Brand hierarchy (a.k.a brand architecture) refers to the organization of brand elements as an attempt to use corporate brand equity to increase brand recognition. It summarizes the branding strategy by grouping the company’s products and services accordingly to their similarities and differences.
The structure of products and services does not have to be complex. In fact, the simpler and more organized the brand hierarchy is, the better.
In essence, the brand hierarchy is an important but commonly overlooked strategic factor within an organization. Unfortunately, it is often worked on in the later stages of brand creation when products are already existing in the market. This is less cost-effective and may result in the need for rebranding in the future.
The reasons why companies need to organize their product and service brand hierarchy include the following:
Good sales are the result of good communication with consumers
When it comes to the understanding of your business’ offerings and brand purpose, it is essential that you don’t confuse your target consumers. This situation will either put in favor, the price-based decisions or repel potential buyers and direct them to your competitors instead. To monitor your customer’s knowledge and understanding of your brand, you can refer to your website analytics, customer phone surveys, social media polls, and consumer behavior maps.
To stand out from your competitors
Developing a brand hierarchy can provide a helpful background when formulating new brand strategies. It clarifies what exactly the brand stands for, what the brand sells, as well as why certain brand products or services were launched. Hence, companies need to revise their line of products and services and their relation to one another, their sales funnels, upsells and cross-sells. Such preliminary research can lead to the maximization of growth, profit, and customer loyalty.
Preventing main and sub-brands from competing with each other
Companies may experience cases where a sub-product meets unexpected popularity. The lack of structure can cause an overshadowing of the primary products, which of course, was initially aimed by the brand to be commonly sold and advertised. With the right brand hierarchy, the competition between main and sub-brands or products can be prevented.
Brand hierarchy disorganization can threaten future business plans
The careful planning of a marketing strategy is one of the most important aspects of every business. To grow and succeed in the industry, companies must allocate their budgets to the right resources, determine their priorities, and avoid unnecessary expenses. One of the best ways they can do this is by organizing a well-structured brand hierarchy in order to gain a better vision of their company.
4 Types of Product and Service Brand Hierarchies:
1) Umbrella or Branded House (aka Master Brand)
In this brand hierarchy, the firm is the brand. All products and sub-products are linked to it, and all of the brand messages express the company’s value proposition in a single, unified voice. Due to its simplicity and ease of management, this hierarchy is often used by small businesses.
Examples: FedEx, Virgin, and Harley Davidson.
2) Product or House of Brands
This hierarchy focuses on creating and building independent sub-products and brands, where each sub-brand is treated as a separate brand. Meanwhile, the main parent brand stays in the background, and its name remains included in the back of all packaging.
This model typically applies the core strengths and infrastructure of the parent corporation to a variety of markets through one house brand. This allows each brand to establish a distinct value and meaning towards its target customers. Since the house of brands structure will require a larger number of resources to help develop and sustain it, it is one that is not often used by smaller businesses.
Examples: Yum! Brands, Unilever or P&G.
3) Endorsed strategy
Individual brands are connected to the parent brand; however, the main figure is neither central nor hidden. It’s an efficient model for less proficient sub-brands because they can still profit from the main brand.
Examples: Facebook and Marriott.
4) Hybrid brands
This model combines the possibilities of all the different structures, meaning that companies are able to apply elements from each of the previously mentioned brand hierarchies.
Hybrid brands is a structure that is often utilized once a brand acquires other brands through mergers and acquisitions, and if these new brands do not fit within the current brand structure. It tends to work best for large conglomerates that have the necessary resources to manage complex brand relationships.
Examples: Amazon, Microsoft, and Coca Cola