Brand architecture serves as the corporate roof under which a business can protect and unify its brand portfolio. Fortune 500 companies, e.g. the P&Gs, Krafts, and Coca-Colas of the world, utilize brand positioning strategies to protect their numerous brands from external market forces, as well as to unify brands in order to enhance consumer associations and perceptions. The process of developing brand architecture is a strategic one, based on identifying threats and creating strong corporate bonds amongst brands that work to mitigate the risk of brand failure. These risks can come from not only consumer preferences, but market fragmentation, competitors, and the pressure to extend existing brand recognition across multiple products. With threats like these in an ever-expanding and competitive global marketplace, companies with weak brand infrastructures will struggle to compete.
Hostess, maker of the iconic Twinkie, is a recent example of a major brand failure. The company’srefusal to modify its product line in order to adapt to changing consumer tastes is cited as a major reason why Hostess plummeted into bankruptcy. Since the company’s collapse, private equity firms Metropoulos & Co. and Apollo Group Management have purchased Hostess with the goal of building a stronger and more stable corporate roof under which the Twinkie, Ding-Dong, and other Hostess brands may again flourish. The two private equity firms will need to decide how to best position the brands in order to mitigate the risks posed by the many volatile and unpredictable market threats. If industry best practices are any indication, Metropolous and Apollo Group will position the Hostess brand by modeling one of the four most common brand positioning strategies, shown in the infographic below.
As depicted above, each brand positioning strategy has its pros and cons. More often than not, companies looking to frame their brands will lean towards either a branded house or a house of brands strategy. These two brand architectures represent opposite ends of the brand relationship spectrum: the house of brand strategy reflects a more independent, stand-alone branding approach; while the branded house strategy represents a more singular, cohesive brand umbrella. How can companies determine which strategy will be most effective for their brands? The table below offers questions companies should ask themselves when evaluating which brand portfolio can be best tailored to fit their needs.
Different portfolio strategies offer different strengths and weaknesses and must be decided upon based on relevant market knowledge and company branding policies. Whether it is a $10 billion per year conglomerate or a local producer of food products, brand architecture is key to mitigating risks and improving the quality and competitiveness of a company’s products.
For more information about how brand management can impact your own business, visit us at www.HanoverResearch.com.
What do you believe is the best brand portfolio approach? Let us know your thoughts in the comments section below.