A firm
Content
A firm’s brand architecture is its collection of brands and their interrelationships,
and typically consists of umbrella, line, and modifier brands.
an umbrella brand is used across multiple product and service categories, a line
brand is confined to only one category, and modifier brands designate specific versions
within a category.
Brand architecture is shaped by and subject to numerous forces including:
market segmentation and targeting imperatives; mergers and acquisitions; competitive
positioning; and cost-driven consolidation or rationalization of brands.
First, the organization’s degree of centralization is reflected
in its brand architecture; and second, whether the offering is standardized
or customized influences brand architecture.
brand architecture reduces customers’ risk and supports the sales
process.
Customer Risks and Brand Architecture
There are five different
phases in a B2B customer-seller relationship:
Contact Phase: This phase is characterized by the customer recognizing a
need and considering potential suppliers, and the seller demonstrating its
ability to satisfy that specific customer need.
Transaction Phase: If the seller is able to convince the customer about its
offer, the customer places a trial order to verify claims made by the seller.
Expansion Phase: Upon satisfactory delivery of the initial transaction by the
seller, the customer decides to entrust the seller with more orders similar in
nature to the initial transaction.
Consultative Phase: Systematically delivering on promises enhances customer
confidence towards the seller and results in the customer’s increased
willingness to work together with the seller to address customer needs in
other areas (outside of the initial transaction area).
Enterprise Phase: Depending on the outcomes and the success of the consultative
phase, the customer now increases its levels of commitment and
resources to working with the seller on joint strategic initiatives.
Finally, it is worth keeping in mind that the risk perceived by the
customer depends on their experience and ability to handle the risk, which in turn
is affected by their prior experience in dealing with suppliers, the seller’s financial
resources, organizational culture, and expertise. For example, a customer used to
dealing frequently with external suppliers is likely to have more expertise in mitigating
or spreading its risks when compared to organizations that have little experience.
Similarly a big customer with more financial resources is likely to perceive
and deal with risks quite differently than a smaller customer.
For the customer-seller relationship to develop, mutual trust from both
parties is critical. Without accretion of trust, the evolution of the relationship stalls
at one of the intermediate phases. However, in order to gain the trust of the customers,
the seller must understand that the customer’s perceived risks change or
evolve as the relationship progresses.
B2B Brand Architecture in Action
Milliken Millad3966 NX8000
B2B brand architecture
is a function of two key dimensions: the organizational structure, in particular,
the extent to which a firm is centralized or decentralized (in terms of its
product range, sales, and marketing); and the extent to which the firm’s market
offerings are standardized versus customized.
Firms such as Milliken adopt a centralized
branding approach because of conditions that are exogenous to its brand architecture.
Consequently, Milliken centralizes its brand by presenting
a common architecture and names across geographies. Other companies build
individual product brands or brands for specific target markets that are typically
connected to a single umbrella brand. For example, Johnson & Johnson is organized
as a group of independent organizations dealing with different customer
segments and hence deploys a decentralized brand architecture. Here, we call
these targeted brands family brands. A family brand potentially includes line and
modifier brands, derived from the standardized nature of the market offering.
In addition, firms tend to centralize their brand architecture when: the
umbrella brand is a dominant, well-known, and well-regarded name in the market.
On the other hand, firms tend to decentralize when they: acquire
brands in new regions of the world where they lack brand equity; acquire new
brands specifically targeted towards strategically different segments; and the acquired
brand has a strong reputation in the market.
The second dimension that contributes to the design of brand architecture is
the nature of the firm’s market offerings. B2B firms can exploit what we label the
B2B branding paradox: the more standardized a B2B firm’s market offering, the more
complex its brand architecture; and conversely, the more customized a B2B firm’s
market offering, the less complex its brand architecture.
This branding paradox occurs because a standardized
offering can be positioned and labeled, whereas it is more difficult to do
each of these with a customized offering whose boundaries are defined in collaboration
with the customer.
The four resulting designs.
Drawing from the vocabulary of conventional architecture, we label the four
designs as: Brand Stack, Brand Park, Brand Tower, and Brand Silos.
Brand Stack
This design fits centralized
organizations that market standardized offerings. It may also benefit companies
that market standardized offerings and are in the process of developing a
centralized branding approach.
Normal Approach
Brand Park
Companies that market standardized offerings, while operating a decentralized
branding approach find that a Brand Park design works best. This design is
capable of dealing with high levels of complexity such as when acquiring brands
that have an established reputation in the market.
Johnson & Johnson
Brand Tower
B2B firms that sell customized offerings, including professional services,
face unique challenges. What these firms sell defies discrete definition, and falls
along a continuum of possibilities that is often tailored to specific customer
requirements. An accounting firm, for example, may sell a discrete product such
as an audit; but even such a standard and commoditized product can vary dramatically
in complexity and time required so that it is essentially tailored to the
requirements of specific customers.
Cognizant
Brand Silos
The more customized a firm’s offering, the more difficult it becomes to
articulate the brand promise, and to make the benefits “real” to the customer. This
problem is further compounded when a firm markets a variety of unique and distinct
customized offerings to different customer segments, in a decentralized manner.
