Do you want to introduce a new product? Are you planning to reach another customer segment? Do you want to streamline your product and service lineup? In all cases, your tool will be sub-branding, that is, the creation of company divisions. Keep reading to find out what benefits it can give to small businesses and how to properly organize the brand structure.
What do Diet Coke and Coke Zero, Gmail and Google Translate, Dove, and Lipton have in common? All of these are sub-brands, that is, divisions of well-known brands. They are needed to:
- conquer a new market segment and target audience;
- structure value propositions and product lines;
- effectively distribute marketing efforts, satisfying the needs of a specific segment of potential customers.
The relationship between sub-brands, their hierarchy, and tasks are determined by the architecture of the brand. There are three types of sub-branding:
1. Brand house
In the center of the structure is a strong brand, from which several closely related divisions branch off.
- FedEx (FedEx Express, FedEx Ground, FedEx Freight)
- Google (Google Maps, Google Translate, Google Document)
- Virgin (Virgin Atlantic, Virgin Care, Virgin Hotels)
- similar corporate identity and positioning: names, logos, packaging, communication with customers
- strong mutual influence: if the client has positive associations with the main business, then it will be easier to win his loyalty to the new brand
- the opposite effect of being too tightly coupled: a reputation issue in one business unit can affect other brands
2. House of brands
Subsidiaries are minimally related to each other and to the parent brand. Often consumers do not even know that trademarks belong to the same concern. This type of architecture is also called fragmentation.
- Procter & Gamble (Ariel, Tampax, Braun, Old Spice);
- General Motors (Cadillac, Chevrolet, Buick);
- Unilever (Ax, Domestos, Dove, Lipton).
3. Hybrid brand model
An intermediate option between the previous two: the relationship between brands is obvious to consumers, but not too close.
- Sony and Sony PlayStation
- Nescafe and Nestle
- brands have different identities and promotion strategies
- the subsidiary enjoys the reputation of the parent
- each sub-brand benefits from the strength of its sister divisions
Does your company need sub-branding?
A common misconception is that only large enterprises need architecture. In fact, sub-branding can be equally beneficial for large and small businesses. Focus not on size, but on the target audience and product line. Check if at least one of these criteria suits you:
- You are expanding your product line. For example, you can add mountaineering gear and accessories or swimwear to your regular sportswear.
- You want to fill a new niche. For example, in the past, you only made traditional high-calorie snacks, and then decided to add a line of healthy foods to attract new customers.
- You need to organize your line of products or services. Let’s say your lineup mixes products for different customer segments. You want to build a hierarchy and help customers quickly figure out exactly what they need.
In each of these cases, you need sub-branding. But, before taking on architecture, think over the following nuances:
- Budget. Subbranding means additional costs for marketing, branding, site updates, and more. Calculate your financial indicators or you can use accounting services.
- Reputation. The attitude of clients towards the core business often extends to its divisions. Make sure your reputation is impeccable before launching sub-brands.
- Identity. Weak sub-brands can be lost against the backdrop of the parent company. To prevent this from happening, think over positioning and corporate style in advance.
Examples of famous brand architecture
In order to correctly build a business structure, it’s best to study examples of well-known enterprises from your niche. Here are some examples.
Each department is responsible for a specific area of service:
- Express (express delivery by air in different countries)
- Services (solutions for global supply chains)
- Ground (ground transportation service)
- Freight (delivery of goods)
- Office (printing of branded products with delivery)
The network operates on the principle of a brand house: all companies are closely associated with the parent brand and work together to build a reputation and gain customer loyalty.
Several divisions emerged from the parent brand Nike, covering different categories of the target audience. For instance:
- Nike Air Jordan (shoes for people interested in basketball)
- Cole Haan (luxury shoes, coats, bags)
- Converse (sports and casual shoes for youth)
- Hurley (footwear, clothing, and accessories for active sports and youth lifestyle)
While Nike’s sporting focus remains unchanged, all of its subsidiaries are targeting a narrow segment of consumers. Each of them works to increase the reach of clients around the world.
The concern includes more than 500 brands of various drinks – from soda water to tea and coffee, for example:
- Sprite (sweet soda)
- Dasani (mineral water)
- Minute Maid (juices)
- Georgia Coffee (a coffee brand in the Japanese market)
- Costa Coffee (coffee chain represented in different countries)
- Doğadan (Turkish tea brand)
Although all companies exist independently of each other, within each of the brands there are closely related divisions. So, in the Coca-Cola line, in addition to the classic drink, there is Coke Zero, Diet Coke / Coca-Cola Light, and Coca-Cola Life. They are color-coded and marketed as “healthy” soda. But everyone retains the corporate font and the recognizable shape of the bottle.
The corporation produces cars under different brands:
- Toyota Auto (the most massive and well-known brand with a wide range of products: minivans, cars, SUVs, special purpose vehicles, electric vehicles)
- Lexus (premium segment)
- Daihatsu Motor (affordable cars for daily use)
- Hino Motors (trucks, buses, cars, engines, and spare parts)
A wide range of sub-brands allows the corporation to reach a wide audience around the world. Because Toyota divisions operate on the basis of fragmentation, their positioning, promotion, and reputation are not related in any way.
The corporation includes more than 20 brands in various fields, from electronics to medicine:
- Electronics (smartphones and home appliances)
- Heavy Industries (shipbuilding and offshore development)
- Engineering (project management in world markets)
- Life Insurance (the largest insurance company in South Korea)
- Securities (Korean investment company)
- Shilla Hotels and Resorts (hotel chain)
- Medical Center (clinic and research center)
- Biologics (drug manufacturing)
While the divisions cover different industries and target audiences, they are all closely related to the parent brand. Therefore, the reputation of each of them is reflected in the rest.