INTERNATIONAL BRAND ARCHITECTURE:
DEVELOPMENT, DRIVERS AND DESIGN
Susan P. Douglas
C. Samuel Craig
Stern School of Business
New York University
Edwin J. Nijssen
Nijmegen Business School
Susan P. Douglas
New York University
Stern School of Business, K-MEC 7-67
44 West 4th Street
New York, NY 10012-1126
Phone: (212) 998-0418
The authors wish to acknowledge support provided by the Unilever Foundation for this research.
Brands play a critical role in a firm's international expansion. A coherent international brand architecture is a key component of the firm's overall international marketing strategy as it provides a structure to leverage strong brands into other markets, assimilate acquired brands, and rationalize the firm's international branding strategy. This article looks at how firms have developed an international brand architecture and the drivers that shape that architecture. Implications for the firm's management and design of its international brand architecture are covered.
With the globalization of markets and the growth of competition on a global scale, companies are increasingly
expanding the geographic scope of their operations, setting up or acquiring companies in other countries, or entering
into alliances across national boundaries. At the same time, with the spread of global and regional media, the
development of international retailing, and the movement of people, goods, and organizations across national borders,
markets are becoming more integrated. As a result, firms need to pay greater attention to coordinating and integrating
their marketing strategy across markets.
An important element of a firm's international marketing strategy is its branding policy. Strong brands help to establish the firm's identity in the market place, and develop a solid customer franchise (Aaker 1996, Keller 1998, Kapferer 1997) as well as providing a weapon to counter growing retailer power (Barwise and Robertson 1992). They can also provide the basis for brand extensions, which further strengthen the firm's position and enhance value (Aaker and Keller 1990). In international markets, an important issue for the firm is whether to use the same brand name in different countries, leveraging brand strength across boundaries, or whether to maintain local brands responding to local customer preferences. A related issue is what level of branding to emphasize, i.e. corporate/house or product-level brands or some combination of both.
The central role of branding in defining the firm's identity and its position in international markets means that it is critical to develop an explicit international brand architecture. This implies identifying the different levels of branding within the firm, the number of brands at each level as well as their geographic and product market scope. The most critical element in this structure is the number of levels, i.e. corporate, house/product business and product and how these are used in conjunction with each other. Related to the development of this architecture, is the question of how to manage brands that span different geographic markets and product lines. Who should have custody of international brands, and be responsible for coordinating their positioning in different national or regional markets, as well as making decisions about use of a given brand name on other products or services?
The significance of the various issues depends to a substantial degree on how a firm has expanded internationally, and how its international operations are organized. Some firms, such as P&G and Coca-Cola, have expanded through leveraging their domestic "power" brands in international markets. Consequently, as they seek to expand further, they have to consider whether to develop brands geared to specific regional or national preferences. Others such as Nestlé and Unilever have traditionally adopted country-centered strategies, building or acquiring a mix of national and international brands. Such companies have to decide how far to move towards greater harmonization of brands and integration of their brand architecture across countries, and if so, how to do so. These issues are particularly critical in European markets where product market structures-traditionally centered around countries, are now becoming more interlinked (Caller 1996). This creates pressures for firms to integrate their brand strategies across markets within the EU.
The purpose of this paper is to examine these issues. First, current perspectives on international branding and brand architecture are examined. This is followed by a discussion of alternative international brand structures and the underlying drivers, i.e. firm characteristics, product market structure and market dynamics. The importance of designing a clear and effective brand architecture and managing brands in order to maintain a harmonious balance within this architecture are next discussed. The paper concludes by emphasizing the need for an annual audit of the firm's brand architecture and its fit with changes in the underlying drivers as well as an assessment of key strategic brands within this architecture.
Perspectives on International Branding
Most discussion and research on branding, whether domestic or international, focuses on the equity or value associated with a brand name and the factors which create or are the underlying source of value (Aaker 1996, Kapferer 1997, Keller 1998). Considerable attention has, for example, been devoted to examining how the value embodied in a brand and its equity can be extended to other products without resulting in dilution of value (Aaker and Keller 1990). This interest has been stimulated in part by the increasing market power and value associated with a strong brand and in part by the prohibitive costs of launching a successful new brand.
While this focus is appropriate for a relatively few high profile brands such as Nike or Coca-Cola, it ignores the issues faced by the vast majority of multinational firms who own a variety of local and international brands that differ in their strength, target market and their association. Such firms have to determine how to develop a cohesive and effective brand structure, which brands to emphasize and build, whether to use the same brands across product groups and across countries, and how different brands at different levels of the organization should be interrelated so as to maximize their market impact and efficiency.