USG
and typically consists of umbrella, line, and modifier brands.
an umbrella brand is used across multiple product and service categories, a line
brand is confined to only one category, and modifier brands designate specific versions
within a category.
Brand architecture is shaped by and subject to numerous forces including:
market segmentation and targeting imperatives; mergers and acquisitions; competitive
positioning; and cost-driven consolidation or rationalization of brands.
First, the organization’s degree of centralization is reflected
in its brand architecture; and second, whether the offering is standardized
or customized influences brand architecture.
brand architecture reduces customers’ risk and supports the sales
process.
Customer Risks and Brand Architecture
There are five different
phases in a B2B customer-seller relationship:
Contact Phase: This phase is characterized by the customer recognizing a
need and considering potential suppliers, and the seller demonstrating its
ability to satisfy that specific customer need.
Transaction Phase: If the seller is able to convince the customer about its
offer, the customer places a trial order to verify claims made by the seller.
Expansion Phase: Upon satisfactory delivery of the initial transaction by the
seller, the customer decides to entrust the seller with more orders similar in
nature to the initial transaction.
Consultative Phase: Systematically delivering on promises enhances customer
confidence towards the seller and results in the customer’s increased
willingness to work together with the seller to address customer needs in
other areas (outside of the initial transaction area).
Enterprise Phase: Depending on the outcomes and the success of the consultative
phase, the customer now increases its levels of commitment and
resources to working with the seller on joint strategic initiatives.
Finally, it is worth keeping in mind that the risk perceived by the
customer depends on their experience and ability to handle the risk, which in turn
is affected by their prior experience in dealing with suppliers, the seller’s financial
resources, organizational culture, and expertise. For example, a customer used to
dealing frequently with external suppliers is likely to have more expertise in mitigating
or spreading its risks when compared to organizations that have little experience.
Similarly a big customer with more financial resources is likely to perceive
and deal with risks quite differently than a smaller customer.
For the customer-seller relationship to develop, mutual trust from both
parties is critical. Without accretion of trust, the evolution of the relationship stalls
at one of the intermediate phases. However, in order to gain the trust of the customers,
the seller must understand that the customer’s perceived risks change or
evolve as the relationship progresses.
B2B Brand Architecture in Action
Milliken Millad3966 NX8000
B2B brand architecture
is a function of two key dimensions: the organizational structure, in particular,
the extent to which a firm is centralized or decentralized (in terms of its
product range, sales, and marketing); and the extent to which the firm’s market
offerings are standardized versus customized.
Firms such as Milliken adopt a centralized
branding approach because of conditions that are exogenous to its brand architecture.
Consequently, Milliken centralizes its brand by presenting
a common architecture and names across geographies. Other companies build
individual product brands or brands for specific target markets that are typically
connected to a single umbrella brand. For example, Johnson & Johnson is organized
as a group of independent organizations dealing with different customer
segments and hence deploys a decentralized brand architecture. Here, we call
these targeted brands family brands. A family brand potentially includes line and
modifier brands, derived from the standardized nature of the market offering.
In addition, firms tend to centralize their brand architecture when: the
umbrella brand is a dominant, well-known, and well-regarded name in the market.
On the other hand, firms tend to decentralize when they: acquire
brands in new regions of the world where they lack brand equity; acquire new
brands specifically targeted towards strategically different segments; and the acquired
brand has a strong reputation in the market.
The second dimension that contributes to the design of brand architecture is
the nature of the firm’s market offerings. B2B firms can exploit what we label the
B2B branding paradox: the more standardized a B2B firm’s market offering, the more
complex its brand architecture; and conversely, the more customized a B2B firm’s
market offering, the less complex its brand architecture.
This branding paradox occurs because a standardized
offering can be positioned and labeled, whereas it is more difficult to do
each of these with a customized offering whose boundaries are defined in collaboration
with the customer.
The four resulting designs.
Drawing from the vocabulary of conventional architecture, we label the four
designs as: Brand Stack, Brand Park, Brand Tower, and Brand Silos.
Brand Stack
This design fits centralized
organizations that market standardized offerings. It may also benefit companies
that market standardized offerings and are in the process of developing a
centralized branding approach.
Normal Approach
Brand Park
Companies that market standardized offerings, while operating a decentralized
branding approach find that a Brand Park design works best. This design is
capable of dealing with high levels of complexity such as when acquiring brands
that have an established reputation in the market.
Johnson & Johnson
Brand Tower
B2B firms that sell customized offerings, including professional services,
face unique challenges. What these firms sell defies discrete definition, and falls
along a continuum of possibilities that is often tailored to specific customer
requirements. An accounting firm, for example, may sell a discrete product such
as an audit; but even such a standard and commoditized product can vary dramatically
in complexity and time required so that it is essentially tailored to the
requirements of specific customers.
Cognizant
Brand Silos
The more customized a firm’s offering, the more difficult it becomes to
articulate the brand promise, and to make the benefits “real” to the customer. This
problem is further compounded when a firm markets a variety of unique and distinct
customized offerings to different customer segments, in a decentralized manner.
USG
