More business-to-business companies are using the power of branding to present products and services to customers. Many of these companies seek to extend their brand through acquisition or the creation of sub-brands, operating under the belief that more business units and sub-brands are the basis of a strong portfolio. But the reality is that too many sub-brands can result in an underfunded, diluted message that confuses consumers and offers little value to organizational equity.
Many companies do not have a process for integrating acquired brands or organically adding brands to the portfolio. In the absence of a business approach to managing brand architecture, a brand portfolio can quickly become a mess. So consider the following before adding sub-brands:
Your budgets. The first step is to study the economics, to see which brands you’re truly supporting. Some B2B companies are spreading their budgets too thin and could better optimize resources by concentrating on the master brand and the specialized sub-brands that offer the most promise.
Why your customers are your customers. Business leaders are sometimes surprised that customers know little or nothing about their sub-brands and tend to focus on the reputation of the corporation to guide buying decisions and relationships. To uncover motivations for purchase, our recommendation is to better understand customers’ purchasing decisions through qualitative research.
Once you have a view of your resources and understand the equity of your master brand and your sub-brand portfolio, you need to do two things: strengthen your master brand by aligning your sub-brand to create the greatest value, and solve the issue of sub-brand development upstream.
Strengthen your master brand
To strengthen your current portfolio, you have to determine your brand architecture strategy and align your brands accordingly. A common best practice is to create a strong master brand and then link or distance sub-brands based on how they feed the equity of the master brand. There are several models, and we’ve found that there is not a “silver bullet” strategy for complex enterprises.
These alignment decisions can, however, be grounded in a few key questions:
* Is the sub-brand fully controlled by our management?
* Should the unit/product be considered an extension or be grouped with another business?
* How committed are we to the unit/product in terms of time frame and finances?
* What is the impact on the master brand?
* What impact does the master brand have on the unit/product?
Each of these questions typically leads to a very specific alignment, either close to the master brand or very distanced. The alignment then informs tactics for naming and identity.
Sub-brand development
At many companies, the group that naturally leads product development is R&D. They get to define the market opportunity and the product positioning, and in some cases they even develop the name. By the time chief marketers get involved, it’s often too late to stop the momentum of a developing product. The result can be sub-brands that may add revenue but do not create brand strength and clarity.
Another activity that is typically not brand driven is mergers and acquisitions. Many acquisitions fail because the acquired company is a poor fit. This applies to both the brand fit and the culture fit. If the M&A people were better versed in the attributes of your brand and had the tools to help study the brands of prospective companies, the results would likely be much better.
To build a strategic brand development process, CEOs and chief marketers need to work together and lay down a foundation for brand strategy and architecture. Answering fundamental questions and disseminating those findings throughout the organization allows you to begin the process of refining your portfolio. The right strategy may be to create a strong corporate brand or perhaps a portfolio of strong sub-brands—or a combination of both approaches.
To aid in everyday decision making, leading business-to-business companies are putting a range of tools in place. Branding decision systems can guide the business case for branding, naming, and identity, and determine the proper fit in the brand portfolio. The result can be a well-architected brand portfolio that offers more than synergy; it can offer your organization a sense of order, vision, purpose, and direction, and dramatically enhance the value of your master brand.
Hampton Bridwell is president of BrandLogic, an identity consulting and communications agency based in Wilton, CT.
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