1.Brand Architecture:Designing Your Brand Portfolio for SuccessSeptember, 2014

2. 2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionAGENDA Brand Architecture Defined Why Brand Architecture Brand Portfolio Roles Brand Architecture Solutions Types of Brand Architecture Strategic Considerations Brand Architecture Development Process Application: McDonalds Masterbrand Under Fire Conclusion1Agenda 3. Naming a company is just the first of many business decisions - andmay not even be the most important!2012 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE DEFINEDWhats In a Name?2Products, business units, specificservices, marketing programs,features, line extensions, apps, websites and more all need monikers.How these names relate is thedifference between brand coherenceand brand confusion. 4. Brand architecture provides the rules for naming assets in the brandportfolio and specifies the relationships between them. It also determinesmarketing investment priorities and whether and how new acquisitionsshould be integrated to the portfolio.A clear architecture contributes to brandhealth and company value.2012 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE DEFINEDArchitecture Rules3Each naming decision hasimplications for future decisions,so its important to have a plan. Makes it easier for customers to navigateofferings and avoid confusion Ensures the masterbrand is leveragedwithout overstretching Guides new product and innovationdevelopment Ensures customer considerations are iscentral to naming decisions Provides direction for where to focusmarketing investments 5. Brand architecture represents the brand to external stakeholders. Theoptimal architecture may not line up neatly with internal organizationalstructures and thats okay!2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE DEFINEDBrand Architecture = Face of the BusinessCorporateBusinessUnitBusinessUnitProducts ProductsBrand Architecture IsExternally FacingMasterbrandABrand BEndorsed by ASub-brandDSub-brandCIngredient or FeatureOrganizational Structure isInternally FacingBusiness units are not brands.4 6. Architecture Basics: Brand RolesBrand Role Descriptions2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE DEFINEDEach portfolio brand asset needs a clear role that links it to other assets.1.5CorporateBrandCompany name and legal entity. Often usedas endorser but may not be customer facingat all.MasterBrand(Driver)Drives purchase decision and defines userexperience. Most strongly represents thedifferentiation inherent to the offer.EndorserBrandProvides approval, credibility or guarantee toa range of products, but is usually not thedriver.Sub-BrandDerives equity from another brand, usuallythe Master.IngredientBrandFeatures, materials, components or partsthat are contained within other brandedproducts. Not an equity driver, often anequity energizer.EndorserBrandMaster BrandSub-BrandClear roles simplify decisionsabout brand expression5 7. Sony plays multiple roles in its portfolio. Some offerings have stand-alonebrands.2012 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE DEFINEDBrand Roles Assigned Based on Business NeedCorporate BrandMaster Brands Sub-Brand Stand-Alone BrandsMaster Brand: Allows equity tobe shared among brand assetswhen used in either driver orendorser role.Sub-Brand: Leverages thestrength of the master brandwhile helping to separate andorganize the offerings.Stand-Alone Brand:Separates offerings, createsnew sources of equity ortargets new audiences.6 8. Brand Architecture: Whats Not Included?Brand Elements Live Outside the Architecture2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE DEFINEDBranded elements live outside the architecture. They may be trademarkedor licensed and can enhance equity by providing uniqueness andmemorability, but they are not offerings.7Celebrities lendmeaningCharacters createlikeabilitySponsorshipsbuild affinity 9. Triggers for Revisiting Architecture2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE DEFINED8Signs of TroubleBrand architecture is built to last. It needs to be revisited when companieschange strategic direction or the business has added important capabilitiesthat go beyond its existing brand structure. Merger or acquisition Too many brands and offerings are competing forattention and investment dollars Corporate brand and product brands have thesame name, hard to distinguish Brands are losing relevance with consumers Brand meaning has been diluted or stretchedbeyond credibility and effectiveness Programs, elements, features or sponsorships areasking to be treated as brandsI have a problem 