Such issues are particularly salient in markets outside the US, where the concept of "power" branding is relatively unknown (Court et al 1997). Markets are often fragmented, characterized by small-scale distribution, and lack the potential or size to warrant the use of heavy mass-media advertising needed to develop strong brands (Barwise and Robertson 1992). As these markets become more interlinked and integrated, companies operating in international markets need to identify opportunities for strengthening brand architecture by improved co-ordination and harmonization of brands across countries.
Relatively little attention has been paid to the question of brand structure or brand architecture. Some authors have developed frameworks of branding structure or brand architecture, typically focused on identifying different levels related to the brand name and/or visual associations of the brand. Olins (1989) has, for example, identified three branding structures: monolithic, i.e. a corporation uses one name and identity worldwide, for example, Kellogg or Shell; endorsed, where the corporate name is used in association with a subsidiary or product brand, for example, Cadbury's Dairy Milk, and branded which emphasizes multiple product-level brands, for example, P&G with brands such as Tide, Camay, etc.
Laforet and Saunders (1994) examined the structure of brands among a sample of 20 grocery manufacturers in the U.K., and concluded that brand structures were inherently more complex than that proposed by Olins. They identified three principal categories similar to those identified by Olins, corporate brands, mixed brands, and brand dominant. Each of these categories included sub-categories. The corporate dominant group was divided into corporate brands, where the corporate name was used, and house brands where the subsidiary or product division names were used, as for example, the Walls, Good Humor and Ola ice-cream brands of Unilever. Mixed brands include endorsed brands (a product-level brand is endorsed by a corporate name), as for example, Nestlé's KitKat, and mixed brands, where two or more brands were given equal prominence, e.g. Colgate-Palmolive. The third category brand-dominant consisted of single product level brands and furtive brands, where the corporate identity is omitted e.g. Darkie toothpaste owned by Colgate Palmolive, or 'I Can't believe its Butter' of van den Bergh (Unilever). Not only was the structure considerably more complex than commonly assumed, but in addition, all the companies studied used more than one approach, often adopting different options for different product lines or businesses.
As the firm expands in international market, issues relating to brand architecture or brand structure become even more complex. In addition to considering the number of levels in the hierarchy, another dimension, namely the degree of brand coordination or standardization across countries, needs to be determined. Especially if the company expands through acquisition or strategic alliances, the question of whether and how brand architectures of different firms are merged, arises. Irrespective of the expansion process, companies have to determine an appropriate brand architecture that transcends national boundaries and how far branding is integrated or standardized across countries.
Development of International Branding Structures
A field study of consumer goods companies based in Europe was conducted to gain some insights into international brand structures, how these were evolving and the underlying drivers of brand structure. Of particular interest was whether or not the firm had an explicit international brand architecture and if so, how this was managed. The study was based on semi-structured interviews conducted with senior executives at the product division level in companies, as well as executives in advertising agencies, market research companies, and consulting companies who were responsible for international brands and branding strategies.
Consistent with the findings of Laforet and Saunders, the study revealed three major patterns of brand architecture: corporate-dominant, product-dominant and hybrid or mixed structures. There was, however, considerable variation even within a given type of structure depending to a large extent on the firm's administrative heritage and international expansion strategy as well as the degree of commonality among product lines or product businesses. In addition, these structures were continually evolving in response to the changing configuration of markets or as a result of the firm's expansion strategy in international markets.
Corporate-dominant architecture tended to be most common among firms with a relatively limited range of products or product divisions, or with a clearly defined target market, e.g. Shell, Kelloggs, Nike, Benneton, etc. Product dominant architecture, on the other hand, was typically found among firms such as Akzo Nobel with multiple national or local brands, or firms such as P&G or Mars that had expanded internationally by leveraging "power" brands. The most common were hybrid or mixed structures, consisting of a mix of global corporate, regional and national product-level brands, or corporate endorsement of product brands or different structures for different product divisions.
Both corporate and product dominant structures were evolving towards hybrid structures. Firms with corporate dominant structures were adding brands at other levels, for example, the house or product level, to differentiate between different product divisions. Product-dominant structures, on the other hand, especially where these emphasized multiple local (national) brands were moving toward greater integration or co-ordination across markets through corporate endorsement of local products. These companies also varied in the extent to which they had a clearly articulated international brand architecture to guide this evolution. Some, for example, laid out the different levels at which brands were to be used, the interrelation between brands at different levels, the geographic scope of each brand and the product lines on which a brand was to be used, while others had few or no guidelines concerning international branding.
