May, 2012

1. Brand Architecture Toolkit: Structuring Your Brand Portfolio for Growth May, 2012

2. Who Are We? Introductions • Brand Amplitude is an insights-based brand strategy consulting firm. • Clients include CPG, Retail, B2B, Higher Education, Healthcare. • Relationships are led by experienced marketing practitioners and industry thought leaders, Carol Phillips and Judy Hopelain. • Supported by a virtual team of research, analytic and consulting associates. Client-Side Consulting Agency Business Faculty JWT Leo Burnett Mullen Y&R Accenture BCG Prophet Swander Pace & Co. Illuminations Patagonia Whirlpool • A strong brand is one of a company’s most important assets. By growing brand equity, marketers help achieve the organization’s business objectives.

3. What Services Do We Offer? Introductions • We help clients solve strategic business and brand issues by leveraging a range of proven tools and frameworks. • Brand audit • Market segmentation • Target insights (motivations, culture and decision-making) • Brand identity and rallying cry • Brand positioning • Brand architecture • Brand activation • Brand measurement

4. What is Brand Architecture? Brand Architecture Defined • Brand architecture provides the external ‘face’ of a business and supports its overall strategy. • Brand architecture helps companies answer important questions: • What to call new products? • What are their relative weights and relationships? • How much visibility to give to the corporate name? • Should there be a different name for the company and the commercial brand? • Should the same architecture apply around the world? “Where much of an organization’s brand building efforts once focused on acquiring, launching or aggressively extending brands… today’s focus is on trying to get the most from exiting brands through better organizing and managing brands and brand inter-relationships within the existing portfolio.” - Rob Osler, “The Type-Role-Purpose Brand Taxonomy,”Brand Management, July 2007

5. Brand Architecture Specifies Portfolio Relationships Brand Architecture Defined Brand architecture may or may not line up with internal organization structures. • Brand architecture establishes the optimal interrelationships of brands within a single company. • Architecture also describes the role of each brand in the corporate portfolio and the linkages between brands. Corporate Business Unit BusinessUnit Products Products

6. Where Architecture Fits Brand Architecture Defined • Brand Architecture is part of corporate strategy. It should be established prior to creating a brand strategy Strategic Marketing Framework Benefits of Optimizing Brand Architecture • Corporate Objectives & Brand Architecture • Support business strategy by providing a “face” to the business • Allows for fewer stronger brands with less overlap • Minimizes waste and marketing inefficiency • Builds credibility for leveraging the brand into new opportunities for growth • Enables equity to “flow” through the portfolio II. Brand Strategy – Identity & Positioning III. Go-to-Market Strategy Value Proposition Messaging & Offer Design Customer Experience IV. Marketing Execution & Metrics

7. Reasons for Revisiting Architecture Brand Architecture Defined • Brand architecture is built to last. It should be revisited when companies change strategic direction or the business has outgrown its existing brand structure. Triggers for revisiting include: • Sizable business unit is acquired or sold • Lack of clarity about role of master brands relative to subbrands – unclear where to build equity • Corporate brand and product brands have the same name • Brands are losing relevance with consumers • Too few brands in the portfolio - brands have been stretched beyond their credibility and effectiveness • Too many brands in the portfolio - programs, sponsorships and products competing for attention and investment dollars

8. Example: Kellogg’s Architecture Changes Drivers Brand Architecture Defined • Recognized Kellogg’s master brand was underleveraged • Acquired multiple new master brands – Keebler, Kashi, Morningstar, potentially Pringles, needed to elevate Kellogg’s corporate brand above its cereal master brand • Wanted to leverage investment in 2012 Olympics to benefit all brands “Kellogg’s is a truly iconic brand …We felt that having a stronger brand, driving a stronger point of view, a more powerful identity and have at the center an umbrella to talk about our portfolio more holistically, to talk about the power of breakfast, to talk about the value of cereal—it sort of became a much bigger platform to capture our thoughts about how we wanted to build a bigger relationship with them.” “If you look at our portfolio we have a number of masterbrands: and we had to start separating out the Kellogg’s brand from the Kellogg company … just as we did effectively a brand refresh of the Kellogg company, and what it stood for provided a north star for the aggregate of the master brands in the company, we then needed to be very clear about what Kellogg’s the brand stood for and provide the north star for all the sub-brands that kind of sat underneath it.” “There are occasions such as the Olympics, when you want to encompass a certain number of those sub-brands and where the master brand approach provides an effective way of doing that. You would need it to ladder up to a common identity system.” http://www.forbes.com/sites/jenniferrooney/2012/05/10/kelloggs-embarks-on-major-brand-overhaul/

9. Brand Elements Are Not Part of the Architecture Brand Architecture Defined • Branded elements can be effective for distinguishing and energizing a brand and may even be trademarked, but live outside the architecture. Keeping them in their rightful place requires clarity around their strategic intent. • Enhance uniqueness and memorability. • Are potentially own-able and can be monetized via licensing and co-branding arrangements. • Take care they do not overshadow the brand Characters create likeability Celebrities lend meaning Ingredients build credibility Sponsorships build affinity

10. Brand Architecture Solutions Spectrum Branded House Houseof Brands Brand Architecture Solutions • House of Brands advantages • Builds individual strong brands for category dominance • Limits risk by containing brand reputations (good for high risk industries) • Branded House advantages • Maximizes marketing spending efficiency • Maximizes awareness among all stakeholders (i.e., investors, employees) Solutions Spectrum Hybrid Solution Single parent brand spans a set of offerings. Independent brands, each maximizing its impact on the market.

