BRAND ARCHITECTURE AND PORTFOLIO MANAGEMENT Page | 1

ANSAL INSTITUTE OF TECHNOLOGY

A
PROJECT REPORT
ON

BRAND ARCHITECTURE AND PORTFOLIO

MANAGEMENT
Prepared by:

Rahul Verma

Roll no – 0651061705

In

Partial fulfillment

Of

BBA Course

At

(GGS Indraprastha University)

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Evaluation of Project

This is to certify that the project titled “Project Finance and Financial Products for
PFC “, submitted by “Rahul Verma, Roll no – 0651061705, Student of BBA V
semester, Ansal Institute of Technology Affiliated to GGSIP University, Delhi”, has
been examined by the following examiners

INTERNAL EXAMINER EXTERNAL EXAMINER

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Acknowledgement

I wish to express my sincere gratitude to Mr. Sudhir for their constant support. I could
not even start and complete my research work without their unbridled support and
encouragement. Their inspiring guidance had always boosted my morale.

The immense learning from this project will be indelible forever.

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Chapter 1Introduction

Brand Architecture is the vehicle by which the brand team functions as a unit to create synergy,
clarity and leverage. So if you think of each brand of a company as a football player, Brand
architecture assumes a coach’s role by placing each player at the right position and making them
function as a team rather than a collection of players. The brand portfolio includes all the brands
and sub-brands attached to product-market offerings, including co-brands with other brands.

The architecture should define the different leagues of branding within the organization; how the
corporate brand and sub-brands relate to and support each other; and how the sub-brands
reflect or reinforce the core purpose of the corporate brand to which they belong.

One of the most important elements of brand architecture is brand portfolio and its management.

Brand portfolio management is not just a marketing issue, in which a sub-optimal portfolio
dilutes marketing messages and confuses customers. It also directly affects corporate
profitability. Ill-defined and overlapping brands in a portfolio lead to erosion in price premiums,
weaker manufacturing economies, and sub-scale distribution. In a slower economy, the problems
of an underperforming portfolio are even more acute: While adding brands is easy, it becomes
difficult to harvest the value in a brand or to divest it.
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o The following model proposed by David Aaker, maps out the

different elements of brand architecture.

Brand
Portfolio
Includes all the brands
& sub brands attached
to the product-market
Brand-Market Portfolio Roles
offerings, including co-
Context Roles brands with other •Strategic brands
•Endorser/Sub brands •Linchpin brands
•Benefit brands •Silver bullets
•Co-brands •Cash cow brands
•Driver roles
Brand
Architecture
Portfolio Graphics
Brand Portfolio
Structure
•Brand Groupings
•Logo
•Brand hierarchy trees •Visual presentation
•Brand range

Optimal Synergy in Clarity of Leveraged Platforms

Powerful
allocation creating: offering brand for future
brands
of brand visibility, assets growth
building efficiency options
resources

Source: Aaker, D. and Joachimsthaler, E. (2001) Brand Leadership, pp.134-153. London,

the Free Press.
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Chapter 2Brand relationships within a portfolio

o Single brand across organization

Examples include Virgin, Red Cross or Oxford University. These brands use a single name
across all their activities and this name is how they are known to all their stakeholders –
consumers, employees, shareholders, partners, suppliers and other parties.

o Endorsed brands

Like Nestle’s KitKat, Sony Playstation or Polo by Ralph Lauren. The endorsement of apparent
brand should add credibility to the endorsed brand in the eyes of consumers. This strategy also
allows companies who operate in many categories to differentiate their different product groups’
positioning. A case in point would be the Japanese giants who follow a strategy of corporate
branding

 Case Study - Japanese Brands

The concept, practice and techniques of branding in the Japanese market are traditionally very
different to their Western counterparts. The large, successful brand is king in the Japanese market
and, as a result, individual products and lines have often played second fiddle to, or been
endorsed by, the more powerful corporate brand. Corporate logos often feature prominently in
advertisements and the endorsement of a successful corporate brand has traditionally been very
important to new products in particular.