Corporate dominant branding
A few of the companies studied had a very simple brand structure based on the corporate name, as for example, Shell, Philips, Apple, Nike, etc. In general, these were business-to-business organizations with a heavy emphasis on corporate branding, or a relatively narrow and coherent product line. Other cases included consumer goods companies focused on a global target segment such as Nike or Benneton. Their prime objective was to establish a strong global identity for the brand rather than respond to local market conditions. In some instances, the corporate logo and visual identification (Apple and Nike) played a major role in identifying the brand and defining brand image worldwide.
Other companies as, for example, P&G, or Best Foods used a product dominant strategy. This strategy was
common among U.S. firms who had expanded internationally by leveraging "power" brands, as, for example,
P&G with brands such as Camay, or Pampers. Firms with domestic product dominant structures, that had expanded
by acquiring national companies often acquired a substantial number of national and local product brands, in addition
to their own global and regional product brands. Best Foods, for example, has several international product brands
such as Hellmans, Knorr, etc., as well as national product brands such as Pfanni potatoes.
A few international companies, though this seemed to be rare, had structures consisting almost exclusively of national product brands. Often these were well-established traditional brand names known for their quality and reliability. For example, Akzo Nobel owns brands such as Diamond Salt in the US and Sikkens' paint brand in Europe. Products were tailored to local preferences and product innovation was relatively low. Since customer preferences were highly localized with few links across national boundaries, management saw few potential synergies from harmonizing brands across borders.
Hybrid branding strategies
A number of companies had hybrid brand structures with a combination of corporate and product brands. Coca-Cola,
for example uses the Coca-Cola name on its cola brand worldwide, with product variants such as Cherry Coke, Coke
Lite or Diet Coke or caffeine free Coke in some, but not all countries. In addition, Coca-Cola has a number of
local or regional soft drink brands, such as Lilt in various fruit flavors in the U.K., TabXtra, a sugar-free cola
drink in Scandinavia, and Cappy, a fruit drink in East Europe and Turkey.
In other cases, companies used the corporate name for some product businesses, but not on others. Mars, for example, used the Mars name on its ice-cream, soft drink and confectionery lines, but used the Pedigree house brand for pet food. This was intended to create separate and distinct images for the confectionery and pet food businesses. Similarly, Danone used the Dannon/Danone name on yogurt worldwide, on bottled water in the US and on cookies in Eastern Europe. Danone also owns the Lu and Jacob brands which are used on biscuits in Europe and the US, and three other bottled water brands, Evian, sold worldwide, Volvic and Badoit only sold in France, as well as Kronenbourg and Kanterbrau beers, and Vivagel and Marie frozen foods in Europe.
Other companies had different brand architecture for different product divisions. For example, Unilever has a global brand architecture in its personal products division. The yellow fats division consists mostly of local brands with some harmonization in positioning or brand name across countries, while the ice-cream division had a combination of local and global product brands such as Magnum, Cornetto and Solero. These are endorsed by a country or regional house brands such as Walls and Algida, and all shared a common logo worldwide.
Drivers of International Branding Strategy
The study also provided some insights into the drivers underlying brand architecture. This suggested that brand
architecture is essentially fashioned by three major factors: firm-based characteristics, product market characteristics
and underlying market dynamics (see Figure 1). While the firm's history shapes its brand architecture, market dynamics
and the growth of economic and political integration as well as rising media costs create pressures to harmonize
branding across country markets to achieve economies of scale and scope. As a result, brand architecture, like
any living organism, is continually changing, both shaped by and evolving in response to these drivers.
The brand architecture of an organization at any given point in time is in large measure a legacy of past management decisions as well as the competitive realities it faces in the marketplace. The firm's history creates 'brand baggage'. This includes strong brands with rich traditions (like Louis Vuitton) as well as the burden of weak brands with strong traditions (Samsonite). Management inertia and vested interests within the firm often create barriers to the pruning of weak brands or their absorption into strong brand categories. Brand architecture also reflects product market characteristics. Where products are strongly culturally embedded, local or national brands are likely to proliferate, catering to specific local preferences. On the other hand, where customer preferences and desired product attributes are relatively homogeneous worldwide, and products share common functions, there are greater opportunities for global or international brands at the corporate or product divisional level.
Brand architecture inevitably reflects the imprimatur of previous generations of management directives. In the
first place, the firm's administrative heritage and in particular, its organizational structure, establish the
template for its brand architecture. Secondly, the firm's international expansion strategy and notably the mode
of expansion, i.e. via acquisition or organic growth affect how brand structure evolves over time. Entry into strategic
alliances in order to broaden the geographic scope of the firm's operations will result in a need to meld the branding
strategies of the partners. The importance of corporate identity and the diversity of the firm's product lines
and product divisions will also impact the range and number of brands.
