Brand Architecture

A national food company hired my studio with a problem they could feel but couldn't name. They powered other people's brands. The meal kits, the grocery private label, the food-media darlings, all ran on their infrastructure. None of it carried their name.

For over a year, leadership argued the same question in different rooms. Should we build our own consumer brand? Should we be visible? Invisible? Both?

Underneath all of it sat an architecture question. And they couldn't move on naming, identity, website, or investor narrative until they settled it.

This episode is about brand architecture. The org chart of your brand portfolio. The four shapes every portfolio takes. The four questions I use to choose between them. And how that food company won by retiring its own consumer brand and disappearing on purpose.

If you have more than one brand-bearing offering, you have an architecture problem whether you've noticed it or not. The only question is whether you make the call on purpose, or by accident, through a thousand small choices no one writes down.

Position to Win. For the challengers, and the founders and CMOs responsible for making it happen.

Transcript

SPEAKER_00 0:04

So my studio got a call from a national fresh food company. And um, so they were a B2B platform company, and they had an engine basically where they were the operation machine of a list of well-known consumer brands, and they were thinking about starting their own consumer brand. And so this is one of the reasons why they called me. And their instinct was simple, and they wanted to put the parent brand, which is this B2B brand, um, as a powered by tag for their B2C tag brand. Um, they wanted to use this as a credibility signal, so it's a way that they thought it would say, well, if this food comes from someone that you know you can trust what they're doing. And on paper it sounds smart, but food does not work like software. Intel inside was the example that they use, but it's not a universal brand strategy. So I asked a different question. Does your name actually help this sell? Or does it add baggage to the brand? Does it make the selling more difficult? And that's a real brand architecture question. Not should our name be on this, but does our name create trust or does it create confusion or risk? A few weeks later, I was in a workshop with the founder and the leadership team, and I put four companies on um the board. It was Apple, Maria, Proctor, and Gramble. And we actually had Google, and Disney is also another variant example that we could say. And then I asked, which one do you want to be? And so they initially said Apple, and this is where the conversation got interesting. I'm John-Luc. Welcome to Positioning to Win. There are two types of brands: the ones that accept their positioning in the market and the ones that challenge it. And this show is for the challengers and for the founders and CMOs who are responsible for making that happen. So, growing up in France, my father had a small orchard in the backyard, a bunch of fruit trees. So there were some apple trees and there were some cherry trees. And I remembered he would go out back, and he is not a guy who likes to explain very much. And he would go and he would cut the branches off. And I remember this because I did not like it. I thought he was hurting the trees. And every season he would go to the orchard and cut not just the dead ones, because the dead ones were obvious and obviously I didn't mind, but sometimes he would cut the living ones. And the branches that looked perfectly healthy, even sometimes were ones I was climbing on, um, and asking him to stop once, trying to convince him that he was doing damage. And he kept on cutting. Months later, the branches that remained were producing more than I've ever seen. And the tree had concentrated everything it had into what was left. There were fewer branches, but there was more fruits. And then he explained to me eventually, retroactively, not at that moment, but you know, after it all happened, so that he could see, look, you remember a few months ago? This is the reason why I'm cutting it. And he said that the tree does not know what it needs to do to prioritize, it will feed every branch that it's connected to equally until it runs out of energy. So when you cut it, you don't cut it as a punishment, it's a direction to concentrate this energy, and you are telling a tree where to put its energy first. And now looking back at this, I see that this is brand architecture. The root system is your master brand. Okay. The branches are everything that grows from it. Architecture is the decision about which branches to cut and which branches to keep, and whether the root system can actually support what you're asking it to feed, how to concentrate its energy, how to have a narrow focus for the brand. What looks like damage is often just concentration. And the founders who cut sub brands and walk away from a customer type and says no to a logo extension is not necessarily hurting the tree. Oftentimes, they're actually just telling it what to put in order first, what to where to focus its energy and where to concentrate it. Brand architecture is how the brands inside the companies relate to each other. Which names lead, which name hides, which names carries trust, which names carries risk. If your company sells one product under one name today, this episode is still worth your attention because the architectural decision is the easiest to get right before you need it, not after. It becomes urgent the moment you have more than one brand-bearing thing. So this could be multiple products, the multiple services, sub brands, or you acquire a new brand, or if you are a B2B company and you are transitioning to B2C, or those type of things. And that's kind of what I want to dive into today. The architectural decision answers four questions at once. What does the customer see? What carries the master brand's name? Who gets the credit when the value is created? And the most often miss, what happens when one of the portfolios fail? When one of the branches fail. However, a scandal at FedEx office hits FedEx Express the exact same day. Because FedEx carries the brand equity deliberately through. They're deliberately connected. Architecture is not just how you organize it, it's