Why brand architecture matters for B2B brand portfolios

Why brand architecture matters for B2B brand portfolios

Friday, 13 May 2022 16:24

A clear-minded, structured but flexible brand architecture can offer significant value for B2B organisations. In contrast to B2C mass consumer market, B2B audiences are smaller and often segmented into micro-niche audiences which can be complex. Those offering a B2B product or service provision need to have an in-depth knowledge of the specific audience they are targeting – where expertise, reliability and consistency all play an important role in buying decisions.

For many B2B organisations, brand architecture will become the framework in which the brand strategy lives, and defines the hierarchy, relationship and investment for your company’s products and services. Without a framework in place to manage the product/service portfolio, the impacts on market share, reputation and revenue can be significant.

At some stage in the business journey, organisations that have evolved over time need to evaluate their brand strategy, identify adjustments that are required, and allocate time and resources to make any appropriate changes. The challenge of disrupting the status quo, the risk to revenue targets, the pain of change, and the fear of creating market confusion are all very real concerns when addressing brand architecture. However, in our experience, the challenge is outweighed by the benefits, over time.

At BrandMatters, we’ve worked with many B2B organisations post M&A activity who are faced with a complex portfolio of brands, which are potentially competing, sometimes cannibalising and often confusing to their customers and stakeholders.

The first step is to decide which brand architecture model will be most suitable to ensure the newly acquired brand/s fit within the portfolio. Conducting a brand architecture review is a logical approach to ensuring each brand has a purpose and performs a specific role that is immediately evident to the end client.

Choosing the most appropriate brand architecture model will depend on your existing brands and the strength and equity they hold. When adding brands to your portfolio, you may consider one of the following options:

1. Stretch your existing brand into new markets (master brand)

By deploying one consistently applied brand as the driving force behind the portfolio, the master brand strategy is ideal when a strong robust brand is the unifying factor of all the products and services offered by the organisation. This architecture approach is generally used when the brand can deliver the brand promise without confusion or dilution.

2. Share your existing brand equity across the new brands (branded house or endorsed brand)

Utilising your parent brand as the dominant identity for each product or service allows the new products or brands to borrow the brand equity and trust already established by your parent brand, whilst still offering differentiation within the portfolio.

3. Allow each brand to stand on their own with a specific positioning (house of brands)

In some cases, it is better to allow each brand to stand alone and do what it was created to do. If the brand is strong enough to stand out in the market and has enough equity to maintain its position in the market, then this would be a case for a house of brands. While this approach would involve a lot more investment in brand and marketing, it can have its benefits, especially if one part of the businesses is outperforming other sectors. It is also beneficial if the business is looking to divest or sell a specific part of the business.

Why getting your brand architecture right matters?

Optimising brand architecture ensures that all of your brands within your portfolio are consistently adding value and justifying the costs required to sustain them. It will also allow you to maximise your organisation’s use of time and resources towards those brands that are worthwhile investing in.

How many brands do you need?

A disorganised and inconsistent brand portfolio can evolve organically over time with little structure or discipline as to how brands are to be treated, presented or managed. This can lead to a multitude of inconsistent identities and possibly a lack of ‘daylight’ between brands.

The development of new brands for products, services or programs can become costly and make it difficult to grow a company’s profile and brand awareness due to lack of consistent branding and messaging.

How well do your brands fit together?

Understanding how all brands fit and work together enables companies to better target their key audiences as well as their internal stakeholders. It enables them to build brand awareness more effectively and avoid brand overlaps and the duplication of internal effort. Brand distinction, in terms of quality or features, is one way to ensure that customers aren’t interpreting your brands as too similar, whereby the price becomes the determining factor in decision-making. When customers experience difficulties understanding the full scope and relationships between brands, they are restricted from fully connecting with the brand and are more likely to make price-based purchasing decisions or search elsewhere.

How clear is your brand structure?

Without clearly defining the roles and relationships of your brands, employees are more likely to interpret them as they see fit, which can lead to internal competition and conflicting views. But this can be improved or prevented by a clear brand structure. The key purpose then of brand architecture is to facilitate customer and employee understanding of a company’s range of offerings and simplify the buyer’s decision-making process to minimise audience confusion.

Is it flexible enough to grow with?

A brand framework that has been designed for today without adequate thought given to future considerations – mergers, acquisitions, brand collaborations and product shifts, just to name a few – inhibits the growth of a company and isn’t responsive to industry trends or the ever-evolving landscape of the marketplace.

Brand architecture is a critical factor within the context of acquisitions, where companies intend to grow their scale, competencies and geographical presence. An inflexible brand structure, one which has failed to consider future business expansion and is too fixed to accommodate any kind of change, can hamper a company’s potential to grow strategically and maximise the value of its acquisitions.

Brand architecture is the framework of your business portfolio

Getting your brand architecture right will result in a clear path forward for decisions relating to your brand and business strategy. When executed effectively, brand architecture will help your customers and stakeholders better understand your business offering.

The benefits of investing in brand architecture can far outweigh the costs. Trying to manage a soup bowl of brands post M&A without a brand architecture framework or model will not only be inefficient but could potentially damage all the brands within your existing portfolio.

To learn more about brand architecture in the context of B2B brands, download our eBook here. If your organisation has recently undertaken a merger, acquisition or divestment, BrandMatters can help uncover the most efficient brand architecture framework that will ensure your business portfolio evolves with clarity and certainty.