Administrative heritage: The firm's administrative heritage is central to understanding its branding strategy (Bartlett and Ghoshal 1989). A firm that has historically operated on a highly decentralized basis where country managers have substantial autonomy and control over strategy as well as day-to-day operations is likely to have a substantial number of local brands. In some cases, the same product may be sold under different brand names in different countries, e.g. Unilever's yellow fat brands, Promise and Flora. In other cases, a product may be sold under the same brand name but have a different positioning or formulation in certain countries e.g. Haagen-Daz.
Firms with a centralized organizational structure and global product divisions, such as Sony or Siemens, are more likely to have global brands. Both Siemens and Sony adopt a corporate branding strategy emphasizing the quality and reliability of their products. Product lines are typically standardized worldwide, with minor variations in styling and features for local country markets.
Expansion strategy: Closely related to the firm's administrative heritage is its international expansion strategy. Here of particular importance in determining the number and composition of the brands owned by the firm is its mode of expansion, i.e., whether it has expanded through organic or greenfield growth or through acquisitions and strategic alliances.
Firms that expand internationally by acquiring local companies, even where the primary goal is to gain access to distribution channels, will typically also acquire local brands. Where these brands have high local recognition or a strong customer or distributor franchise, the company will normally retain the brand. This is particularly likely if the brand does not occupy a similar positioning to that of another brand currently owned by the firm. Best Foods typically expands internationally through acquisitions and has, for example, acquired Pfanni, a German company selling mashed potatoes and dumplings, Telna, a soup company in Israel and a sauce company in Chile. These companies are then used as a platform to distribute Best's other brands.
Sometimes, a company expands by acquiring companies in the same or related product businesses. For example, when Kimberley Clark acquired Scott Paper, it also acquired a number of paper product companies in Europe, some of whom had strong local brands. Kimberley Clark decided to adopt a transition strategy, gradually changing local brands to the Kleenex brand. For example, Kimberley Clark acquired Page, the leading Dutch brand of tissues, toilet paper and paper towels, and placed the Kleenex brand on all Page products. The Kleenex name and little dog logo was also used in all promotional campaigns. Over time it is expected that the local brand will become smaller and possibly eventually be phased out.
Other companies have expanded and diversified at the same time through a strategy of acquisition. Nestlé, for example, has expanded by acquiring companies in a range of different product markets, mostly food and beverage. These range from well known global brands in mineral water such as Perrier and San Pellegrino, confectionery companies such as Rowntree and Perugina, to pet food companies and brands such as Spillers and Alpo and grocery companies such as Buitoni, Crosse and Blackwell and Herta. The proliferation of brands obtained through this acquisition from 1960-1990 generated a need to consolidate and integrate company branding structures. Consequently, the Nestlé branding tree was established (Figure 2). This consists of ten worldwide corporate brands, such as Nestlé, Carnation and Buitoni; 45 worldwide strategic product brands such as KitKat, Polo and After Eight (these are always endorsed by a corporate level brand); 25 regional corporate brands; 100 regional product brands, such as Contadina and Stouffer; 700 local strategic brands, and approximately 7,000 local brands (Parsons 1996).
Firms that have expanded predominantly by extending strong domestic brands into international markets tend to have a product-level brand strategy. For example, Procter & Gamble has rolled out a number of its personal products brands such as Camay, and Pampers, into international markets. This strategy appears most effective, where customer interests and desired product attributes are similar worldwide and where brand image is an important cue for the consumer.
Importance of corporate identity: The relative importance placed by the firm on its corporate identity, also influences brand structure. Companies such as IBM and Apple, place considerable emphasis on corporate identity (Schmitt and Simenson 1997). In the case of IBM, "Big Blue" is associated with a solid corporate reputation and reflects the company's desire to project an image of a large reliable computer company, providing products and services worldwide. The IBM logo is featured on products and advertising worldwide in order to convey this image. Equally, Apple used its colored apple logo to project the image of a vibrant challenger in the personal computer market.
Japanese companies also frequently emphasize corporate identity as a means of reassuring customers and distributors that the company is reliable and stands behind its products. As a result, even companies with highly diverse product lines such as Kao with detergents, personal care products and computer floppy disks and records, rely on the corporate brand name (and its logo) to project an image of reliability.
