Brand hierarchy


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Brand hierarchy

  1. 1. Brand Hierarchy Pravash
  2. 2. •Brand hierarchyStand-alone intimacy brandsThe most precise way to develop brands is to have each brand supported by astand-alone set of trademarks that will build a special relationship of intimacywith the target customer, as well as one of trust that will build over time. In thisway, the brand stands or falls on its own merits, without putting any other brandon the line as its guarantor of quality and trust.This approach has clear advantages. There is less confusion over what thebrand stands for than where a customer-specific intimacy brand is backed by atrusted house brand. There is also less risk to the house brand - often the nameof the manufacturing corporation. The role of the brand is clean andunadulterated.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-alonebrand in a consumer market. It is therefore no coincidence that the mostaggressive of the Internet brands, such as Amazon, AOL, Yahoo etc., haveinvested some 75% of their total expenditure in brand-related marketingactivities.
  3. 3. Combination brand architecturesSo, unless you are ready to bet the company, there are otheroptions:•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 bya series of descriptors of engine size, performance and possiblyspecial edition, all of which may not be, or cannot be, trademarkedMany companies combine approaches. Ford has "the FordCorporation" to describe the company, "Ford" as the house brand,stand-alone intimacy brands such as Aston Martin, Jaguar andVolvo, and car brands such as Focus, Sierra, Ka. Nestle operatesin a similar way. Sometimes it uses the Nestle house brand withdifferent logos, at other times it uses a trademark-root brand, suchas "Nescafe", and sometimes it builds stand-alone intimacybrands, such as "Carnation".
  4. 4. The extent to which customers associate the different brands will vary. Jaguar isnot officially endorsed by Ford but, at a guess, most current and prospectiveJaguar owners are aware of Jaguars parentage, and appreciate it as aguarantee of quality. Not everyone will associate Nescafe with Nestle, but manywill. They may or may not know that Carnation is a Nestle brand.The objective of supporting a customer-specific intimacy brand with a trustedhouse brand is to transfer the equity between the two. When you are building anew brand, supporting it with a trusted house brand will give it a kick-start. At alater stage, the new brand may add freshness and vitality, or another angle, intothe house brand. This is what British Airways intended to do with Go, and KLMwith Buzz. Go stands for a new way of flying cheaply (in competition withEasyjet), BA guarantees that the plane will stay in the air. The danger is thatone brand will adulterate the other. Is Go quite so fresh when associated withBA, and what happens if the Go proposition starts undermining the BA pricingstructure? 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 itsturn has started to use the trademark-root approach, taking the word and stylingof Easy to make the same proposition for car rental under the name of Easycar.
  5. 5. It is all a trade-offMuch of business is a trade-off, and branding is about business. Ideally, eachbrand would make a clear proposition and, if you want to make a slightlydifferent 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 upwith many thousands of trademarks aspiring to be brands. But in brandingterms, this approach does not work. Legally protecting several thousandtrademarks alone is punitively expensive, giving each one the investment itneeds to reach its full potential is impossible. It may work where people arebuying 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 thecentral organising thought, the easier it will stretch into new markets; Virgin is agood example of this. The more specific the brand to a particular feature orhard benefit, the more risky it is to stretch it because the legacy connotationsmay not fit the new market. It is hard to imagine Snickers motor oil.
  6. 6. IssuesSome issues you may wish to address are:•How much money do you have? - brands cost a great deal of money to build, especiallyon a global basis. Using a trusted house trademark, or trademark-root, will getrecognition & gain respect faster, but may dilute the clarity of the brand.•How many separate thoughts are you trying to get across? - one thought should equalone trademark, at a cost.•How quickly do you need to build respect and trustworthiness into your brand? - brandsgain trust over time. If you want immediate trust, you will need to link the new trademarkwith a trademark which is already a trusted brand (which need not be your own).•Do you want to grow and sell your brands? - trademarks cannot easily be sold insections. Buyers normally want the whole trademark or not at all. If your trademarkarchitecture is based on a house trademark, a trademark shared across a product familyor several product families, or a trademark-root, this makes it difficult to sell except as ajob lot. As with licensing or franchising, you would need to build into all agreements theability to confiscate the brand if the other parties do not uphold the core values of thebrand, and then you would have to police their performance.•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 fromone area of the business. It is more costly, but safer, to have different trademarks tocover different areas of the business as well as different thoughts.
  7. 7. Coca-Cola started life in 1886 as asoda fountain beverage. A typicallocal or store brand, it spread toother outlets rapidly. Bottling wasnot an initial priority. In fact, twoattorney bought the bottling rightsfor most of the US for a handsome$ 1.
  8. 8. Nokia was originally a brand ofpaper and cardboard. It pre-datesCoke, tracing its origins back to1865. Today it is the worlds eighthmost valuable brand worth $24billion (Coke No.1 at $67 billion).The company was in paper; it is stillin the communications business.
  9. 9. All brands have small beginnings. Even inthese days of simultaneous globallaunches, there is an enormous amount oftest marketing earlier. In India, cities likeHyderabad, Bhubaneswar, and areas likeLokhandwala in Mumbai are happy huntinggrounds for the test marketing fraternity.Sometimes new brands spend as much as ayear out there before they are takenregional or national.
  10. 10. So is there a hierarchy in brands? At the bottomis the store brand or the private label (a verylocalized brand). Then comes the regionalbrand, followed by the national brand and theglobal brand.The store brand needs the least investment andthe global brand the highest. Given the samecore product, the global brand cost the most.An obvious corollary: the margins on storebrands are the least.
  11. 11. Is there also a naturalprogression from a store(local) brand toregional, national and finallyglobal? What does it take tomove from one orbit to the other?
  12. 12. It is an increase in energy leveland really need three inputs.First is the communicationinput, which meansadvertising, promotions, etc.Then is the availabilityinput, which is essentiallydistribution. Finally, it is the
  13. 13. Unpredictability is what will make anew brand successful against thealready entrenched. The P&G s ofthe world are prepared for theordinary and the common place.They take a hard knock when theydont know what hit them. Thesurprise could be in price.
  14. 14. It could be in distribution.Would you think of getting saltwith your morning newspaper?The Dainik Bhaskargroup, which has launched thehighly successful Bhaskarsalt, can do that because itowns the No.1 Hindi daily in
  15. 15. It could be in advertising.French Connection UnitedKingdom was a tired old fashionhouse. Then it startedadvertising under its acronymFCUK, and turned a loss of 5million pound in 1992 into aprofit of almost 39 million
  16. 16. Progress never comes overnight.Everyone has to climb the ladder stepby step. There are several Indianbrands that are doing it. Anchor isgoing global. Bajaj Auto, Tata motorsand Raymond are already there, albeitin a small way. The challenge for Indiatoday is to turn from an outsourcingcenter to a producer of India-ownedbranded goods.
  17. 17. Thank You