One reason for this is that frequent purchasing and ever shifting trends in Japanese society have
shortened the average life cycle of a product as new fads and ever increasing bench marks have
resulted in businesses having a necessity for quick model change and new products simply to
maintain momentum. This quick turnover means that, often, a line will not be in existence long
enough to develop a brand identity of its own and so by attaching a well known corporate brand,
instant kudos is added. Examples of this include Sony whose brand name is attached to many of
their products such as the ‘Sony Minidisc’ and ‘Sony Walkman’ and Yamaha who attach their
own brand name to their lines of motorcycles, musical instruments and sports equipment. As
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products have changed quickly, so the discerning Japanese consumer has come to rely on big
names of strong reputation when making purchasing decisions. The basic driver of a brand in the
Japanese market is success and a large and successful corporate name has often become a badge
that instantly authenticates a new product on the market, reducing the need for individual brands
to be built and promoted. Following the difficulties in the Japanese domestic economy in the
1990’s, however, practices are beginning to change in Japan. As the economy slowed, so
businesses found themselves able to spend less on product innovation and instead concentrated
on sustaining and promoting established products. Japanese corporations are increasingly taking
on a more Western attitude of creating brands for individual lines as the product and the
corporate brand are separated. The Playstation 2 is an excellent example; the Sony name is much
less prevalent in the promotion of the product than the previous Playstation as Sony attempts to
build a distinct ‘PS2’ brand, separate from the Sony brand itself. Many of the large corporate
brands are long standing and they have built strong reputations of reliability, quality and cutting
edge technology or have come to define a niche market. Whilst the corporate brand has often
been less important in the marketing of Japanese products for export, they have been vital in the
domestic market and as they are distanced from products it remains to be seen how Japanese
consumers will react to a new generation of product rather than corporate brands

o House of brands

Like Procter & Gamble’s Pampers or Unilever’s Persil. The individual sub-brands are offered to
consumers, and the parent brand gets little or no prominence. Other stakeholders, like
shareholders or partners, know the company by its parent brand.
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 The above three concepts can also be explained figuratively as follows:

 Brand relationships spectrum, and there are additional examples of brand

relationships
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Chapter 3Portfolio roles

For building effective brand architecture it is necessary to identify the portfolio roles of each
brand. It provides a tool to take more system view of the brand portfolio and includes a strategic
brand, a linchpin brand, a silver bullet brands and a cash cow brand.

o Strategic brands

A strategic brand or a mega brand is a currently dominating brand that represents a meaningful
future level of sales and profit. For ex: Slate is a strategic brand for Levi’s, TATA consultancy
services (TCS) is a strategic brand of TATA group of cos. because the vision of the firm is to
move beyond traditional steel and automobile business.

o Linchpin brands

A linchpin brand unlike strategic brand not necessarily represents a meaningful future level of
sales and profit but it is a leverage point of a major business area. It indirectly influences a
business by providing a basis for customer loyalty. For ex. ‘Park Avenue’, a brand extension of
Raymond’s launched in mid-eighties. It is a linchpin brand for Raymond’s because it has
extended the Raymonds’s credibility in different businesses from ready –to- wear trousers to
men’s toiletries.

o Silver bullet

A silver bullet is a brand or sub brand that positively influence the image of another brand. It can
be a powerful force in creating, changing and maintaining a brand image. for ex. When IBM
ThinkPad was launched it has provided a significant boast in public perception of the IBM brand.
Another ex. is the Positioning of Forhans’s Flouride as having branded feature of ‘being foamy’
rather than just ‘protect gums and teeth’. It has served to make credible claim that Forhans had
achieved another breakthrough in oral care industry.

o Cash cow brand

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Strategic, Linchpin and Silver bullet brands involves investments and active management for
fulfilling their strategic mission. The cash cow brands in contrast do not require any investment
because it has a significant loyal customer base. The role of a cash cow brand is to generate
marginal resources that can be invested in other brands, which will help for future growth and
vitality of brand portfolio. For ex; Nivea cream the core product of Nivea, a brand that has been
extended to variety of skin care and related products.
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Chapter 4Brand market context roles

For deciding effective brand architecture, the product market context roles of the group of brands
must be well defined and coordinated. There are four steps of product market context roles that
work together to define a specific offering and these are:

o Endorser and sub brands roles

An endorser brand is an established brand that provides credibility and substance to the offering.
Endorser brands usually represent organizations rather than products because organizational
associations such as innovation, leadership and trust are particularly relevant in endorsement
context. For example Nestea and Nescafe create associations with its mother brand Nestle and
Mcchicken, Mcburgers, Mctikki, etc. from Mcdonald’s. Tata has 80 different companies
operating in seven business sectors, which are endorsed under the megabrand TATA. The
subbrands on the other hand stretches endorser brands that add associations, a brand personality
or any other quality which creates brand identity of it for ex. Nestle’s Cerelac, Gillette’s Sensor
and Cadbury’s Bournvita. The understanding and use of endorser brand and subbrands is a key in
achieving clarity, synergy and leverage in the brand portfolio.