Product diversity: A fourth issue concerns the diversity or conversely, the interrelatedness of the product businesses in which the firm is involved. Firms that are involved in closely related product lines or businesses that share a common technology or rely on similar core competencies, often emphasize corporate brands. GE, for example, is involved in a range of product businesses worldwide from aerospace and electric generators to medical equipment. All rely heavily on engineering skills. Use of the GE name provides reassurance and reinforces the firm's reputation for engineering competency and reliable products worldwide.
Conversely, when firms are involved in a range of diverse product businesses that target different customer segments, and have different associations, they sometimes opt to develop separate identities and associations for individual product businesses or products. For example, Unilever has no corporate brand and emphasizes either product or house brands, thus establishing separate identities for its businesses such as food, personal care, and detergents. It was considered particularly desirable to avoid association between the (now sold) chemicals business and foods products. Similarly, Procter and Gamble has emphasized product brands in its detergents business in order to target distinct market segments, and avoid creating an impression of market dominance.
Product market structure
The nature of the product market(s) in which the firm is involved also influences its brand architecture. Here,
three factors play an important role in brand architecture: the nature and scope of the target market, the degree
of market integration, and the cultural embeddedness of the product.
Target market: Global branding is frequently an effective means of reaching target markets with relatively homogeneous needs and interests and similar sociodemographic profiles and media habits worldwide (Hassan and Katsanis 1996). Luxury brands such as Godiva, Moet and Chandon, Louis Vuitton and Aveda as well as brands such as Bodyshop or Benneton are all targeted to the same market segment worldwide, and benefit from the cachet provided by their appeal to a global consumer group.
Market integration: Another factor impacting the firm's brand architecture is the degree of product market integration. This can be viewed not only in terms of whether the same customers are present in different country markets or regions and have similar purchase needs and interests worldwide, but also whether the same competitors are present in these markets (Douglas and Craig 1996). Where markets are fully integrated and the same competitors compete in these markets worldwide, as in aerospace, use of global brands help to provide competitive differentiation on a global basis. Where the same competitors compete in all or most markets, but local competitors are also present, use of a multi-tier branding structure, including global corporate or product brands as well as local brands is desirable. Coca-Cola, for example, not only has its global brand of colas, but also numerous local and regional brands catering to specific market tastes.
Cultural embeddedness: A final, and in many cases, critical factor influencing brand architecture is the degree of cultural embeddedness of a product. As noted earlier, markets where demand is relatively homogeneous worldwide are likely to be prime candidates for global branding at either the corporate or product level. Products which are deeply culturally embedded, as for example, food or in some cases, household products are on the other hand, more likely to thrive as local brands. In some cases, they may be products which cater to specific local tastes, such as food products. Particularly, where these are traditional products and market tastes have evolved little over time, a well-established local brand name may have substantial value. In some instances, where the product is associated with local cultural habits and tastes, use of a local sounding brand name may be preferable.
While the firm's history and the product markets in which it operates, shape the firm's brand structure, market
drivers create and continually change the context in which this brand architecture evolves. In the first place,
removal of political and economic barriers between markets together with regulatory change create opportunities
to harmonize branding across countries resulting in fewer brands. The integration of markets and in particular,
the growth of regional and global media also encourage a move towards international brands in order to obtain cost
efficiencies and reinforce brand strength. Advances in global communication technology and the internationalization
of retailing further facilitate the growth of international branding and stimulate a shift towards international
brands (de Mooij 1997). Increased consumer mobility enhances the value of establishing a global identity and potential
synergies from establishing a global presence.
Political and economic integration: Increasing political and economic integration in many parts of the world has been a key factor stimulating the growth of international branding. As governments remove tariff and non-tariff barriers to business transactions and trade with other countries, and people and information move easily across borders, the climate has become more favorable to the marketing of international brands. Firms no longer need to modify products to meet local requirements, and develop specific variants for local markets, but can market standardized products with the same brand name in multiple country markets. In many instances, harmonization of product regulation across borders has further facilitated this trend.
Infrastructure: The growth of a global market infrastructure has acted as a major catalyst to the spread of international brands. Global and regional media provide an economical and effective vehicle for advertising international brands, particularly where these brands are targeted to focused global and regional market segments, as for example, upscale and more affluent consumers, teenagers, etc. (Hassan and Katsanis 1996). At the same time, global media play an active role in laying the groundwork for consumer acceptance of and interest in international brands by developing awareness of these brands and the life-styles with which they are associated in other countries. In many instances, this stimulates a desire for the brands consumers perceive as symbolic of a coveted life-style.