10. Triggers for revisiting architecture:2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE DEFINEDIn 2012, Kelloggs restructured its brand portfolio to better leverage itsmaster brand, acquired stand-alone brands and its Olympics sponsorship.If you look at our portfolio we have a number of masterbrands: and we had to start separating out theKelloggs brand from the Kellogg company we thenneeded to be very clear about what Kelloggs the brandstood for and provide the north star for all the sub-brandsthat kind of sat underneath it.Kelloggs is a truly iconic brand We felt that having astronger brand, driving a stronger point of view, a morepowerful identity and have at the center an umbrella totalk about our portfolio more holistically, to talk aboutthe power of breakfast, to talk about the value ofcereal.9Example: Kelloggshttp://www.forbes.com/sites/jenniferrooney/2012/05/10/kelloggs-embarks-on-major-brand-overhaul/ Had acquired multiple newbrands Keebler, Kashi,Morningstar and needed toelevate Kelloggs corporatebrand above its cereal masterbrand Needed to strengthen themeaning of the Kelloggsbrand - its about the power ofbreakfast, not just cereal. Wanted to leverageinvestment in 2012 Olympicsto benefit all Kelloggs sub-brands 11. Types of Brand ArchitectureHouse of Brands Hybrid Branded HouseBuilds equity in strongstand-alone brands acrossa wide range of categoriesRequires significantmarketing investment2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE SOLUTIONSBrand architecture solutions fall on a spectrum. Most are hybrid solutions,falling somewhere between branded house and house of brands.10ConsResults in strong masterbrand.Can be difficult to extendbeyond the expertise ofthe master brand.Leverages strong masterbrand while allowing flexibility.Requires careful planning toavoid confusing customers ordiluting the master brand. 12. Hybrid Solutions Are Most CommonStand-Alone Brands Hybrid Branded House2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE SOLUTIONSDisney uses a mix of brand architecture solutions to build and protect itsbusinesses.11 13. Determining the Optimal ArchitectureArchitecture decisions have investment implications, so selection of theoptimal solution is determined by business strategy.2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE SOLUTIONSDo the brands address thesame or different customersegments?How important is it torepresent the brand the sameway in different geographies?Are there synergies that canbe leveraged between differentbrands or business units?House of Brands Branded HouseTarget multiplesegmentsAddress individualgeographiesFew synergies to beleveraged12Target single or fewsegmentsReinforce a globalorganization mindsetMany synergies to beleveraged 14. Brand Architecture PrinciplesThree guiding principles help to ensure brand architecture has the optimalbusiness impact.Sufficiently cover the market and targetcustomer segments with the fewestbrands possible.Make it easy for customers to find thesolution they seek by ensuringdaylight between brand offerings.Fulfill customer needs (and generaterevenue) while minimizing branddevelopment and management costs.Clear Separation2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE SOLUTIONS13Right NumberHighest Profit 15. Architecture Decisions Are Strategic2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE SOLUTIONSNot all brands are equally important. Architecture guides decisions aboutinnovation and investment as portfolio brands compete for resources.14StrategicBrandSignificant contributor to companys future sales,perceptions or market position.DistinguisherBrandEnhances the differentiation of another brand. Alsoreferred to as branded energizer or silver bullet.Cash Cow Money making brand that does not representfuture significant growth.CorporateBrandLow visibility to customers, but important toregulatory bodies, investors, employees, tradegroups, partners.Fighter/Flanker BrandAddresses competitive threat. Protects share ofother brands in the portfolio.Example 16. Example: Samsungs Architecture DirectsInvestmentCash Cow Flanker/fighter Corporate BrandWearable Tech2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE SOLUTIONSSamsung has strategically separated the Galaxy brand from its consumerelectronics and enterprise brands through an endorser strategy, and investsprimarily in Galaxy.Strategic Brand15Solutions ExchangeSamsung KnoxEnterprise SolutionsEnterprise Ready DevicesAndroid SmartphonesAndroid TabletsAndroid CamerasAndroid WearablesFeature Mobile PhonesDigital Cameras andCamcordersTablet PCsHome Theater and AudioHome Appliances*Not