o Benefit brands

The benefit brand is a brand which offers either features, component ingredients or services
which becomes the unique selling proposition (USP) of offering. for ex. Gillette diversified’s
oral B has a branded feature which shows the time to replace the toothbrush, Dietcoke, Dabur
amla, and Neem & Margo soaps have branded component and gradient and American express,
Life insurance corporation (LIC) and Taj group of hotels have the branded services associated
with their names.

o Driver role

Driver role is an extent to which a brand drives the purchase decision and defines the use
experience. Brand with a driver role will have some level of loyalty. Brand architecture involves
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selecting the set of brands to be assigned a major driver role; those brands will have priority in
brand building. A driver brand is usually a masterbrand or subbrands but endorser and second
and third level sub brands can have some driver roles.for ex. Cadbury’s has two subbrands
‘Dairymilk’ and ‘Bournvita’, which have the major driver roles for selling. Another example is
Nirma tikia and Nirma washing powder, which is operating in the market with value for money
as its major driving role.
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Chapter 5Brand portfolio structure

The brands in the portfolio have a relationship with each other. Brand architecture also involves
designing a structure of all the brands, which will provide clarity to the customer rather than
complexity and confusion. It must provide a sense of order, purpose and direction to the
organization. Three approaches can be utilized to present the portfolio structure.

o Brand groupings

A brand grouping is a logical grouping of brands that have meaningful characteristics in

common. The groups provide logic to the brand portfolio and help its growth overtime. For ex.
in case of Johnson and Johnson Ltd.,the brand grouping can be made using following
characteristics.

• Segment( Infant Care and Intimate Feminine Care)

• Product (Healthcare and Pharmaceuticles)
• Design (Classic and Contemporary)

o Brand hierarchy trees

Sometimes the brand portfolio structure can be captured by brand hierarchy trees. The brand
hierarchy tree structure looks like an organization chart with both horizontal and vertical
dimensions. The horizontal dimensions reflect the subbrands and endorsed brands that reside
under a brand umbrella. The vertical dimension captures the number of brands and subbrands
that are needed for different segments of the market. For ex. Colgate, the hierarchy tree for the
Colgate oral care shows that Colgate name covers toothpaste, toothbrush, dental floss and other
oral hygiene products. Again under toothbrush it has brands like plus, precision, classic, youth
and colour change. Under Colgate plus toothbrush it has brands like diamond head and "the wild
ones". The brand hierarchy tree presentation provides perspective to help evaluate the brand
architecture. A successful brand architecture makes a range of offerings both to the customers
and to those inside the organization, Having a logical hierarchy structure among sub brands helps
generate the clarity.
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o Brand range

Brand architecture also involves deciding the range of portfolio brands. It throws light on the
some issues like how far a brand (Megabrand or subbrand) should be stretched horizontally in
the brand hierarchy tree? How far should they be stretched vertically in to the different markets?
The brand range can be described for each brand in the portfolio that spans product classes or has
the potential to do so. The above issues must be analyzed by organizations by distinguishing
between the brands in its role as an endorser and master brand and recognize that sub brands and
co- brands can play a key role in leveraging brands.

o Portfolio Graphics

The logo of the brand or the company as well as the visual representation also form an integral
part of the architecture.The identifying logos, trademarks, packaging, symbols, product designs,
taglines and even the touch and feel aspect of the product are all included in portfolio graphics.
These are helpful towards building a strong brand, and drive the purchase toward the brand.

The unique shape of Tupperware containers, the Swoosh of Nike, the colour blue which is
synonymous with IBM, are all signs of strong pictorial brand associations.
When compared to Indian Airlines logo, the Jet Airways logo definitely stands out, because of its
relative signage.

Changes in brands and brand management systems are but obvious, especially with regard to the
varied functions a brand performs. Hence the role of brand architecture is to maintain
equilibrium between so many brands within and outside the organisation. In the new world of
competition, survival essentially depends upon the effective management of brand architecture.
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Chapter 6Characteristics of the ideal brand portfolio

There is a clear analogy between managing a brand portfolio and a football team. The football
pitch is the market map. You have to decide in which areas you will dominate – whether, for
example, the midfield or the flanks. The players, represented by brands, have to cover the
priority areas. Each will have a specific role but will still contribute to the team. The manager
will avoid players who duplicate – for example, two small fast strikers – or who detract from
team effort. Some players are stars (super brands) while others have a more pedestrian role
(support brands).