The internationalization of retailing has further facilitated and stimulated the development of international manufacturer brands. As retailers move across international borders they provide an effective channel for international brands, but at the same time, their power increases. Consequently, manufacturers need to develop strong brands with high market share in multiple countries in order to obtain adequate retail space for these brands and minimize slotting allowances (Barwise and Robertson 1992). Strong international brands can also be extended to provide manufacturers with an effective negotiating tool and to ensure the placement of new products.
Consumer mobility: A final factor underlying the power of international brands is increased consumer mobility. While global media provide passive exposure to brands, increasing international travel and movement of customers across national boundaries provides active exposure to brands in different countries (Alden, Steenkamp and Batra 1999). Awareness of the availability and high visibility of an international brand in multiple countries enhances its value to consumers, and provides reassurance of its strength and reliability. Increased exposure to and familiarity with new and diverse products, and the life-styles and cultures in which they are embedded also generates greater receptivity to products of foreign origin or those perceived as "international" rather than domestic (Featherstone 1990). All these factors help to create a climate more favorable to international brands.
In brief, while, on the one hand, firm-based drivers, often responding to product market structure, influence the formation of international brand architecture, market drivers provide a continually changing environmental context to which this architecture must be adapted in order to be effective. At the same time, the image and strength of the firm's brands in the marketplace changes, as the firm enters new countries or markets, acquired brands are integrated into the architecture, new brand extensions or product lines are added, or a positioning is modified or radically changed. As a result, brand architecture is continually evolving both in terms of structure and scope.
Dynamics of International Brand Architecture
Corporate endorsement and brand extension
As a result of rising media and promotional costs as well as the trend towards globalization, brand architecture
is increasingly subject to pressures at both the corporate and product level. Increasingly complex brand structures
are beginning to emerge, characterized on the one hand, by corporate endorsement of product brands, and on the
other, by extension of strong brands across countries and product businesses.
Corporate endorsement: At the one end of the spectrum, international expansion and consumer needs for reassurance about product quality and reliability is resulting in a shift toward corporate endorsement of product brands. This helps to forge a global corporate identity for the firm and gathers its products under a global umbrella, thus generating potential cost savings through promotion of the global corporate brand, rather than multiple independent product brands. At the same time, endorsement by the corporate brand provides reassurance for the customer of a reliable corporate image and enhances visibility.
Corporate endorsement of product level brands is increasingly used as a mechanism to integrate brand structure across country markets, providing a unifying element across product offerings. For example, Cadbury uses the Cadbury name on all its confectionery products, in conjunction with product brands such as Dairy Milk, Whispers, etc. Equally, a house brand is sometimes used on a product business worldwide. For example, Akzo Nobel places the Sikkens name on all its paint products. The relative size of the corporate or house name and the brand name varies from one company to another. In some cases, e.g. Cadbury or Nestlé, the corporate brand has equal prominence to the product name. In other cases, it is smaller and used primarily as an endorsement rather than an identifier.
In some cases, the prominence and role of the corporate brand or logo varies from country to country. For example, Douwe Egbert uses the Friesen lady logo on its coffee in all countries, but the size of the lady and also the positioning statement vary from country to country. In Spain, for example, the positioning emphasizes the richness of the coffee and the master brewer, while in the UK, its continental taste, and in Holland, the association with family and comfort are featured.
Brand extension: At the other end of the spectrum, rising media costs, coupled with the importance of building high visibility and the need to obtain cost economies, create pressures to extend strong brands across product lines and country borders. Increasingly, new products and variants are launched under existing brand names to take advantage of their strength and consumer awareness. Mars, for example, has launched an ice-cream line as well as a soft drink under the Mars brand name. Cadbury's Milk Tray brand has been extended to desserts, leveraging the brand's association with creaminess. Strong international brands often have high visibility and are prime candidates for brand extensions, especially for entry into new and emerging markets such as Eastern Europe or China. In some cases, a well-known brand name is used on a product line which is marketed under another brand name elsewhere. For example, Danone uses the Danone name to market biscuits in Eastern Europe, in order to leverage customer familiarity with the name. Similarly, Nestlé's Maggi brand, used on sauces and seasonings, had high recognition in Eastern Europe and so was extended to frozen foods rather than the Findus brand used elsewhere in Europe.
Assigning custody for key international brands
The growing prevalence of corporate endorsement and brand extensions, coupled with a focus on building a limited
number of strong brands in international markets, has led firms to develop procedures to manage and monitor key
strategic brands. A key objective is to maintain their identity and value in international markets. Two important
aspects need to be considered; first, the consistency of brand positioning in different countries and across product
lines, and secondly, the value and/or risks of brand extensions in international markets. Widely different approaches
have been adopted for managing strategic brands in international markets and assigning custody for them. Typically
these vary depending on the organizational structure of the firm and the desired degree of control, and range from
having no explicit custody strategy to highly centralized tight control by corporate headquarters.
