An independent brand of a segment in a specific category.
Pros: Creating the most accurate product for the specific needs of the audience. Minimizing the risk of negative impact on the overall reputation.
Cons: This strategy requires a high marketing budget.
Products and services have a hard connection with the main brand. It has the same or obvious similarities in verbal and visual communication
Pros: Maximum cost-effectiveness in communication working on the good name of the main brand.
Cons: Limited flexibility in the development of new products and directions.
A new product can be associated with a master brand or exist autonomous.
Pros: Using a strong brand and maintaining development flexibility simultaniously.
Cons: It is essential not to mislead consumers and do not erode the main brand.
-avoid cannibalism of brands within the company’s portfolio
-identify strategic brands with high growth rates
-to optimize the roles of brands to accelerete the development of the company as a whole
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Development of the correct architecture of a brand directly affects success of portfolio policy of the company.
Process of formation of branded hierarchy consists of such elements:
- Search of the place for a certain firm in a portfolio of the enterprise.
- Definition of the place of each company in a context “goods market”.
- System of separate elements of set of the organizations.
- Verbal and visual display of architecture.
Allocate two types of hierarchy of brands: “House of Brands” and “Branded House”. The first option enjoys popularity in America and Europe. The concept of the second type practices in east states.
House of Brands
The Mars and Procter & Gamble companies treat striking examples of the brands adhering to the concept of “House of Brands”. The second firm prefers to be guided by the system of the related corporate, grocery, category enterprises. “Mars” gives preference to approach of so-called free branding. It is based on the idea that separate elements of a portfolio of firm are not connected among themselves and also are not associated with the concrete organization at consumers.
This concept is relevant in case all goods of the producer leave under one brand which at the same time plays a role of corporate firm. The Mercedes, BMW, Sony and Virgin brands are considered as examples of the organizations using the Branded House model. Efforts of marketing actions of these companies are directed to improvement of their position. It is shown in the next moments:
- Concentration of the enterprise in a certain professional environment or within concrete category of products.
- Development of the considered model is real only on strong help — a brand as the trademark is not the reliable base. Formation of this concept is possible only in that case when the capital, competitive advantages and set of values of the brand expand so that they become much for one product. At the same time transfer of qualities on a sub brand has to be painless.
Concentration of firm on one or several groups with essentially similar characteristics. Besides, expansion of a brand provides to the consumer more wide range of products, based on uniform values and competitive advantages.