how you contain the risk, the business risk, the business reward, and you concentrate the equity. So back to the workshop I started in the beginning. We have Apple, the branded house. One master brand that carries everything iPad, MacBook, Apple Watch, Apple Music. Every product is a tailwind from the master brand. The Apple name does the heavy lifting on every launch, but this is efficient, right? You got one marketing budget, one brand to defend, one reputation to manage. So what's the downside? Well, the downside is liability. The master brand breaks, everything breaks. Then you have Marriott, uh, an indoors brand. The sub brands have their own distinctive identities, but openly carry the parents' brand as a credibility signal. So Marriott and then Ritz Carlton. Ritz-Carlton has its own brand world, right? This is luxury refinement, distinctive from any other Marriott corporate signal. Marriott's name is their lending validation, but they all share the same Marriott Bonvoy rewards program, and there's shared benefits across the Marriott chain and the Marriott Trust signal. And then there's the Marriott Courtyard, right? So courtyard by Marriott, actually, that's how you say it. So courtyard by Marriott tells you the place will be reliable even if you've never stayed there. And then there's Fairfield. This is their entry-level value-based brand. And this is for a totally different type of customer. Now, the parent brand provides credibility across all of them. And the sub brand provides differentiation in targeting and in different values and benefits because the Ritz-Carlton customer and the Fairfield customers are genuinely not the same people. And then we have Proctor and Gamble. Proctor and Gramble is the most famous example of the house of brands. You can think of this as a forest. Each tree stands on its own. The forest contains them all, but no single tree speaks for the other. Tide, Pampers, Crest, Charming, Gillette, Old Spice, right? They each run their own marketing, they each have their own visual identity, they speak to their own audience. The customer often does not even know that they're owned by the same company. Now this can be expensive, right? So each brand has its own team, their own marketing budget, but then they're resilient. The brand's liability at one brand does not touch the rest of the others. Then there's another example which is gets a little bit more complicated, right? We have examples like Disney or Google, and this is a hybrid, a portfolio built over decades of acquisition and strategic expansion. The hybrid is not a starting strategy. We have Pixel Marvel, Lucasfilm, ESPN, ABC. Some operate as separate brands and some as sub brands. And the architecture choice made by different leadership teams and it responses to different pressures. And this accumulates over time. So one could be to serve investors or to appeal to investors, one could be to aid in selling to different types of service providers, right? The hybrid case is real, but it's what you arrive after 20 years of expansions and merger acquisition. However, it's not what you should design from scratch. I asked the team, which one do you want to be? And they said Apple. Then I asked the harder question, what does the Apple model actually do for you? And so the room went quiet and they thought about it. And here's where the decision got real. Apple's brand recognition lets the master brand carry every new product into the world. But when Apple launches anything, the brand alone gets the cover of the magazine. If it was to launch a new car, the brand alone would acquire customers. The master brand does the lifting. So I asked, what does your master brand do for a new product launches or for new service launches? Would it actually held? Nobody had a quite clear answer. And the truth was that the master brand had low recognition with the customer. And this they agreed with. They never built a customer relationship, they built a B2B platform. So they only had B2B customers. So it's not that they had low consumer awareness, it's that they didn't have any consumer awareness. Their name had never really appeared on any private labels or products relating to their offering. And so the brand had some equity, but some of it was damaged. And on paper, the powered buy sounded like a responsible choice. Use the equity you already have, borrow the trust from the parent, and make the new brand feel less risky. But the trust that they thought they had was not consumer trust. A core investor actually flagged and he said that parent brand needs to get equity one way or another. And he was right to raise this, but the equity only matters if it helps the customer choose. Co-branding can help when the two names have clear values. When the second names create confusion, it weakens the recognition. Or it can raise questions the consumer was not already asking. And it can lower the trust signals instead of building it. The powered by tag was not going to transfer equity. It was going to transfer Dell. Saying, oh well, who's this that's also making this? Right? Putting it on the new consumer brand would not protect the launch, it would make the product fragile. So adding the extra brand on this new brand would not help sell. It would, if anything, just add additional layer of doubts. So this was the moment the architecture decision became clear. They were not Apple. Matter of fact, they were much closer to Procter and Gramble. And the right move was a fresh consumer-facing brand. Its own name, its own identity, its own equity building plan with the platform staying invisible behind him. The way Procter Gramble stays invisible behind Tide. This is not unusual. Some B2B brands can move to consumers successfully when the master brand already has public trust, category relevance, or strong technical credibility. You could take a PayPal as an example, you know, when they first sold to businesses and then they eventually went to consumers. But the trust has to be there first. And when the B2B identity is invisible to consumers or actively industrial and its association, the equity does not travel. There is a reason why Phil Knight did not build a consumer brand or name around Blue Ribbon Sports. Do you know what Blue Ribbon Sports is? Well, most people don't. But Blue Ribbon Sports was the distributor and