This figure represents an ideal football team. The shaded areas in midfield, on the flanks and up-
front are where they look to dominate to win. Companies, unlike football teams, are not
restricted by any fixed boundaries, and may enter any market they wish. And they are not limited
to 11 products or brands – though perhaps they should be.

So the ideal portfolio:

• Fits the company’s future vision and destination

• Prioritizes markets and key segments
• Efficiently covers those priority segments
• Ruthlessly prunes out those that do not fit
• Fills gaps through new or extended brands and acquisitions.
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 Case Study : Allied Domecq

One case study which is often quoted to represent an ideal brand portfolio is Allied Domecq.
Allied Domecq Spirits and Wine Ltd is one of the largest players in the alcoholic drinks market
with colossal brands such as Beefeater Gin, Kahlua liquor, Sauza tequila, Tia Maria and Malibu
in their portfolio. The company also own a chain of some 3,500 pubs in the UK and the
American fast food giant Dunkin’ Donuts.Their website claims that ‘Allied is about brands and
people’ and with some of the world’s leading alcoholic drink brands and an exclusive database of
some three million consumers to assist in understanding their customers it would be difficult to
argue with the statement. The Allied portfolio of brands is carefully managed for a large
company with such a vast range. Allied have prioritised the area’s that they wish to compete in
such as high quality spirits (Courvoisier cognac, Ballantines Finest Scotch) and ready to drink
cocktails and positioned their brands accordingly. This has been supported by brand extensions
and a policy of buying individual, cherry picked, brands to strengthen their portfolio; Allied have
recently produced a new range of Kahlua cocktails and purchased brands such as Malibu, Mumm
Champagne and the US distribution right s for Stolichnaya vodka. This policy has allowed Allied
to manage their portfolio effectively. They have covered their priority areas, maintained a
sustainable number of brands and have largely avoided overlapping and causing cannibalisation.
The strategy seems to be working. In 2001, Allied reported pre tax profits of £236million over a
six-month period, an increase of 16% on the previous year. Allied’s four core drinks brands,
Kahlua, Sauza, Beefeater and Ballantines are all the second biggest of their kind globally and
with a vast portfolio of second tier products, a commitment to market research and innovative
products such as their ready to drink cocktails, Allied’s focus on portfolio management seems to
be paying off.

(Source: The Charted Institute of Marketing, U.K.)

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Chapter 7Major mistakes in portfolio management

The biggest mistake is to allow each brand to be managed in isolation because what is right for
an individual brand may be wrong for the portfolio in terms of:

• Too many brands in too many segments: there may be too many brands in relation to
consumer needs, retailer space and company ability to promote
• Duplication and overlap
• Gaps in priority market segments
• Inefficiencies in operations and the supply chain
• Diffused and therefore ineffective resource allocation.

To return to the football analogy, this approach will result in bunching and poor coverage of the
playing area like the following figure :
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Chapter 8Why managing a brand portfolio is Important

“Lack of focus means that energy and resources are dissipated. Focus, in contrast, ensures that
people and resources are concentrated where they can add greatest value.” (Source: Fitzgerald,
2001)

Portfolio management will influence the following areas:

o Resource

Resources such as R&D and marketing spend need to be allocated to areas of best return. Each
brand requires brand-building resources. Without a clear picture of the portfolio, it will be harder
to identify how best to support the brands that will bring the best returns. If each brand is funded
solely according to its profit contribution, high-potential brands with modest current sales could
be starved of resources.

o Efficiency

Create synergy with your brand portfolio – strong associations can not only benefit all the brands
but also be cost efficient by creating economies of scale in both manufacturing and
communications. Looking at brands as standalone silos is a recipe for confusion and inefficiency.
Are there too many or too few brands? Could some be consolidated, eliminated or sold?

Growth

Davidson identifies six ways in which portfolio management enhances growth:

• Clear prioritization of future focus by major market

• Prioritization by brand and product
• Concentration of spend on priority market, brands and products
• Operational cost savings through simplified business
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• Disposal of brands which don’t fit

• Gap filling by product development and acquisition

Leverage

Leverage your brand equity. Leveraging brands makes them work harder. A proper portfolio
analysis can highlight which brands are best suited to extension, for instance. The more effective
and powerful your brands are, the stronger your leverage and the bottom line.

Clarity

Clarity of product offerings will underpin a consistent brand identity with all the stakeholders.

A balanced portfolio would take advantage of the relative strength of each type of brand to
support others.