Tag: organisational structure

Brand Architecture

Your choice of brand architecture has a strong influence on your organisational structure and your corporate marketing strategy: it affects how your organisation operates.

When you are developing a brand, someone in your organisation must meet the definition of a brand master; that is an individual who ensures that there is the necessary cohesion across your organisation’s divisions and territories to ensure the brand’s success.

The more a company moves to the position of a ‘branded house’, the greater the amount of cohesion required.

A brand master looks after brand values, not just the physical attributes and functional characteristics of the brand.

Developing a brand architecture is a critical responsibility of the brand master and other senior managers in your organisation. So what are the different types of brand architecture?

The Product Brand Strategy

This is the traditional ‘House of Brands’ approach.  An organisation’s products and services have individual brand names and brands have uniquely identifiable facets. Facets include brand symbols, logos, concepts and statements.

In the product brand strategy a brand name is associated with a single product.  The brand distinguishes that product from others in your range.  The brand has its own significance and meaning. It has exclusive positioning in the market.

An example is the Accor group of hotels.  The group has numerous hotel brands including Sofitel, Ibis, Suit Hotel, Formulae 1 and Motel 6.  Each brand has a unique identifiable market position.  Consumers may actually find it difficult to identify that each of these hotel chains belongs to the same corporate group.

In the extremes of the product brand strategy, a brand has an exclusive market position. The brand is its own market category. The product is so specific and unique that there is no other name for the category than that of the brand. The brand may be protected by patents and other intellectual property rights.

Usually in such an exclusive position, brand extension can only be achieved through reformulation of products.

A product brand strategy has the following advantages:

  • If your business is focused on one market segment, it is a strong offensive strategy with the aim of market domination
  • It is a strategy which allows each of your products to occupy different market segments with specific needs and expectations
  • It is a strategy to consolidate market share by becoming a category leader.
  • Your corporate name becomes discrete, if not hidden.  The focus is on brands, not your corporate identity.
  • The strategy can be used by innovative brands looking to pre-empt a market position i.e. to be the first brand in a new market or segment.
  • A unique brand identity helps consumers perceive brand characteristics
  • A product brand strategy allows risk-taking as the risks associated with one brand do not infect other brands in an business’s portfolio.
  • It allows a firm to dominate shelf space at retailers leaving little room for competitors and new entrants.  Think of your local supermarket cereal aisle, how much space is taken by Kellogg’s products?

However, there are drawbacks to a product brand strategy, predominantly economic drawbacks.

  • A product specific brand strategy can be expensive and it is not for the faint-hearted or businesses with tight finances.
  • It is a strategy which offers increasingly narrow segmentation options and which hinders rapid return on investment.
  • Often high sales volumes are required to justify the costs of the strategy.
  • It is not a suitable strategy for small or saturated markets.

The product brand strategy requires firewalls between brands.  These firewalls prohibit the development of a halo effect where the reputation of one product or brand does not assist the reputation of others in the brand.  Economies cannot cross brand firewalls.

The Line Brand Strategy

This is a variant of the branded house approach where a single brand name is used for products in different categories. One consistent and coherent response is used across market segments.  An example is L’Oreal Studio line, where the brand covers a range of hair products from shampoos and conditioners to hair gels and waxes.

The line brand strategy is often the result of successful brand extension.

There are multiple advantages to the line brand strategy:

  • It reinforces the selling power of a brand.
  • It facilitates further brand extension
  • It reduces launch costs of extension products
  • There can be a halo effect where the reputation of existing products in the line is transferred to new additions to the line.

However, there are also disadvantages.  in particular there are limits to brand extension strategies.  Extension products should have a clear link to existing products which is understandable by target consumers.

Range Brand Strategy

This is the strategy used by firms such as Campbell’s Soups and Black and Decker power tools.  All products are linked through a core brand principle, the brand concept.

Range brand strategy has the following advantages:

  • It avoids a random spread of external communications concentrating focus on a single brand name.
  • It creates brand capital across a range of products.
  • Consumer messages are concentrated on core products but the concepts contained in those messages can cross to peripheral products in the range.
  • A range brand strategy can make it easier to distribute new products as retailers and wholesalers trust the brand’s existing reputation.

