brand architecture & portfolio mgmt rahul verma project

8/14/2019 Brand Architecture & Portfolio Mgmt Rahul Verma Project

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BRAND ARCHITECTURE AND PORTFOLIO MANAGEMENT P a g e | 1

ANSAL INSTITUTE OF TECHNOLOGY

A

PROJECT REPORT

ON

BRAND ARCHITECTURE AND PORTFOLIO

MANAGEMENTPrepared 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 Vsemester, 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 coachs role by placing each player at the right position and making themfunction as a team rather than a collection of players. The brand portfolio includes all the brandsand 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 thecorporate brand and sub-brands relate to and support each other; and how the sub-brandsreflect 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 portfoliodilutes 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 problemsof an underperforming portfolio are even more acute: While adding brands is easy, it becomesdifficult to harvest the value in a brand or to divest it.


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BrandArchitecture

Brand

Brand-MarketContext Roles

Endorser/Sub brandsBenefit brandsCo-brandsDriver roles

Portfolio Roles

Strategic brandsLinchpin brandsSilver bulletsCash cow brands

Brand Portfolio

Brand GroupingsBrand hierarchy treesBrand range

Portfolio Graphics

LogoVisual presentation

Powerfulbrands

Optimalallocationof brandbuilding

resources

Synergy increating:visibility,efficiency

Clarity of offering

Leveragedbrandassets

Platformsfor future

growthoptions

Includes all the brands& sub brands attachedto the product-marketofferings, including co-brands with other


o The following model proposed by David Aaker, maps out the

different elements of brand architecture.

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 Nestles 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

1990s, 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 & Gambles Pampers or Unilevers 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 brandrelationships


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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 Levis, 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

Raymonds launched in mid-eighties. It is a linchpin brand for Raymonds because it has

extended the Raymondss credibility in different businesses from ready to- wear trousers to

mens 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 Forhanss Flouride as having branded feature of being foamyrather 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 andMcchicken, Mcburgers, Mctikki, etc. from Mcdonalds. 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. Nestles Cerelac, Gillettes Sensor

and Cadburys 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 diversifieds

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. Cadburys 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 theorganization. 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 companys 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 worlds 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 areas 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. Allieds 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, Allieds 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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brand architecture & portfolio mgmt rahul verma project

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