Sub-BrandedBrandWindows SmartphonesWindows TabletsWindows LaptopsWindows Desktops 17. Amazons Architecture Also Directs DecisionsCash Cow Strategic Brands Stand-Alone Brands2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE SOLUTIONS Amazon keeps its acquired strategic businesses separate through a stand-alonestrategy. It uses an endorsed approach for all other brands.Amazon.com is the closest thing the company has to Cash Cows, though itappears to still have healthy growth potential.16 18. Starbucks is Expanding to Meet Business NeedsCash Cows Strategic Brands Flanker/fighter2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE SOLUTIONS Starbucks is thoughtfully expanding its portfolio to separate its high growthand premium businesses from its mainline coffeehouses and newStarbucks Express stores.Starbucks ReserveRoastery and TastingRoom (Seattle)Starbucks Reservestores (2015)17Brandhttp://news.starbucks.com/news/starbucks-accelerates-growth-of-store-formatsStarbucks coffeehouses Express formatstores (2015) 19. Assessing Brand Architecture OptionsBusiness CustomerStrategic Fit?Help achieve and supportstrategic priorities?Business Support?Support different businessunits and/or marketsegments?Flexibility?Accommodate changingmarket conditions?Implementation?Ability to executesuccessfully?2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBrandBuild Equity?Fit with/protectexisting equities orcreate new ones?Create Synergies?Create synergiesacross the portfolio?Provide Leverage?Enable marketing andbrand-buildingefficiencies?Maximize Clarity?Minimize customerconfusion?Address MultipleStakeholders?Meet the needs ofmultiplestakeholders?BRAND ARCHITECTURE SOLUTIONSWhen selecting the optimal architecture, its important to evaluate optionsusing agreed criteria.18 20. 2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionBRAND ARCHITECTURE DEVELOPMENTEffective brand architecture directly impacts the market value of a business,so its worth taking the time to get it right.19The Way ForwardBrand ArchitectureMappingAlternativesDevelopmentEvaluation ofAlternativesHow aligned areexternal and internalperceptions of brandsand their roles?What are thevarious ways theportfolio could beconfigured goingforward?Which architecturealternative best fitsthe short and long-termbusiness andbrand objectives?StrategicBusiness AnalysisHow closely alignedare the brand andbusiness strategies?Brand Architecture Development Process 21. The Branded House McDonalds Built[McDonalds] gave millions of Americans their first jobswhile changing the way a nation ate.2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionMCDONALDS CASE STUDYThrough consistency and careful brand-building, McDonalds became anAmerican icon. Using the arches, color palette and Mc to identify and link mostof its offerings to the master brand, it is a prime example of a Branded Housearchitecture.Bloomberg Businessweek, 3/2/0320Tightly associated withburgers, fries and soft drinks,the brand thrived in the 80sand early 90s.http://mrktspnkr.wordpress.com/2012/06/29/brands-as-identifiers-functional-and-symbolic-images/ 22. Signs of Trouble Starting in Late 1990s1995 2000 2010 20152014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionMCDONALDS CASE STUDY21New menu itemslike the low-fatMcLean Deluxeand Arch Deluxeburgers, meant toappeal to adults,bombedSalesstagnated whilecosts increasedas the productofferingexpanded/became morecomplexIn an effort toregain relevance,McDonaldsacquired ChipotleMexican Grill andBoston Market in1999Spun off Chipotlein 2006 to refocuson corehamburgerbusiness2005Salads represent only 2-3% of McDonalds sales inthe United States. CEODon Thompson admitted Idont see salads as being amajor growth driver in thenear future. (5/13)Recordnumber offranchiseesleft thesystem in2002In 2004,Supersize Mebrought attentionto what too muchMcDonald's doesto your body andhow it makes youfeel..U.S. comp store salesslipped 1.7% in Q1and 1.5% in Q2 of2014 23. 