6.3 Brand hierarchy strategies
3 min read•july 18, 2024
organizes a company's brands into a structured framework, establishing relationships and roles for each. This strategic approach helps manage brand portfolios effectively, clarifying positioning and preventing overlap. Well-defined hierarchies offer benefits like efficient resource allocation and focused marketing efforts.
Companies can employ various strategies for brand hierarchy, including corporate, family, and . Each approach impacts differently, influencing trust, recognition, and purchasing decisions. Evaluating the effectiveness of these strategies involves considering factors like alignment with business objectives and market fit.
Brand Hierarchy and Portfolio Management
Concept of brand hierarchy
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- Brand hierarchy organizes a company's brands and sub-brands into a structured framework
- Establishes relationships and roles for each brand within the portfolio (corporate, family, individual)
- Assists companies in managing and prioritizing their brand offerings effectively
- Well-defined brand hierarchy offers several benefits
- Clarifies purpose and positioning for each brand avoiding overlap and confusion
- Prevents cannibalization among brands by clearly defining target markets
- Enables efficient allocation of resources and focused marketing efforts
- Brand hierarchy typically consists of three main levels
- Corporate or positioned at the top (Apple, Samsung)
- Family or umbrella brands situated in the middle (Nike Running, Nike Basketball)
- Individual or product brands placed at the bottom (iPhone, Galaxy S)
Strategies for brand hierarchy
- strategy utilizes the company name as the primary brand across all offerings
- Leverages the reputation and equity associated with the corporate brand (Apple, Nike)
- Builds trust and credibility across product lines simplifying consumer decisions
- May limit flexibility in targeting specific segments due to broad corporate identity
- strategy groups related products under a single brand name
- Allows for and cross-selling opportunities within the family (Kellogg's cereals, Coca-Cola beverages)
- Facilitates and loyalty within a product category
- Potential for negative spillover if one product fails impacting the entire family
- Individual branding strategy assigns a unique brand identity to each product
- Allows for targeted positioning addressing specific consumer needs (Procter & Gamble's Tide, Pampers, Crest)
- Minimizes association with other brands reducing risk of negative impact
- Requires more resources to establish and maintain each individual brand
Impact on consumer behavior
- Corporate branding impact
- Builds trust and credibility across product lines simplifying consumer decisions
- Leverages the reputation and equity of the corporate brand (Apple, Nike)
- May limit flexibility in targeting specific segments due to broad corporate identity
- Family branding impact
- Facilitates brand recognition and loyalty within a product category (Kellogg's cereals)
- Enables the success of one product to benefit others in the family through association
- Potential for negative spillover if one product fails impacting perception of the entire family
- Individual branding impact
- Allows for unique positioning and targeting of specific consumer needs (Tide, Pampers)
- Minimizes association with other brands reducing risk of negative impact
- Requires more resources to establish and maintain each individual brand's identity
Effectiveness of hierarchy strategies
- Factors to consider when evaluating brand hierarchy effectiveness
- Alignment with company's overall business strategy and objectives
- Clarity and consistency in brand messaging and positioning across touchpoints
- Ability to meet the needs and preferences of target consumers effectively
- Differentiation and competitive advantage in the market vs. rivals
- Assessing the fit between brand hierarchy and
- Understanding the target audience's brand preferences and loyalty drivers
- Evaluating the relevance and appeal of brand hierarchy to target segments
- Analyzing the competitive landscape for brand hierarchy strategies
- Benchmarking against competitors' brand hierarchy approaches
- Identifying opportunities for differentiation and market penetration
- Measuring brand hierarchy performance using key metrics
- Tracking , consideration, and purchase metrics over time
- Evaluating financial impact of brand hierarchy on revenue and profitability
- Conducting brand audits and consumer research for feedback and insights
Key Terms to Review (22)
Aaker's Brand Equity Model: Aaker's Brand Equity Model is a framework that identifies brand equity as a combination of brand loyalty, brand awareness, perceived quality, brand associations, and other proprietary assets. This model helps businesses understand the value of their brand in the market and emphasizes the role of strong brands in driving consumer preferences and business success.
Brand Asset Valuator: Brand Asset Valuator (BAV) is a tool used to measure the value of a brand by analyzing various components such as brand awareness, brand loyalty, perceived quality, and brand associations. It provides insights into how a brand is positioned in the market and helps identify strengths and weaknesses relative to competitors.
Brand Awareness: Brand awareness is the extent to which consumers recognize and recall a brand, reflecting the familiarity and visibility of that brand in the market. It plays a crucial role in shaping consumer perceptions, influencing buying decisions, and differentiating a brand from its competitors.
Brand Equity: Brand equity refers to the value that a brand adds to a product or service, derived from consumer perceptions, experiences, and associations. It encompasses elements like brand awareness, brand loyalty, and perceived quality, which collectively influence a customer's decision-making process and contribute to the overall financial performance of a brand.
Brand extension: Brand extension is a marketing strategy that involves using an established brand name to introduce new products or services in a different category. This strategy leverages the existing brand equity to enhance consumer perception and acceptance of the new offerings, making it easier to enter new markets or product categories.
Brand Hierarchy: Brand hierarchy is a structured framework that organizes a company's brands and sub-brands to establish relationships among them. It helps in defining the roles of various brands within a portfolio, providing clarity for consumers and guiding strategic decisions for brand management. By setting up a clear hierarchy, companies can enhance their brand equity, streamline marketing efforts, and optimize brand architecture for future growth.