Limited or negotiated custody: Firms with strong country management, operating in product markets where brands are not important purchase cues may have no explicit custody strategy. Attention is centered around trademark issues and their infringement in different markets. In cases where product markets are becoming more integrated and there is concern to improve brand harmonization across countries, specific brand positionings may be negotiated between corporate headquarters and country managers. This approach may, however, be somewhat cumbersome where there are multiple brands to manage.
Brand champion: An approach that appears to be becoming increasingly popular is to appoint a brand champion. The brand champion is typically given responsibility for building and managing the brand worldwide. This includes monitoring the consistency of the brand positioning in international markets, as well as authorizing use of the brand on other products or other product businesses. The brand champion can either be a senior manager at corporate headquarters or a country manager or product development group. For example, a lead country or one with major market share for the brand can be given responsibility for the brand.
In examining consistency in brand positioning across countries, often there is recognition that some adjustment to local market conditions will be needed, especially for mature brands. Typically, however, it is considered desirable that the core positioning should be maintained, though execution may vary. The extent to which some deviation is permitted typically varies considerably from company to company, and from one product business to another. For example, Nike strictly controls positioning centrally while Douwe-Egbert permits substantial adaptation.
The brand custodian is also often responsible for authorizing or providing an opinion on brand extensions. An important issue with brand extensions is to avoid over-extension or stretching of the brand and dilution of its equity and image. Criteria for sanctioning brand extensions vary considerably depending largely on the firm's organizational structure, the diversity of its product lines and businesses and management philosophy. Often, however, a proposed extension has to be consistent with the core brand's positioning and reinforce or sustain the existing brand concept. For example, extension of a confectionery brand to ice-cream or dessert should emphasize the same core attributes. In many cases, proposed extensions of strategic brands are also required to have international market potential. Procedures for resolving conflicts in relation to brand extensions also vary considerably depending on custody management principles and the firm's organizational structure.
Centralized custody and brand manual: Some companies centralize control of brands within the product division. This typically occurs with relatively new products or brands, where there is greater consistency in market characteristics across countries, and limited history of strong country management. In this case, brand manuals are often used as mechanisms for ensuring consistency of brand positioning and identification across countries. The brand manual is typically developed at corporate headquarters and details the specific positioning and visual appearance of an international brand packaging, logo, etc. Country managers are normally required to stick closely to these guidelines. Brand manuals are, for example, used by Unilever's ice-cream division, by Beiersdorf for their Nivea brand and Sara Lee's tobacco division.
International markets continue to change rapidly (Craig and Douglas 1996).As markets evolve, firms need to consider how to modify their brand architecture and look for opportunities to reduce the number of brands and improve efficiency as well as to harmonize brand strategy across product lines and country markets. Focus on a limited number of strategic brands in international markets enables the firm to consolidate and strengthen its position and enhance brand power. Effective management of international brand architecture in the light of changing market conditions and the firm's market expansion, is, however, crucial to maintaining its position and strengthening key strategic brands in international markets.
Designing international brand architecture
First, management needs to design an efficient harmonious brand architecture that spans operations in different
countries and product lines. This establishes the framework for decisions relating to the firm's brands in international
markets. It should clearly define the importance and role of each level of branding, as, for example, at the corporate,
product division or product brand level, as well as the interrelation or overlap of branding at each level (Table).
It should also determine the appropriate geographic scope for each level relative to the firm's current organizational
The design of this architecture should satisfy a number of key principles:
1. Parsimony: The brand architecture should incorporate all of the firm's existing brands, whether developed internally or acquired. It should provide a framework for consolidation in order to reduce the number of brands and strengthen the role of individual brands. Brands that are acquired need to be melded into the existing structure, especially where these brands occupy similar market positions to those of existing brands. Equally, when the same or similar products are sold under different brand names or have different positionings in each country, ways to harmonize these should be examined.
2. Consistency: Another important element of brand architecture is its consistency relative to the number and diversity of products and product lines within the company. A balance needs to be struck between the extent to which brand names serve to differentiate product lines, or alternatively, establish a common identity across different products. Establishment of strong and distinctive brand images for different product lines helps to establish their separate identities and diversify risk of negative associations (for example between food and chemicals). Conversely, use of a common brand name consolidates effort and can produce synergies.
