An organization’s brand architecture matters. It organizes the relationship between main and sub-brands and determines the perception and reputation of each product and service provided. Let’s take Audi, Bugatti, Porsche and Lamborghini. There is no doubt these brands stand for high quality and luxury, but how would you feel if the Volkswagen Group, the owner of these brands, would offer these cars under their Volkswagen or SEAT brand? The cars wouldn’t change a bit, but the initial perception hearing Volkswagen 911 Turbo S instead of Porsche 911 Turbo S would loose its glamour.
Vice versa, loyal Volkswagen customers, fans of a brand dedicated to be accessible to all people (Volk = nation; Wagen = vehicle; Volkswagen = vehicle for the people/nation), would be confused seeing $25,000 cars standing next to $260,000 cars in Volkswagen showrooms across the US. Volkswagen has actually attempted to establish a luxury sedan under the Volkswagen brand in 2002 introducing the Volkswagen Phaeton, a $70,000-$85,000 vehicle that kept the distinct Volkswagen resemblance. Sales fell beyond short of expectations and production stopped in early 2016.
Surprisingly, even an international corporation like the Volkswagen Group violated these basic brand architecture rule of thumbs:
A successful brand architecture…
- Is adaptable and flexible
- Is simple and consists of no more than two/three levels of hierarchy
- Has a strong dominant brand
- Creates distinctive sub-brands whose audiences do not overlap (see Volkswagen)
- Is based on sophisticated knowledge of the market and market segments
There is not a one-model-fits all approach when it comes to brand architecture. Every entity needs a distinct strategy taking into account the product/service provided, their target audiences, but also legal restrictions, especially when it comes to financial services.