When managing a brand portfolio, a basic strategic decision should be made to determine how to brand new offerings and how these offerings will fit into or augment the existing brand portfolio. A key tool in making this decision is the brand relationship spectrum. The brand relationship spectrum includes a master brand with descriptors (GE Healthcare), a master brand with sub-brands (Calloway Big Bertha), a new brand endorsed by a master brand (Miracle by Lancôme) and a new brand (Lexus).
The Master Brand Strategy
The preferred go-to strategy, often termed the master brand or branded house strategy, is to use the master brand with a descriptor on the new offering. The descriptor brand will have a very modest or nonexistent driver role. A driver role reflects the extent to which the brand influences the purchase decision or defines the customer experience. BMW has a master brand strategy with models denoted as BMW 3, BMW 7, BMW X1, BMW M, and so on. FedEx is another, with FedEx Express, FedEx Services, FedEx Freight, and more. The branded house option maximally leverages an established master brand, requires a minimum investment in each new offering and potentially enhances the clarity and synergy of the portfolio. As a result, it is the default option. Any other strategy requires creating a new brand and needs to be justified by compelling reasons. The master brand strategy is optimal when two conditions are met. First, the master brand will enhance the offering because its equity, comprised of its awareness, perceived quality, customer base and credibility in the context of the new offering, will be relevant, helpful, and consistent with the value proposition or personality of the new offering. Second, the offering will enhance the master brand by providing visibility, energy, and added credibility all while staying “on-brand.” When one or both of these conditions are not met, alternatives to the master brand strategy need to be considered that will create some distance between the new offering and the master brand. The least amount of distance occurs through the use of a master brand with a sub-brand. A new brand endorsed by the master brand increases that distance, but by far the most distance results from a new brand not connected to the master brand.
The first option is the sub-brand strategy. Examples of this strategy include the Chevrolet Volt, the Samsung Galaxy handset or the Schwab OneSource Select List. The sub-brand adds to or modifies the associations of the master brand. It could have a different personality or value proposition than the master brand but does not have as much latitude as an endorsed brand. A sub-brand can stretch the master brand, allowing it to become relevant in new arenas. An important element in managing the sub-brand is to understand its driver role. If it is significant, then it could merit some brand-building resources. But if it is minor and mainly plays a descriptive role, then its brand-building budget would be less. It is easy to assume the sub-brand is more important than you think. It turns out people really are buying HP and not LazerJet.
The second option is the endorsed brand strategy, in which the offering is endorsed by an existing master brand. The role of the endorser brand is to provide credibility and reassurance that the endorsed brand will live up to its claims. An endorsed brand (Scotchguard) is not completely independent of the endorser (3M), but it has considerable freedom to develop product associations and a brand personality that is different from that of the endorser. The endorser brand usually has only a minor driver role, but when the endorser is strong and the new offering is unknown and risky, its driver role can become significant. There are also times in which the endorser can benefit. For example, a successful new product with energy or an offering that becomes a market leader brand can enhance an endorser. Thus, when Nestle bought Kit-Kat, a leading chocolate brand in the UK, a strong Nestle endorsement was added in order to enhance Nestle’s image in the UK.
A New Brand
The most independent option is to have a new brand, unconstrained by any past master brand associations that might be unhelpful or even harmful. When a collection of new brands is assembled, it is called a House of Brands strategy. P&G, a house of brands firm, operates more than 80 major brands with little link to P&G or to each other. The house of brands strategy allows firms to position brands clearly on functional benefits and to dominate niche segments. In the shampoo category, for example, P&G has several brands such as Head & Shoulders (dandruff fighter), Pantene (makes hair shine), Pert Plus (the first shampoo plus conditioner product), Herbal Essences (nature inspired), and Wella Allure (professional quality), each of which has an unique value proposition. A major limitation of the house of brands strategy is the loss of economies of scale that comes with leveraging a brand across multiple businesses. Those brands that cannot support investment themselves risk stagnation and decline. Another limitation is the loss of brand leverage, because focused brands tend to have a narrow range and their ability to extend is limited. Final Thoughts When thinking about selecting the right position on the brand relationship spectrum, there is no one-size-fits all solution. However, if a compelling business strategy is at stake some brand risks might be necessary. We should not be under the illusion that the goal is to create and protect brands. Rather, the goal should be to create and leverage a brand portfolio that enables the business strategy to succeed.