted life-style.
The internationalization of retailing has further facilitated and stimulated the development of international manufacturer brands. As retailers move across international borders they provide an effective channel for international brands, but at the same time, their power increases. Consequently, manufacturers need to develop strong brands with high market share in multiple countries in order to obtain adequate retail space for these brands and minimize slotting allowances (Barwise and Robertson 1992). Strong international brands can also be extended to provide manufacturers with an effective negotiating tool and to ensure the placement of new products.
Consumer mobility: A final factor underlying the power of international brands is increased consumer mobility. While global media provide passive exposure to brands, increasing international travel and movement of customers across national boundaries provides active exposure to brands in different countries (Alden, Steenkamp and Batra 1999). Awareness of the availability and high visibility of an international brand in multiple countries enhances its value to consumers, and provides reassurance of its strength and reliability. Increased exposure to and familiarity with new and diverse products, and the life-styles and cultures in which they are embedded also generates greater receptivity to products of foreign origin or those perceived as "international" rather than domestic (Featherstone 1990). All these factors help to create a climate more favorable to international brands.
In brief, while, on the one hand, firm-based drivers, often responding to product market structure, influence the formation of international brand architecture, market drivers provide a continually changing environmental context to which this architecture must be adapted in order to be effective. At the same time, the image and strength of the firm's brands in the marketplace changes, as the firm enters new countries or markets, acquired brands are integrated into the architecture, new brand extensions or product lines are added, or a positioning is modified or radically changed. As a result, brand architecture is continually evolving both in terms of structure and scope.
Infrastructure: The growth of a global market infrastructure has acted as a major catalyst to the spread of international brands. Global and regional media provide an economical and effective vehicle for advertising international brands, particularly where these brands are targeted to focused global and regional market segments, as for example, upscale and more affluent consumers, teenagers, etc. (Hassan and Katsanis 1996). At the same time, global media play an active role in laying the groundwork for consumer acceptance of and interest in international brands by developing awareness of these brands and the life-styles with which they are associated in other countries. In many instances, this stimulates a desire for the brands consumers perceive as symbolic of a coveted life-style.
The internationalization of retailing has further facilitated and stimulated the development of international manufacturer brands. As retailers move across international borders they provide an effective channel for international brands, but at the same time, their power increases. Consequently, manufacturers need to develop strong brands with high market share in multiple countries in order to obtain adequate retail space for these brands and minimize slotting allowances (Barwise and Robertson 1992). Strong international brands can also be extended to provide manufacturers with an effective negotiating tool and to ensure the placement of new products.
Consumer mobility: A final factor underlying the power of international brands is increased consumer mobility. While global media provide passive exposure to brands, increasing international travel and movement of customers across national boundaries provides active exposure to brands in different countries (Alden, Steenkamp and Batra 1999). Awareness of the availability and high visibility of an international brand in multiple countries enhances its value to consumers, and provides reassurance of its strength and reliability. Increased exposure to and familiarity with new and diverse products, and the life-styles and cultures in which they are embedded also generates greater receptivity to products of foreign origin or those perceived as "international" rather than domestic (Featherstone 1990). All these factors help to create a climate more favorable to international brands.
In brief, while, on the one hand, firm-based drivers, often responding to product market structure, influence the formation of international brand architecture, market drivers provide a continually changing environmental context to which this architecture must be adapted in order to be effective. At the same time, the image and strength of the firm's brands in the marketplace changes, as the firm enters new countries or markets, acquired brands are integrated into the architecture, new brand extensions or product lines are added, or a positioning is modified or radically changed. As a result, brand architecture is continually evolving both in terms of structure and scope.
Designing International Brand Architecture:
First, management needs to design an efficient harmonious brand architecture that spans operations in different countries and product lines. This establishes the framework for decisions relating to the firm's brands in international markets. It should clearly define the importance and role of each level of branding, as, for example, at the corporate, product division or product brand level, as well as the interrelation or overlap of branding at each level. It should also determine the appropriate geographic scope for each level relative to the firm's current organizational structure.
The design of this architecture should satisfy a number of key principles:
The design of this architecture should satisfy a number of key principles:
1. Parsimony: The brand architecture should incorporate all of the firm's existing brands, whether developed internally or acquired. It should provide a framework for consolidation in order to reduce the number of brands and strengthen the role of individual brands. Brands that are acquired need to be melded into the existing structure, especially where these brands occupy similar market positions to those of existing brands. Equally, when the same or similar products are sold under different brand names or have different positionings in each country, ways to harmonize these should be examined.