A range brand strategy has the following disadvantages:

  • It increases brand opacity as the number of products in the range expands.  Consumers can feel that there is less choice available in the market
  • The range brand strategy can dilute a brand identity and can lead to the need to devise intermediate brand identities.  Findus, the now defunct frozen food brand had such an issue which led to the development of its Lean Cuisine, Gourmet and Seafoods intermediate brands.

Maker’s Mark Strategy

Brands such as Laughing Cow and Bel cheese use a maker’s mark strategy.  Often such a strategy derives from a historical symbol used to identify the products of a specific manufacturer of a generic product.  The brand relates to the manufacturer, not the product.  The oldest trademark in the world, the Bass Brewery red triangle began life as a mark used to identify barrels for collection at Taverns.

Endorsing Brand Strategy

Firms such as General Motors use an endorsing brand strategy.  General motors owns several brands of car including Pontiac, Chevrolet and Buick.  But the GM brand is used to link these entities at dealer networks.

In this strategy the main brand promotes consumer choice whilst the endorsing brand assumes a secondary, supportive position.

An endorsing brand strategy allows freedom of movement as brands are introduced or dropped from the corporate portfolio.  The endorsing brand may have less equity than the individual brands but it can evolve a powerful image capable of being recalled by consumers.  It can be an economical way to give substance to a corporate identity and a way of ensuring technical assurance for a brand.

Often the Endorsing brand strategy involves the development of a brand hierarchy:

  1. The endorsing brand is a quality guarantee
  2. The individual brand concept creates a specific promise
  3. The brand creates distinction, personalisation and even pleasure.

Umbrella Brand Strategies

The flexible umbrella brand creates a single brand level where products are given separate identities.  Apple uses such an approach where desktop computers are Macintosh; Laptops are Macbook, tablets are iPad, music players are iPod and mobile phones are iPhones.  An umbrella brand can cover several product categories and give a unified identity to a highly diversified range.

Inflexible umbrella identities gives subsidiaries a significant amount of autonomy.  This can be useful when looking to capture market share.  The brand is a corporate identifier not a product specific mark.  For example, the Mitsubishi trademark can be found on cars, electrical goods and even ships.  Communications are based on product attributes and advantages. The umbrella brand may appear distant and cold.  The brand identity can be diluted.  With luxury brands, an umbrella brand identity can communicate common attributes to consumers.

To align umbrella brands, there is often the use of a ‘Masterbrand’.  This appears similar to the endorsing brand strategy but in this case the parent brand dominates.  This is a branded house approach where the Masterbrand provides a frame of reference and sub-brands align to embody the Masterbrand.  The prototype Masterbrand was Nivea where a wide range of branded products is collated under a single concept; love and care.

A Masterbrand structure can create significant market power and economies of scale.

Source Brand Strategy

This strategy is similar to an umbrella brand strategy.  In this strategy the over-riding brand is more than a simple endorsement.  It is the brand which holds sway and which gives individual products a seal of approval. It is a strategy often used in the perfume and fashion markets e.g. Polo by Ralph Lauren or Jazz by Yves Saint Laurent,  However there is a danger that a source brand may devolve to become an endorsing brand.

A source brand can give a sense of difference and depth however the need to reflect the core identity of the brand gives strict boundaries that make brand extension difficult.

 

The difference between culture and process in an organisation

I have twice been through the process of local government reorganisation.  Once when four district councils were consumed by a county council and once where a large regional council was split into four smaller unitary councils.  One of these reorganisations was completed with few difficulties (issues did occur but they were properly dealt with).  The other was a disaster zone of competing egos and managerial empire building.

So what was the difference between these two events.  On e major factor was how the reorganisation treated organisational culture.  The reorganisation which was completed relatively smoothly recognised that there were significant cultural differences between the merged councils.  It worked to create a new culture which was comfortable to all stakeholders.  In the less successful reorganisation, managers tried to force a new culture into existence without taking into account the differences between stakeholder groups.

In the less successful reorganisation, management saw organisational culture as their property, not belonging to everyone in the organisation and thus there was significant reluctance to accept managements plans.  They also confused culture with process.

So what is the difference between culture and process and why is organisational culture important to business planning and marketing.