Brand Image: Brand image refers to the perception and associations that consumers have with a particular brand, shaped by their experiences, communications, and marketing efforts. It reflects the brand's identity and values, influencing how customers view and engage with the brand. A strong brand image can create loyalty and trust, while a negative image can lead to diminished consumer interest and sales.
Brand Loyalty: Brand loyalty refers to the consumer's commitment to repurchase or continue using a brand's products or services consistently over time. This loyalty often leads to a preference for a brand, even when faced with alternatives or changes in price, making it a critical aspect of effective branding and management strategies.
Brand Personality: Brand personality refers to the human-like traits and characteristics attributed to a brand, shaping how consumers perceive and connect with it on an emotional level. This concept plays a vital role in establishing a brand's identity, influencing consumer behavior, and helping brands differentiate themselves in a competitive marketplace.
Brand Portfolio: A brand portfolio is the collection of all brands and brand variants that a company offers to the market. It encompasses various products, services, and sub-brands that help a company target different market segments, thereby maximizing its market reach and overall brand equity. Understanding the structure and organization of a brand portfolio is essential for effective brand management, as it directly influences brand architecture and strategies related to brand hierarchy.
Brand recognition: Brand recognition is the ability of consumers to identify a brand by its attributes, such as its name, logo, or packaging. This recognition plays a vital role in building a brand's identity and helps to create associations in the minds of consumers, making them more likely to choose that brand over competitors. It is closely tied to visual branding elements, brand guidelines, and overall brand equity, influencing how consumers perceive value and trust in a brand.
Consumer behavior: Consumer behavior refers to the study of how individuals make decisions to spend their resources, such as time and money, on consumption-related items. This encompasses various factors, including psychological, social, and cultural influences that affect purchasing habits and brand perceptions. Understanding consumer behavior is crucial for brands to develop effective strategies that enhance brand equity and value, as well as to establish a coherent brand hierarchy that aligns with consumer needs and preferences.
Corporate Branding: Corporate branding is the practice of promoting a company’s brand as a whole, rather than focusing solely on individual products or services. This approach helps create a unified image and reputation for the organization, allowing customers to form a relationship with the entire company instead of just its offerings. By establishing a strong corporate brand, companies can build trust and loyalty among consumers, differentiate themselves in the marketplace, and achieve a competitive advantage.
David Aaker: David Aaker is a renowned brand strategist and author known for his significant contributions to brand management, particularly in the development of the Aaker Brand Equity Model. His work emphasizes the importance of brand equity, brand identity, and strategic brand management, connecting various elements that influence how brands are perceived and managed in the marketplace.
Family Branding: Family branding is a marketing strategy where a company uses a single brand name to market multiple related products or services. This approach leverages the equity and recognition of the main brand to enhance the marketability of all products under that brand umbrella, creating a cohesive identity that benefits all offerings.
Individual branding: Individual branding is a strategy where a company creates distinct brand identities for each of its products or services, rather than using a single brand name for multiple offerings. This approach allows businesses to target different market segments more effectively, establishing unique positioning and messaging for each product. Individual branding is crucial when products have varied target audiences or differing attributes that need to be emphasized.
Keller’s Brand Equity Model: Keller’s Brand Equity Model is a framework that emphasizes the importance of building strong brand equity through consumer perceptions and experiences. It outlines how brands can create value by focusing on brand identity, brand meaning, brand responses, and brand resonance, ultimately leading to stronger customer loyalty and preference.
Kevin Lane Keller: Kevin Lane Keller is a renowned marketing scholar known for his contributions to brand management, particularly through his development of the Customer-Based Brand Equity (CBBE) model. His work emphasizes understanding how consumers perceive and interact with brands, which is essential for developing strategies that influence brand perception, establishing brand architecture, and measuring the ROI of branding initiatives.
Net Promoter Score: Net Promoter Score (NPS) is a metric used to gauge customer loyalty and satisfaction by asking customers how likely they are to recommend a company's product or service to others. This score helps brands understand their customer relationships and identify areas for improvement in their offerings.
Parent brand: A parent brand is the main brand that oversees and supports various sub-brands or product lines under its umbrella, providing them with credibility and recognition in the market. The parent brand establishes a strong identity, which can enhance the value of its sub-brands, as they can benefit from the reputation, equity, and customer loyalty that the parent brand has cultivated. This connection is essential for managing brand portfolios, structuring brand hierarchies, and evaluating the risks and benefits associated with brand extensions.
Sub-brand: A sub-brand is a secondary brand that is linked to a parent brand, designed to target a specific audience or market segment while leveraging the equity of the main brand. Sub-brands allow companies to diversify their offerings, appeal to different consumer preferences, and create unique identities within the overarching brand framework. This strategic approach helps in managing brand portfolios effectively and establishes clear brand hierarchy strategies.
Target Market: A target market is a specific group of consumers identified as the intended audience for a brand’s products or services. Understanding this group helps brands tailor their marketing efforts to meet the needs and preferences of those most likely to purchase, ensuring effective communication and resource allocation. Identifying a target market also influences branding strategies, product development, and promotional tactics to achieve better engagement and loyalty from consumers.