Read the summary and the most important questions on Brand architecture strategy and firm value: how leveraging, separating, and distancing the corporate brand affects risk and returns A5MCM

• 1 Introduction

• Characteristics of brand portfolios have an effect on the firm value. Name a couple of characteristics.

  1. The amount of brands; 
     
  2. The amount of segments in which brands are marketed;
  3. The degree to which the brands are in competition with each other.

• What is brand architecture strategy? And what does it describe (name 3 points)

  It is a hierarchical specification. It describes: 
  

  1. Whether 1 or two levels of brands are used; 
  2. Whether, how, and how strongly individual brands within the organisation's portfolio are grouped and relate to one another; 
  3. Visibility and role of corporate master brand.

• What does Brand Architecture have a strong influence on? And what does Brand Architecture Govern?

  Influence: on performance of company; 
  
  Governs: efficiency and effectiveness of marketing resources.

• Shortly name 5 different brand architecture strategies.

  1. Branded House (BH); 
     
  2. Sub-branding; 
  3. Endorsed branding; 
  4. House-of-brands (HOB); 
  5. BH-HOB hybrid architecture.

• 2 Beyond BH and HOB: a five-part categorisation of brand architecture strategies

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• What is the definition of the Branded House architecture strategy which generates the highest value but has more risks than HOB?

  One corporate company over a number of stand-alone and disconnected brands. Uniting all corporate brands in the portfolio of the parent company.

• What are the pros of the Branded House?

  1. High brand equity; 
     
  2. Operational efficiencies; 
  3. No brand confusion.

• What are the cons of a Branded House?

  1. Very dependent on the reputation of the parent brand - which is a risk; 
     
  2. Increased dilution risk - the meaning of the brands that stand-alone must align with the parent brand; 
  3. High stretch risk - due to the brand meaning restrictions on market opportunities imposed by parent brand.

• What's the definition of the Sub-Branding architecture strategy, a horizontal extension?

  Uses both separate and corporate brands and they both function as meaningful and equity-creating organisations; (when an established parent brand creates a subsidiary brand) e.g. Apple with iPod, Mac and iPhone sub-brands

• What are the pros of sub-branding?

  1. The parent brand is visible and consistent - showing scale and size (demand-side advantages); 
     
  2. Broader participation in the market; 
  3. Brand extensions goes fast. 

• What are the cons of Sub-branding?

  1. Dependent on the reputation of the mother brand (it strengthens risk - doesn't controle it); 
     
  2. Higher operating costs (managing several brands); 
  3. Higher risk of cannibalisation; 
  4. High dilution risk (parent brand becomes less obvious);
  5. Sub-brands have risk for reputation crises and quality failures.