In the good old days it was all very straightforward. Ask a senior marketer at Volkswagen about his brand architecture and he could draw you a neat tree diagram with VW at the top and boxes such as “Beetle”, “Golf”, and “Passat” underneath (with a wide range of carefully arranged variations under each of them). They were all very distinctive products and sub-brands aimed at very different market segments.
But in other parts of the company other people were doing their own thing; building an empire that now spans Audi, Seat, Skoda and VW, as well as Bentley, Bugatti, and the luxury Phaeton. And some bright spark decided that what had worked so well for the VW brand should be applied to each main brand. The result? A dog’s dinner
In response to criticisms, VW recently reorganised, to “sharpen the focus of our brands”. The new structure puts Skoda, VW, Bentley and Bugatti into one brand group, whose aim is to deliver “class-beating standards in all its products from the sub-compact Lupo through to the Phaeton luxury saloon”. The other group contains Audi and Seat, which share the core competencies of “sportiness, technology and design”. Got it?
VW is hardly alone with its brand portfolio conundrum. A spree of acquisitions which brought Aston Martin, Jaguar, Land Rover and Volvo under the Ford umbrella presented the US car manufacturer with a problem. There are big savings to be made from sharing platforms and technologies across brands, but if all these luxury brands went under the Ford name, their images would be undermined. So Ford created the Premier Automotive Group.
Nevertheless, when Jaguar owners looked under the bonnet they saw Ford-branded parts, and they weren’t too happy. Being aware of Ford’s platform strategy, some began to wonder whether they were shelling out a fortune for just a Mondeo with a Jaguar shell. This image problem has cost Jaguar dearly. (Previously ambitious sales targets have been abandoned, and now Jaguar is developing its own undercarriage at a cost of $1bn (£562m).)
How, then, to get the best of both worlds: from one company and many brands? US branding guru David Aaker has turned his attention to this subject in his tantalisingly titled Brand Portfolio Strategy. The problem is simple enough to state. “Rather than clarity, there may be brands with complex branding structures that lack logic and consistency,” he writes. “Some brands may reflect product types and others price value, and still others customer types of applications. The branded offerings may even overlap. The totality simply reflects a mess. Customers have a hard time understanding what is being offered and what to purchase. Even employees may be confused.” Ring any bells, VW?
But, it seems, managing a portfolio of brands well is getting harder and harder. Partly that’s because of in-built corporate tendencies. Companies agonise about their new product development strategies, but very few give equal weight to old product deletion strategies and processes.
“It is easier to add than subtract,” notes Aaker. “Organisations instinctively want to solve a brand problem by turning it around or to engage in benign neglect [and] unfortunately, there is rarely a brand-killing champion willing to battle these organisational biases.” So, periodic spring cleaning like Unilever’s recent brand cull might be a good idea.
Another factor behind portfolio perplexity is the growing plethora of specialist brand roles and functions. Consider a few. There is master brand endorsement such as Wall’s Magnum, or Marriott Courtyard hotels as opposed to Marriott Fairfield Inns. Then there are umbrella brands which bring a wide range of products under the same wing – such as NestlÃ©’s Buitoni for Italian food. You can, of course, have mixtures of the two. Sainsbury’s Blue Parrot CafÃ© is an own-label product endorsed by an umbrella master brand.
Meanwhile co-branding is becoming increasingly fashionable. Sometimes it’s a short-term category thing – salty snacks and colas or beers working together in promotions, for instance. Sometimes, the deal is with yet another brand beast – the ingredient brand (think Intel Inside). Sometimes it’s with a celebrity partner such as Sainsbury’s and Jamie Oliver.
All of these variations and permutations needs to be considered by the portfolio strategist. But there’s even more. At his British Brands Group lecture last week Aaker went further, to show how focusing on static brand “architectures” can miss the role played by a particular brand or sub-brand.
Take “brand energisers”. A brand energiser is needed when the master brand has so much of its own momentum and legacy that changing embedded perceptions is a massive task. The brand is too valuable to drop. But keeping perceptions up to date is a losing battle. So what does it do?
A brand energiser is not just a “sub-brand”. It is a sub-brand with supreme importance for the brand as a whole, because it changes perceptions of the entire brand. For example, when IBM was still often seen as a mainframe monolith, the launch of its Thinkpad laptop helped to transform perceptions of the IBM brand itself, even though actual Thinkpad sales accounted for a tiny proportion of sales revenues.
Later, as the internet age began to mature, IBM again used the same trick, associating the good old big blue brand with next-generation, revolutionary concepts such as “e-business on demand”.
In the US, United Parcels Service (UPS) was wrongly, but widely perceived as a domestic, van-based parcel delivery service. Rather than trying to re-educate people about the UPS brand itself, UPS invented a new sub-brand “UPS Supply Chain Solutions”, which did the trick much more efficiently.
Likewise (also in the US) Heinz reinvigorated the ketchup market and the Heinz brand generally by introducing crazy coloured purple and green tomato ketchups, which went down a treat with children. You could say Sainsbury’s is trying to do something similar by its association with James Oliver.
Yet another powerful tactic described by Aaker is the branded ingredient – as opposed to the ingredient brand. Both have their roles.
Ingredient brands (as per Intel Inside) can give credibility to their co-brand partners and may even help them to differentiate. A branded ingredient, on the other hand, is a proprietary offering that adds so much value in its own right that it’s worthwhile treating as a mini-brand in its own right. Aaker’s official definition is: “an actively managed feature, service, program or ingredient that provides meaningful differentiation for the parent brand”.
Procter & Gamble created a branded ingredient with Pantene Pro-V, while Unilever created “Nutrium” for its Dove range of products. Best Western hotels is trying to do the same with its “Heavenly Bed”. Apparently, the Heavenly Bed makes such a difference to customers’ sleeping experience that many do, genuinely, opt for Best Western hotels simply for the bed. Best Western has even set up a sideline business – selling Heavenly beds direct to its customers. (If you want to know, Heavenly Beds boast 900 individual coils, a choice of three sheets “ranging in thread count from 180 to 250”, plus five goose down/goose feather pillows).
As VW is finding out, brand portfolio management is tough. But even if it gets the architecture right, it will still have more to do. Innovating around the roles each portfolio element plays is opening up all manner of possibilities.
Alan Mitchell, email@example.com