Brand Hierarchy

Question: When should I develop a new brand?

Answer

Some big consumer branding companies, such as Procter & Gamble and Unilever used to create a separate brand for each new product category. Today, however, this is viewed as being potentially wasteful as extending an existing brand can make it stronger, get the new product into the market faster, and significantly reduce costs and complexity.

Key Points


Some issues you may wish to address are:
  1. How much money do you have? - brands cost a great deal of money to build, especially on a global basis. Using a trusted house trademark, or trademark-root, will get recognition & gain respect faster, but may dilute the clarity of the brand.
  2. How many separate thoughts are you trying to get across? - one thought should equal one trademark, at a cost.
  3. How quickly do you need to build respect and trustworthiness into your brand? - brands gain trust over time. If you want immediate trust, you will need to link the new trademark with a trademark which is already a trusted brand (which need not be your own).
  4. Do you want to grow and sell your brands? - trademarks cannot easily be sold in sections. Buyers normally want the whole trademark or not at all. If your trademark architecture is based on a house trademark, a trademark shared across a product family or several product families, or a trademark-root, this makes it difficult to sell except as a job lot. As with licensing or franchising, you would need to build into all agreements the ability to confiscate the brand if the other parties do not uphold the core values of the brand, and then you would have to police their performance.
  5. Are any parts of your business risky in PR terms? - the larger the span of a trademark, the cheaper it is to run, but also the more at risk it is from damage to its reputation from one area of the business. It is more costly, but safer, to have different trademarks to cover different areas of the business as well as different thoughts.
  6. Do you want to rejuvenate your "house" brand? - e.g. egg adds youth to Prudential. Trademarks working in combination borrow from each other's equity.

In More details


Stand-alone intimacy brands
The most precise way to develop brands is to have each brand supported by a stand-alone set of trademarks that will build a special relationship of intimacy with the target customer, as well as one of trust that will build over time. In this way, the brand stands or falls on its own merits, without putting any other brand on the line as its guarantor of quality and trust.

This approach has clear advantages. There is less confusion over what the brand stands for than where a customer-specific intimacy brand is backed by a trusted house brand. There is also less risk to the house brand - often the name of the manufacturing corporation. The role of the brand is clean and unadulterated.

However, there are also disadvantages. It is rumoured that Proctor & Gamble, the company most associated with the "one brand per proposition" approach, estimates that it costs around US$1 billion to establish a global stand-alone brand in a consumer market. It is therefore no coincidence that the most aggressive of the Internet brands, such as Amazon, AOL, Yahoo etc., have invested some 75% of their total expenditure in brand-related marketing activities.

Combination brand architectures
So, unless you are ready to bet the company, there are other options:

  • Multiple trademarks with the same trademark-root, e.g. Nes +café/tea/quick etc. for Nestle
  • A combination of trademarks, e.g. Ford + Sierra, often followed by a series of descriptors of engine size, performance and possibly special edition, all of which may not be, or cannot be, trademarked.

Many companies combine approaches. Ford has "the Ford Corporation" to describe the company, "Ford" as the house brand, stand-alone intimacy brands such as Aston Martin, Jaguar and Volvo, and car brands such as Focus, Sierra, Ka. Nestle operates in a similar way. Sometimes it uses the Nestle house brand with different logos, at other times it uses a trademark-root brand, such as "Nescafe", and sometimes it builds stand-alone intimacy brands, such as "Carnation".

The extent to which customers associate the different brands will vary. Jaguar is not officially endorsed by Ford but, at a guess, most current and prospective Jaguar owners are aware of Jaguar's parentage, and appreciate it as a guarantee of quality. Not everyone will associate Nescafe with Nestle, but many will. They may or may not know that Carnation is a Nestle brand.

The objective of supporting a customer-specific intimacy brand with a trusted house brand is to transfer the equity between the two. When you are building a new brand, supporting it with a trusted house brand will give it a kick-start. At a later stage, the new brand may add freshness and vitality, or another angle, into the house brand. This is what British Airways intended to do with Go, and KLM with Buzz. Go stands for a new way of flying cheaply (in competition with Easyjet), BA guarantees that the plane will stay in the air. The danger is that one brand will adulterate the other. Is Go quite so fresh when associated with BA, and what happens if the Go proposition starts undermining the BA pricing structure? This apparently troubled the business team within BA for a long time, and for good reason - it is a question of calculating the trade-off. Easyjet in its turn has started to use the trademark-root approach, taking the word and styling of Easy to make the same proposition for car rental under the name of Easycar.

It is all a trade-off
Much of business is a trade-off, and branding is about business. Ideally, each brand would make a clear proposition and, if you want to make a slightly different proposition (perhaps because you have developed a new technology), you would create a new brand. Many established companies have used this approach in the past, ending up with many thousands of trademarks aspiring to be brands. But in branding terms, this approach does not work. Legally protecting several thousand trademarks alone is punitively expensive, giving each one the investment it needs to reach its full potential is impossible. It may work where people are buying products, but not where people are buying relationships. Thus Proctor & Gamble recently announced it would focus on 80 brands.

So, inevitably brands will have to be stretched. The more emotionally-based the central organising thought, the easier it will stretch into new markets; Virgin is a good example of this. The more specific the brand to a particular feature or hard benefit, the more risky it is to stretch it because the legacy connotations may not fit the new market. It is hard to imagine Snickers motor oil.