2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionMCDONALDS CASE STUDY22Strategic DirectionBrand ArchitectureMappingAlternativesDevelopmentEvaluation ofAlternativesHow aligned areexternal and internalperceptions of brandsand their roles?What are thevarious ways theportfolio could beconfigured goingforward?Which architecturealternative best fitsthe short and long-termbusiness andbrand objectives?StrategicBusiness AnalysisHow closely alignedare the brand andbusiness strategies?Brand Architecture Development ProcessFocused on health-centric global initiatives, putting food quality first.Marketing now organized by consumer groups such as millennials,families and adults rather than by product.Stepping up digital, including e-commerce, fast-tracking testing ofmobile payments and ordering. In June it set up a "learning lab" at arestaurant in Laguna Niguel, Calif., to better understand what peoplewant and to experiment with customizable burgers 24. Brand Architecture Mapping2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionMCDONALDS CASE STUDYExecutives worry the master brand has lostrelevance with consumers as:Millennials have defected to fast casual chains likeChipotle and Five Guys.Moms no longer see McDonalds as a good place forkids.Last month, Consumer Reports said a survey ofmore than 32,000 subscribers rated McDonald'sburgers the worst-tasting of 20 rival burger chains.23Brand ArchitectureMappingAlternativesDevelopmentEvaluation ofAlternativesHow aligned areexternal and internalperceptions of brandsand their roles?What are thevarious ways theportfolio could beconfigured goingforward?Which architecturealternative best fitsthe short and long-termbusiness andbrand objectives?StrategicBusiness AnalysisHow closely alignedare the brand andbusiness strategies?Brand Architecture Development Processhttp://www.businessweek.com/articles/2014-09-09/mcdonalds-happy-meal-problem-kids-turn-away-from-fast-foodhttp://www.chicagobusiness.com/article/20140906/ISSUE01/309069980/mcdonalds-has-a-new-generational-problem-kids#http://online.wsj.com/articles/mcdonalds-faces-millennial-challenge-1408928743http://online.wsj.com/articles/mcdonalds-faces-millennial-challenge-1408928743 25. Architecture Alternatives2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionMCDONALDS CASE STUDY24Brand ArchitectureMappingAlternativesDevelopmentEvaluation ofAlternativesHow aligned areexternal and internalperceptions of brandsand their roles?What are thevarious ways theportfolio could beconfigured goingforward?Which architecturealternative best fitsthe short and long-termbusiness andbrand objectives?StrategicBusiness AnalysisHow closely alignedare the brand andbusiness strategies?Brand Architecture Development ProcessBranded House approach makes it difficult to change perceptions.May need to reserve McDonalds as corporate brand and build equityin new stand-alone brands and sub-brands.Corporate brand could be focused on target-relevant purpose (e.g.,transparency in food sourcing; championing clean, healthy foods andingredients; supporting a living wage for hourly workers)Sub-brands or stand-alone brands for Kids or Millennials or other prioritytargets may help separate new initiatives from current offerings.New digital initiatives provide a platform for a new, more relevant brand.McDonalds appliedfor a new trademarkfor a McBrunch brandin September 2014http://adage.com/article/news/mcdonald-s-files-trademark-mcbrunch/294911/? 26. Selecting the Optimal Solution2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionMCDONALDS CASE STUDYKey evaluation criteria relateto ability to support thebusiness, build new sourcesof equity and better addressthe needs of Millennials andkids/Moms.25Brand ArchitectureMappingAlternativesDevelopmentEvaluation ofAlternativesHow aligned areexternal and internalperceptions of brandsand their roles?What are thevarious ways theportfolio could beconfigured goingforward?Which architecturealternative best fitsthe short and long-termbusiness andbrand objectives?StrategicBusiness AnalysisHow closely alignedare the brand andbusiness strategies?Brand Architecture Development Process 27. 2014 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionCONCLUSIONS Brand architecture is a strategic business design solution that is alignsbusiness and brand goals Architecture defines clear roles, relationships and investment prioritiesamong brands A coherent brand architecture makes marketing more efficient and effectiveby ensuring customers and other stakeholders understand what thebusiness can do for them House of Brands and Branded House are just two many possiblearchitecture solutions. Most companies used a hybrid approach. Brand architecture should be revisited periodically to ensure businessrequirements are being addressed and the structure is optimal for supportingthe business strategy Identifying the optimal architecture is a 4-step process that begins with astrategic business assessment and concludes with a recommended solution26Key Takeaways 28. Carol Phillipscarol@brandamplitude.com269-429-6526Judy Hopelainjudy@brandamplitude.com415-810-8268To Learn More, Contact Us:2012 Brand Amplitude, LLC All Rights ReservedMay not be reproduced without permissionCONTACT US27How Can We Help You Grow?