Brand Architecture - A View of Practitioners

1. Brand Architecture - A View of Practitioners Marina Dabic, Günter Schweiger, Andreas Strebinger Department of Advertising and Marketing Research Vienna University of Economics and Business Administration June 25th 2004

2. 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

3. 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)

4. Classification of brand architecture strategies Brand architecture Brand dominant strategy Corporate dominant strategy Mixed brand strategy Endorsed brand strategy Dual brand 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-Noël (1997), Park, C. Whan, Robert Lawson, and Sandra Milberg (1989), Park, C. Whan, Sandra Milberg, and Robert Lawson (1991).

5. 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

6. 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

7. Objectives regarding the sample • Respondents from advertising agencies, brand consultants and market research companies with regard to their client‘s brand architecture strategy. • Different industries • Service industries • durable goods • Fast-moving consumer goods • Variability in terms of headquarter vs. local subsidiaryof 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

8. Sample profile • 53 face-to-face interviews: February – August 2002 (geographical distribution: 51 Austria, 1 Germany, 1 Hungary) • 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)

9. Sample of companies

10. Advantages and disadvantages of different brand architecture strategies 2. Dimension (26%) „synergy“: Internal or external synergies (0,13; 0,34) Brand dominant strategy Corporate 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) 1. Dimension (63%) „identity“: 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); Endorsed brand strategy Dual brand strategy „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

11. 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.

12. 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

13. (26) (26) (25) (24) (23) (22) (21) (20) (20) (18) (18) (18) (14) (12) (11) (10) (8) (8) Effects on the brand architecture strategy

14. 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 company’s 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.

15. Limitations • non-probability sample • Single country study (mainly companies in Austria) • qualitative research design => identification of variables, generation of hypotheses •  Quantitative future research

16. Thank you for your attention

17. Sample of advertising agencies, brand consultants and market research companies (with regard to their client's brand architecture strategy)

18. Marina Dabic • education and training: • 2002 master in economics and business administration, Vienna University of Economics and Business Administrationmaster 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