Brand Architecture A View of Practitioners

Marina Dabic, Gnter Schweiger, Andreas Strebinger

Department of Advertising and Marketing Research

Vienna University of Economics and Business Administration

June 25th 2004

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Structure of the presentation

Definition of brand architecture and classification of different brand architecture strategies Objectives of the study and sample profile Hypotheses resulting from the study Limitations of the study Discussion

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Definition of brand architecture

The organization and structure of the brand portfolio by specifying brand roles and the

nature of brand relationships between brands and

between different product-market contexts. (Aaker D.A. and Joachimstaler E. 2000, p. 102)

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Classification of brand architecture strategies

Brand architecture

Corporate dominant strategy

Dual brand strategy

Mixed brand strategy Endorsed brand strategy

Brand dominant strategy

Brand Hierarchy: Definitions; in Keller, K. L (1998), Strategic Brand Management, Chapter 11 Branding Strategies, pp. 428-431.

Pro and cons of the different brand architecture strategies: e.g. Aaker, David A. and Kevin Lane Keller (1990), Aaker, David A. and Erich Joachimsthaler (2000), Kapferer, Jean-Nol (1997), Park, C. Whan, Robert Lawson, and Sandra Milberg (1989), Park, C. Whan, Sandra Milberg, and Robert Lawson (1991).

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Comparison of two competitors

- using a totally different brand architecture strategy despite a comparable structure of their store brand and private labels portfolio

Store brands

Private labels

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Objectives of the study

Evaluation of advantages and disadvantages of different types of brand architecture strategies by practitioners regarding - consumer market - capital market - labor market - employees (corporate culture)

Identifying brand roles in the brand portfolio

Finding out key factors influencing the brand architecture strategy Collection and description of case studies regarding brand architecture strategies

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Objectives regarding the sample

Different industries Service industries durable goods Fast-moving consumer goods

Variability in terms of headquarter vs. local subsidiary of an internationally operating company

Variability in terms of brand architecture strategy Corporate dominant strategy Mixed strategy (endorsed brand, dual brand) Brand dominant strategy

Multiple respondents related to a company Respondents from advertising agencies, brand consultants and market research companies with regard to their clients brand architecture strategy.
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Sample profile
53 face-to-face interviews: February August 2002
(geographical distribution: 51 Austria, 1 Germany, 1 Hungary)

Sample of companies
33 mainly internationally operating companies Industries: durable goods (8), fast moving consumer goods (13), service industry (12) 9 advertising agencies 7 consulting and market research companies

Sample of respondents
Senior marketing managers (31), executive managers (6) responsible for brand architecture management

Agency employees responsible for brand architecture management (9) Brand consultants responsible for brand architecture management (7)

Duration of the interview in minutes: 82,2 Related cases: 2 respondents of one company (4), company/advertising agency (9),
company/consulting or market research company (7)
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Sample of companies

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Advantages and disadvantages of different brand architecture strategies

2. Dimension (26%) synergy:
Internal or external synergies (0,13; 0,34)

Brand dominant strategy flexibility:

reaching niche markets
(0,23; 0,81); flexible, rapid reaction to changes (0,081; 0,73); High communication costs (0,097; 0,73)

Corporate dominant strategy 1. Dimension (63%) identity:

Endorsed brand strategy

Dual brand strategy

consistence, stability (0,13; 0,85); uniform brand communication (0,11; 0,76); lower communication costs (0,05; 0,96); certain target segments not reachable (0,06; 0,96) cross-sectoral know how (0,04; 0,92); Low flexibility, slow reaction to changes (0,02; 0,99);

interaction:
favorable transfer of image (0,18; 0,87); cannibalization (0,206; 0,59) (contribution of point to inertia of dimension; contribution of dimension to inertia of point) n=52 respondents; multiple responses

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Statements regarding brand architecture strategy in respect of target markets other than consumer markets
- Labor market: Many people don't know which brands belong to company X. For example, the majority don't know that brand y belongs to our company X. So the benefit from synergies cannot be used on the labor market. + Capital market: Our investors and the capital market favor our brand architecture strategy because company X is a well known company with good reputation combining everything under one umbrella. - Employees: Some employees would like the company to follow a different brand architecture strategy because a brand architecture strategy is very complex.
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Brand roles in the brand portfolio

94% (29 of 31) of the companies have at least one silver bullet usually pointed out in advertising but often no sales driver 90% (26 of 29) have strategic brands that are supported by the company (may be identical with the silver bullet of the company) 63% (17 of 27) of the companies have cash-cows in their brand portfolio 88% (22 of 25) believe that their brand portfolio as a whole is more valuable for the company compared to the sum of brand equity of single brands
n=37 respondents of 33 different comanies

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Effects on the brand architecture strategy

Factors influencing the brand architecture
globalization market research findings mergers & acquisitions changes in consumer trends changes in target markets direct competitors changes in technology new media (the Internet) changes in law business cycle variation capital market/investors corporate culture indirect competitors global politics labor market environmental pollution retailer's expectations lobby

77% (26) 77% (26) 74% (25) 71% (24) 68% (23) 65% (22) 62% (21) 59% (20) 59% (20) 53% (18) (18) 53% (18) 53% 41% (14) 35% (12) 32% (11) 29% (10) 24% (8) 24% (8) 20% 40% 60% 80% 100%
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0%

n=34 respondents;February -August 2002;

Some Hypotheses resulting from the study

Corporate dominant strategy and brand dominant strategy vs. mixed brand architecture strategies

Advantages and disadvantages of different brand architecture strategies on the consumer market vs. other important target markets
Influential factors on the brand architecture strategy are considered. No modification of the companys brand architecture strategy expected. The brand portfolio of the companies is actively managed. Forecast: Internationalization of the brand architecture and a rising complexity of the brand architecture management.

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Limitations
- non-probability sample

- Single country study (mainly companies in Austria)

- qualitative research design => identification of variables, generation of hypotheses

Quantitative future research

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Thank you for your attention

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Sample of advertising agencies, brand consultants and market research companies

(with regard to their client's brand architecture strategy)
9 advertising agencies 7 brand consultants / market research companies

(2)

(2)

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Marina Dabic
education and training:
2002 master in economics and business administration, Vienna University of Economics and Business Administration master thesis: brand architecture and brand structure a qualitative study with the top-management of selected companies, advertising agencies, consulting and market research companies Since Nov. 2002 assistant professor at the Vienna University of Economics and Business Administration, Department for Advertising and Marketing Research Doctoral thesis: Individualization of customers and evaluation of product variety

main interests:
Strategic brand management, brand architecture Motivational research and consumer behavior Retail brands

Marina.Dabic@wu-wien.ac.at Tel.: +43 / 1 / 313 36 / 4814 www.wu-wien.ac.at/werbung

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