Nike was the idea. This had a different job. So Blue Ribbon Sports was the first company. And then it was renamed to Nike because they had a different audience, a different name. And when your B2B identity would actively work against a consumer trust, a new name is not a retreat, it's the strategic and it's the correct move. So here's why this is so important. About 30% of brands' extensions survive through the first two years. This isn't really better odds than launching a brand new product from scratch, right? And when they fail, they do not fail quietly. Failed extension produces an average of 5 to 10% loss of the original market share that the master brand was already operating in. So if you think about it, if Apple was to launch cars, Apple cars, and it was to fail, that could hurt its computer business by 5 to 10%. So these things are related to each other. You're not just failing to grow, you are eroding what you've already built. And so that's why the powered buy decision matters. If the consumer brand had failed, it would not have failed quietly. It could have dragged the parent brand into a market where the parent brand had no real consumer trust and pulled down the B2B equity that they had spent years building. So when my studio sits down with a leadership team to make an architectural decision, we run the conversations through a series of questions. So question one, does your offering serve to the same customer or different customers? Same customers across everything leads to a branded house. Different customers to different offerings lead to a house of brands. Question two the value travel up the portfolio, meaning the sub brands travels up to the master brand. Or does it travel down, meaning it goes from the master brand and then travels down to the portfolio of sub brands? Master brand trusts pulling the customers into new products, so the values traveling down is a branded house signal. Sub brands, boom, boom, boom, on the bottom, and the success lifting to the master brands, and the value travels up is the endorsed brand. Okay, value that's contained into each of the separate brands independently is the house of brands. Uh, you know, think of Proctor and Gramble for that example. And then question three what's the brand liability exposure, right? If something was to fail, what happens? Branded house, a failure anywhere becomes a brand liability everywhere. Apple, for example. A house of brands, a failure stays contained. Procter and Gable, for example. The stronger your massive brand equity, the more you have to protect. Question four, what can you afford to invest? A house of brand requires a separate budget for every brand. A new marketing team, new marketing operations. And if you're like sub 50 million in revenue and you're running a house of brand strategy, you're likely underfunding every brand portfolio. Branded House concentrates the investment into one identity. A house of brands earns its complexity at scale. So Proctain Gramble owns 65 plus consumer brands. So you have Tig and Gain, Pampers and Loves, Crest and Oral B and Old Spice and Jalel. And many of these are just competing with each other in the same category, on the same shelf, for the same tower. So that means one marketing team is competing with the other marketing team. So why? And they're all owned by the same company. Procter and Gamble, PG, long ago they decided that consumers do not want one company to be the answer for every cleaning, grooming, or hygiene need. Tide is for the people who want a premium experience for cleaning, and gain is for the people who want their laundry to smell clean, right? To really feel like it just got cleaned. Both are PNG, and neither admits it on the package. The architectural pays-off in their risk management. Tide had a crisis with their laundry pods. Children were eating them thinking that they were candy. And that crisis stayed inside Tide, and Pampers did not even get touched. When Gillette ran controversial we believe in ad in 2019, they faced boycotts. The controversy stayed inside Gillette and Crest did not get touched. Compare that to Boeing, the single name on every airplane. When the 737 max crisis hit, every Boeing product was suddenly a suspect. Defense system, satellite business, commercial aviation. All of it traveled together because all of it carried the Boeing name. So architecture is a risk allocation. Procter Gamble, PNG, figured it out decades ago. The vocabulary in this episode, Branded House, House of Brands, and Dorse Brands come from David Acre's brand relationship spectrum. He introduced this in his book, Brand Portfolio Strategy. Acres core insight architecture is not a binary, all right? It's a continuum. Most companies need to make different decisions for different parts of their portfolio. And if you want to go deeper, that's a great book to start. If you have more than one brand offering in your company, you have an architectural question, whether you can notice it or not. So what can force the architecture question is you buy a company and suddenly you have to decide okay, do we absorb the brand? Do we endorse it, say powered by, or do we leave it alone and just own it and share common assets? Companies with an architectural playbook and integrate this cleanly. Companies without it have never made the decision and they stumble through it, and oftentimes they make mistakes. House of brand is expensive, endorsement is a bridge, and a hybrid is well not a starting strategy. The only architecture that matters is the one that your actual equity can support. So founders think that their name is an asset everywhere. Sometimes it is, but sometimes it can be a baggage or it can be a source of confusion. Architecture is how you tell the difference. Architectural decision made well holds on for decades, made poorly, they leak equity everywhere, and every quarter you fail to fix them. The next episode, we go from architecture to the smallest, most debated, hardest to undo decisions in all of branding. Naming. Why naming is harder than most founders think. And we'll provide tests that every name has to pass, and naming projects that I've worked on my own and in my own studio, and that taught me what I know about the work, including a name I gave to my own son using the same discipline. So thanks for listening and let's chat soon.