Kluckhorn (Yes, I know!) defined culture as:

Patterned ways of thinking, feeling and reacting, acquired and transmitted through symbols, consisting of the distinctive achievements of human groups, including the embodiment of artefacts; the essential core culture consists of traditional (historically derived and selected) ideas and their especially attached values.

Yup, that’s a pretty long way of saying “the way we do things round here.

Importantly culture is not and cannot be imposed by management.  This is an important consideration for marketing and business strategy.

When attending to organisational culture, it is important to recognise that:

  1.  the culture of an organisation is like an iceberg; most of it lurks beneath the surface invisible to management.  That invisible part sits waiting to cause a collision.  As everyone in an organisation is part of its culture, it is almost impossible to get a complete picture of it and it can be difficult to describe.
  2. Culture is self-protecting and it will resist attempts to change it.  For example it takes around three months for a new employee to be ‘encultured’ – to become part of and to display the behaviours associated with the culture.  Similarly, it takes around three months for new managers to be listened to.
  3. The culture of an organisation is not always what stakeholders say it is.  There is often a significant gaps between how managers describe an organisations culture and how the staff view that culture. Ford UK in the 1970s is a prime example where different view of organisational culture caused significant industrial strife.
  4. Culture is best described as ‘the way we do things round here’.  It is an expression of the attitudes and behaviours of staff, not management.
  5. Culture is desperately important because it affects every aspect of how customers engage with an organisation and how service is delivered.  Your organisational culture cannot endanger trust with your target customer groups.  If staff dealing with customers do not feel trusted with the culture, it can severely harm that relationship.  Staff feelings and internal relationships between organisational stakeholders always get through to the customer.
  6. You need to behave internally how you expect staff to behave externally.  For example, if you are offering a low-cost solution to customers, your management and staff cannot behave like it is a high margin business where money grows on trees.  I have referred to Carillion several times in this blog.  The attitude of that company’s board in relation to their remuneration and bonuses, whilst they forced contractors to wait months for payment, is one of the major failings of Carillion’s collapse.

So what should culture actually be?  What culture is right for an organisation?

An organisational culture should:

  1.  fit with what the customer wants.
  2. There should be a correlation between what management want and the way in which they behave.
  3. The culture should fit with what staff want and must correlate with what they believe is ‘the way things are done around here’.

Culture can be far worse than a ‘negative influence’ when it is no influence at all.  If management ignore culture, it ends up with small disparate cultural groups across an organisation which are inconsistent with each other and which are a disaster for the customer.

At best, the wrong culture will stop an organisation being excellent; at worst, it will stop the organisation.

If management cannot replace a culture, they can at least influence it.  The tool management can use is process.  Culture belongs to staff, process belongs to management.

Process is the organise part of organisation.  However, too many organisations view process through the prism of efficiency not effectiveness.  Their concern is with doing things right as opposed to doing the right things.

Too often process is built around functionality and this risks the development of an effective, joined-up, organisation.  This can lead to silo mentalities developing across an organisation.

Some organisations develop group strategies to breakdown how each function fits within the organisation’s structure.  However, such group strategies often risk an organisation’s focus being internal and it not providing the outputs customers desire.

Process can be defined as:

A series of activities or steps to achieve a particular end – AskOxford.com

A series of actions that you take in order to achieve a result – Cambridge Dictionary

A particular course of action intended to achieve a result or results – Anon.

What this means for most organisations is that there will be a functional structure and customers will be passed from one functionality to another e.g. Promotion to sales to manufacture to fulfilment to after sales service.

Each of these functions may contain several tasks and the process may move back and forth through various functions.

Process is the glue which holds these different functionalities together.  If you are trying to create a ‘joined-up’ organisation, it is important that the staff of each function understands the role and responsibilities of other functions.  The failed local government reorganisation mentioned above, tried to amalgamate members of different functionalities into new groups without the development of a common understanding of each group members role.

Do all your staff understand the role they play in fulfilling the customers desired benefits to the appropriate standard?

Process is also the way in which the strategy and the Customer Value Proposition are reflected in what the people of the organisation do.

Process defines tasks, how those tasks are carried out, why they are carried out, what the task delivers and how tasks contributes to the end delivery of customer benefit.