2. Consistency: Another important element of brand architecture is its consistency relative to the number and diversity of products and product lines within the company. A balance needs to be struck between the extent to which brand names serve to differentiate product lines, or alternatively, establish a common identity across different products. Establishment of strong and distinctive brand images for different product lines helps to establish their separate identities and diversify risk of negative associations (for example between food and chemicals). Conversely, use of a common brand name consolidates effort and can produce synergies.
3. Endorsement: The value of corporate brand endorsement across different products and product lines, and at lower levels of the brand hierarchy also needs to be assessed. Use of corporate brand endorsement either as a name identifier or logo identifies the product with the company, and provides reassurance for the customer. In international markets, corporate brand endorsement acts an integrative force unifying different brand identities across national boundaries. At the same time, corporate endorsement of a highly diverse range of product lines can result in dilution of image. Equally, negative effects or associations can harm and have long-lasting effects across multiple product lines. Thus, both aspects need to be weighed in determining the role of corporate brand endorsement in brand architecture.
Brand Portfolio:
The total collection of trade marks that a company applies to its products and services. (business dictionary)
When large businesses operate under multiple different brands, services and companies, a brand portfolio is used to encompass all these entities under one umbrella. Often, each of these brands has its own separate trademarks and operates as an individual business entity. However, for marketing purposes, a brand portfolio is used to group them all together. Brand portfolios are also used to lessen consumer confusion in regard to who owns particular brands.Examples of Brand Portfolios
To better explain what a brand portfolio looks like, consider the Hilton brand. In addition to the Hilton Hotels and Resorts brand, the company also owns numerous other business entities, which are all grouped under the brand portfolio name Hilton Worldwide. A few of the other brands under Hilton Worldwide include the Waldorf Astoria Hotels and Resorts, Embassy Suites Hotels and Homewood Suites. As another example, consider PepsiCo. PepsiCo is the brand portfolio name of several food and beverage companies that include not only Pepsi, but also brands such as Frito Lay, Quaker and Tropicana.
Advantages of Using a Brand Portfolio
When businesses try to run each of their brands completely separate from one another, confusion and inefficiency can prevail. In contrast, by utilizing a brand portfolio, the business is able to focus on the big picture, causing resources to be better allocated to where they can do the most good, thus creating the most value, and reducing unnecessary overlap. For example, if a new brand with potential is left solely to its own resources, it could be starved out of resources before ever having a chance to get off the ground.
Guidelines for a successful brand portfolio strategy:
David Aaker's has proposed 10 guidelines for building a strong brand portfolio strategy.
- Make sure each brand has a well defined role or set of roles to play
- Identify the strategic brands that will play a driver role in supporting major businesses or product platforms in the future
- Understand the role of sub-brands and endorsed brands when deciding how to brand a new offering
- Brand portfolio strategy is intimately connected to the business strategy
- Find or create branded differentiators
- Almost all brands could use more energy
- Leverage strong brands through brand extensions
- Vertical extensions are risky but sometimes necessary when creating a new brand is simply not feasible
- A corporate brand could be powerful master brand or endorser
- Reduce the size of the portfolio when possible
Sources:
https://www.prophet.com/theinspiratory/2012/09/12/10-steps-to-a-successful-brand-portfolio-strategy/
Aaker, David (1996), Building Strong Brands, New York: The Free Press.
Aaker, David and Kevin Keller (1990), "Consumer Evaluations of Brand Extensions," Journal of Marketing, 54, 1, 27-33.
Alden, Dana, Jan-Benedick E.M. Steenkamp, and Rajeev Batra (1999), "Brand Positioning Through Advertising in Asia, North America and Europe: The Role of Global Consumer Culture," Journal of Marketing, 63, 75-87.
Bartlett, Christopher A. and Sumantra Ghoshal (1989), Managing Across Borders. Boston, MA: Harvard Business School Press.
Barwise, Patrick and Thomas Robertson (1992), "Brand Portfolios," European Management Journal, 10, 3 (September), 277-285.
Caller, Linda (ed.) (1996), Researching Brands, Amsterdam: ESOMAR.
