Brand architecture – one name or several?

October 25, 2011

(The views expressed in this column are the author’s own and do not represent those of Reuters)

You may be sitting at the airport drinking a Kingfisher beer while you are waiting for your Kingfisher flight. Maybe in a year or two you will be able to stay at a Kingfisher resort and talk to your friends on a Kingfisher mobile network.

The Kingfisher brand is growing. Vijay Mallya obviously loves it. Where else is he going to take Kingfisher and how far can he stretch it? Probably, if he can manage it, quite a long way. But he has to be careful how he uses it. He has a few other businesses which aren’t called Kingfisher, both in India and globally.   Mr. Mallya owns Whyte & Mackay, a venerable Scotch whisky company.   Whyte & Mackay has several brands, single malts like Dalmore, Isle of Jura and Fettercairn, as well as Glayva liqueur and Vladivar vodka, and none of them are called Kingfisher.

Why? Because when he bought Whyte & Mackay, he bought some very valuable brand names and if he chucked these out and called everything Kingfisher, he wouldn’t be in the Scotch whisky business very long.

Most companies in the drinks business own a portfolio of brands and don’t use their corporate name with final consumers. Diageo has Johnny Walker, Guinness, Gordon’s and about fifty other brands — but it doesn’t use its corporate name on any of them. You can’t get a glass of Diageo. Each of these brands has its own niche; some compete with each other, they don’t appear to be related to each other — and their individuality is a large part of their strength.

Many luxury goods companies operate under a similar policy. LVMH has Louis Vuitton, Hennessy, Moet Chandon, Loewe and a whole raft of other brands; each presents itself independently — many compete with each other. What happens in the back office is different but, publicly, they compete.

Hindustan Lever, also, until quite recently never used their corporate name on any of their brands. Every Unilever brand — such as Liril, Brooke Bond, Surf, Pepsodent, Pond’s Lakme — was quite separate and distinct.  Sometimes they competed with each other. Relatively recently though, they’ve started putting the ‘U’, which is the corporate mark, on all their brands in order to indicate that each brand is related to the other and that each is backed by the House of Unilever, the corporate whole. That’s called endorsement and it’s being adopted increasingly on the basis that customers are better informed and want to know where what they are buying comes from.

At the other end of the spectrum, some companies, like Bharat Petroleum or Hindustan Petroleum, especially in oil and gas, tend to focus on one name. It’s true that Exxon Mobil, in some places, calls itself Esso but that’s for legal reasons. Probably the highest profile organisation that uses this monolithic approach is Virgin of the UK. The Virgin brand now covers money, airlines, rail, retail and pretty much everything in between.

So, how does it happen that companies have such differing patterns in brand architecture. Sometimes it’s planned, it happens on purpose. Mostly, though, it happens by accident. Nobody planned it, the organisation just grew up, making acquisitions, starting businesses and nobody thought about it very much.   It just ended up that way.

But brand architecture is important. It affects the way employees, partners and customers think about the company as a whole and about its different units. Brand architecture directly affects share price, because if you don’t know what the company in its entirety does, you may have a narrow view of its activities.

So there comes a moment in every organisation’s life when it has to think through which brand architecture model it wants to adopt. Each model has advantages and disadvantages. Look at two examples in the automobile business. Volkswagen started with one name and one product, the Beetle, but over time it grew a multiplicity of brands. VW now has Skoda, Seat, VW, Audi, Bentley and Bugatti and maybe one or two others that I can’t remember. The point here is that each brand focuses on a particular market segment. It’s costly in marketing and distribution but it works for them. Mercedes Benz, on the other hand, which is a subsidiary of Daimler, one of the great competitors of VW, focuses almost exclusively on Mercedes. The Mercedes star is used on heavy trucks, coaches, delivery vehicles, luxury cars through to small cars.

So, who is right? The rule is there’s no rule — there is no right and wrong. You have to weigh up all the options and take a decision. Each situation is different but what’s absolutely clear is that, as your organisation grows organically and by acquisition, by sector and geography, you have to take a good look at your brand architecture to maximise your options. Funnily enough, the strange mix that Vijay Mallya has developed seems to work — at least for him.

In India, for the most part, even the biggest companies with fingers in all sorts of pies don’t take brand architecture as seriously as they should.

What about your business?

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