11. Hybrid Architecture Solutions Dominate Branded House Houseof Brands Brand Architecture Solutions • Most companies build their businesses through a mix of architecture solutions. Hybrid Solution Single parent brand spans a set of offerings. Independent brands, each maximizing its impact on the market.

12. Principles for Designing Brand Architecture Brand Architecture Solutions Brand architecture is guided by three principles. Right Number • Sufficiently cover the market and target customer segments, with the fewest brands possible. • Make it easy for customers to find solution they seek by ensuring “daylight” between brand offerings. Clear Separation Fulfill customer needs while minimizing brand development and management cost. Highest Profit

13. Six Main Architecture Types Brand Architecture Solutions • Within the spectrum, the number of branding levels determines the architecture type. (Note: Fewer branding levels is best, aim for no more than three.)

14. Determining the Optimal Architecture Branded House Houseof Brands Brand Architecture Solutions • Questions to consider: • Do the brands address the same or different customer segments? • How important is it to represent the brand the same way in different geographies? • Are there synergies that can be leveraged between different brand or business units? Hybrid Solution Single parent brand spans a set of offerings. Independent brands, each maximizing its impact on the market. Target single or few segments Target multiple segments Address individual geographies Reinforce a global organization mindset Many synergies to be leveraged Few synergies to be leveraged

15. Brand Architecture Evaluation Criteria Brand Architecture Solutions • Three types of criteria inform selection of the optimal architecture. Business Brand Customer • Strategic Fit • Help achieve and support strategic priorities? • Business Management • Support different business units and/or market segments? • Flexibility • Accommodate changing market conditions? • Implementation • Ability to execute successfully? • Brand Equity • Fit with/protect existing equities or create new ones? • Brand Synergies • Create synergies across the portfolio? • Brand Management • Enable marketing and brand-building efficiencies? • Maximize Clarity • Minimize customer confusion? • Multiple Stakeholders • Meet the needs of multiple stakeholders?

16. Benefits of Clear Brand Architecture Brand Architecture Benefits • Clarifies strategy by identifying gaps and overlaps • Brand proliferations generally a bigger problem than too few brands • Important to have ‘daylight’ between brands • Facilitates development of visual identity systems • Dictates size and position of brand names in relation to each other • Provides rules for guiding creation of new brands and brand extensions to avoid diluting meaning through overstretching • Provides direction for valuation and future treatment of acquired brands -- will name be retained or retired? • If retained, will it be a new master brand or will it be lined in a hybrid solution? • If retired, how much should the value of the brand be discounted in the purchase?

17. Brand Architecture Directs Naming Decisions Brand Architecture Benefits • Decisions about naming should be based on target customer equity.

18. Architecture Decisions Have Business Implications Brand Architecture Implications • Consistency - Architectures with a single branding level require more internal coordination than multiple branding levels. • Brand committee or council across business units, silos or geographies used to ensure consistency • Some organizations establish a centralized marketing structure or internal service unit to avoid compliance issues inherent in committees • Innovation and Investment – Portfolio brands compete for resources • A brand’s strategic purpose in the portfolio should determine which of the latest features and investments are made in each brand

19. Strategic Purpose Should Drive Investment Decisions Brand Architecture Implications • Not all portfolio brands are equally important to the business. Clarity of strategic purpose helps companies understand where to invest resources for maximum impact. Fighters/Flankers protect other category brands Cash Cows generate revenue for other investments Strategic brands represent future growth Distinguisher brands provide added interest NA (J. Crew) (Microsoft)

20. Getting Started Brand Architecture Process • Effective brand architecture directly impacts the market value of a business, so it’s worth taking the time to get it right. • The first step in aligning brand architecture with business strategy involves a strategic analysis. This analysis forms the basis for developing and evaluating architecture alternatives. Strategic Business Analysis Brand Architecture Mapping Alternatives Development Evaluation of Alternatives How closely aligned are the brand and business strategies? How aligned are external and internal perceptions of brands and their roles? What are the various ways the portfolio could be configured going forward? Which architecture alternative best fits the short and long-term business and brand objectives? Brand Architecture Development Process “…[architecture] should not be seen as a formal design problem but rather a matter of deciding on the value flows to be created between the different parts and products of a company. As such it affects the value of the company.” – Jean-Noel Kapferer, The New Strategic Brand Management, 2012

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