3. Endorsement: The value of corporate brand endorsement across different products and product lines, and at lower levels of the brand hierarchy also needs to be assessed. Use of corporate brand endorsement either as a name identifier or logo identifies the product with the company, and provides reassurance for the customer. In international markets, corporate brand endorsement acts an integrative force unifying different brand identities across national boundaries. At the same time, corporate endorsement of a highly diverse range of product lines can result in dilution of image. Equally, negative effects or associations can harm and have long-lasting effects across multiple product lines. Thus, both aspects need to be weighed in determining the role of corporate brand endorsement in brand architecture.
Managing international brand architecture
Where brand architecture includes multiple brands at different levels of the hierarchy (as opposed to a single
corporate brand), management should identify the key strategic international brands, that will provide the lynchpin
of the firm's global strategy. These provide the focus for building the firm's position in international markets,
and the basis for international growth and expansion. The pivotal role of these brands in global markets implies
that it is critical for management to set up procedures to manage them to ensure that they retain their integrity,
visibility and value. This entails assigning custody for the brand and establishing procedures for sanctioning
brand extensions and monitoring brand positioning.
Assigning custody: Custody for a brand should be assigned to a senior manager within the organization, or to a key organizational unit. It is critical that the brand custodian report directly to top management and have clear authority to sanction/and or refuse brand extensions to other product lines and product businesses, so as to maintain the integrity of the brand and avoid brand dilution. This should have top priority in establishing brand management responsibilities.
Monitoring consistency of brand usage: Procedures or tools to monitor consistency of brand use and positioning in different countries/geographic area or by different product businesses also need to be established. Here the degree of centralization and standardization in brand positioning and use of brand identifiers such as logos, packaging, etc., will depend on the firm's strategy in international markets as well its administrative heritage and organizational structure. In general, however, the newer the business, and the more it is targeted to a specific global market segment, the more feasible it is likely to be to exercise a high degree of centralized control.
Auditing brand architecture
Brand architecture is not a static framework, but one that needs to be monitored and modified continually. The
mechanisms established for brand custody help insure that an individual brand is managed in a consistent fashion
across multiple countries. However, given the dynamic nature of international markets and the changing competitive
realties, the structure must be reviewed, at least annually. An international brand architecture audit should be
performed to insure compliance with established procedures and to determine whether the structure of the architecture
should be changed. This needs to take place on two levels. First, the degree to which individual strategic brands
have adhered to established guidelines needs to be assessed. Second, the entire portfolio of brands has to be examined
in terms of whether the overall brand architecture requires modification.
Compliance audit: A bottoms-up audit of the individual brands allows an assessment of how well each functions as part of the overall brand architecture of the firm. The key steps of this phase are: 1) collection of information that establishes how the brand has been used in each country that it is marketed in, 2) assessment of deviations from its established position in the structure and reasons, and 3) evaluation of the brand's performance. Deviations are particularly diagnostic. They may suggest poor management of the brand globally or, more importantly, fundamental changes in the underlying market dynamics. If the underlying market dynamics or product market structure has changed, then the brand's position in the overall architecture needs to be modified accordingly. With these preliminaries conducted, the audit should culminate in a face-to-face meeting of key participants, including the brand custodian, to establish guidelines for the coming year.
Strategic audit: The second phase is a strategic, top down audit, conducted on multiple levels. First, logical groupings of strategic brands need to be assessed in terms of their compliance with established guidelines. Once this has been accomplished, senior management needs to evaluate the overall structure of international brand architecture to determine the fit at different levels across multiple countries. Again, a key factor here is how the underlying drivers of brand architecture have changed. In addition to market dynamics and the product market structure, an important consideration is how the firm itself has evolved, particularly with respect to acquisitions or market expansion initiatives. If the end-result of the strategic audit is that the firm's brand architecture no longer fits underlying drivers, steps should be taken to revise the firm's architecture so that it reflects the new realities of the marketplace.
The central role of branding in establishing the firm's identity and building its position in the global marketplace
among customers, retailers and other market participants, makes it increasingly imperative for firms to establish
a clear-cut international branding strategy. A key element of success is the framing of a harmonious and consistent
brand architecture across countries and product lines, defining the number of levels and brands at each level.
Of particular importance is the relative emphasis placed on corporate brands as opposed to product level brands
and the degree of integration across markets.
Escalating media costs, increasing communication and linkages across markets, together with the internationalization of retailing, create pressures for parsimony in the number of the firm's brands and consolidation of architecture across country markets. Focus on a limited number of international strategic brands generates cost economies and potential synergies for the firm's efforts in international markets. At the same time, procedures for managing the custody of these brands have to be established. These should be clearly understood and shared throughout all level of the organization, leading to a culture/mentality that promotes the growth of strong international brands without diluting their strength by over-use or inconsistencies.
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