Court, David C., Anthony Freeling, Mark C. Lerter and Andrew J. Parsons (1997), "If Nike Can 'Just Do It' Why Can't We," McKinsey Quarterly, No. 3, 25-34.
Craig, C. Samuel and Susan P. Douglas (1996), "Responding to the Challenges of Global Markets: Change, Complexity, Competition and Conscience," Columbia Journal of World Business, 31, 6-18.
De Mooij, Marieke (1997), Global Marketing and Advertising, Understanding Cultural Paradoxes, Thousand Oaks, CA: Sage Publications.
Douglas, Susan P. and C. Samuel Craig (1996), "Global Portfolio Planning and Market Interconnectedness," Journal of International Marketing, 4, 93-110.
Featherstone, Mike (1990), "Global Culture: An Introduction," Global Culture: Nationalism, Globalization and Modernism, in Mike Featherstone (ed.), London: Sage Publications.
Hassan, Salah S. and Lea Katsanis (1994), "Global Market Segmentation Strategies and Trends," in Globalization of Consumer Markets: Structures and Strategies, Salah S. Hassan and Erdner Kaynak (eds.), New York: International Business Press, 47-62.
Kapferer, Jean-Noel (1997), Strategic Brand Management, second edition, London: Kogan Page.
Keller, Kevin (1998), Strategic Brand Management, New Jersey: Prentice Hall.
Laforêt, Sylvie and John Saunders (1994), "Managing Brand Portfolios: How the Leaders Do It," Journal of Advertising Research, September/October, 64-76.
Olins, W. (1989), Corporate Identity, London: Thames and Hudson.
Parsons, Andrew (1996), "Nestlé: The Visions of Local Managers," McKinsey Quarterly, no. 2, 5-29.
Aaker, David and Kevin Keller (1990), "Consumer Evaluations of Brand Extensions," Journal of Marketing, 54, 1, 27-33.
Alden, Dana, Jan-Benedick E.M. Steenkamp, and Rajeev Batra (1999), "Brand Positioning Through Advertising in Asia, North America and Europe: The Role of Global Consumer Culture," Journal of Marketing, 63, 75-87.
Bartlett, Christopher A. and Sumantra Ghoshal (1989), Managing Across Borders. Boston, MA: Harvard Business School Press.
Barwise, Patrick and Thomas Robertson (1992), "Brand Portfolios," European Management Journal, 10, 3 (September), 277-285.
Caller, Linda (ed.) (1996), Researching Brands, Amsterdam: ESOMAR.
Court, David C., Anthony Freeling, Mark C. Lerter and Andrew J. Parsons (1997), "If Nike Can 'Just Do It' Why Can't We," McKinsey Quarterly, No. 3, 25-34.
Craig, C. Samuel and Susan P. Douglas (1996), "Responding to the Challenges of Global Markets: Change, Complexity, Competition and Conscience," Columbia Journal of World Business, 31, 6-18.
De Mooij, Marieke (1997), Global Marketing and Advertising, Understanding Cultural Paradoxes, Thousand Oaks, CA: Sage Publications.
Douglas, Susan P. and C. Samuel Craig (1996), "Global Portfolio Planning and Market Interconnectedness," Journal of International Marketing, 4, 93-110.
Featherstone, Mike (1990), "Global Culture: An Introduction," Global Culture: Nationalism, Globalization and Modernism, in Mike Featherstone (ed.), London: Sage Publications.
Hassan, Salah S. and Lea Katsanis (1994), "Global Market Segmentation Strategies and Trends," in Globalization of Consumer Markets: Structures and Strategies, Salah S. Hassan and Erdner Kaynak (eds.), New York: International Business Press, 47-62.
Kapferer, Jean-Noel (1997), Strategic Brand Management, second edition, London: Kogan Page.
Keller, Kevin (1998), Strategic Brand Management, New Jersey: Prentice Hall.
Laforêt, Sylvie and John Saunders (1994), "Managing Brand Portfolios: How the Leaders Do It," Journal of Advertising Research, September/October, 64-76.
Olins, W. (1989), Corporate Identity, London: Thames and Hudson.
Parsons, Andrew (1996), "Nestlé: The Visions of Local Managers," McKinsey Quarterly, no. 2, 5-29.
No comments:
Post a Comment