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In this edition:

• Column: The Strategic Backbone Behind Brand Hierarchy Trees

• Inspiration: Paddy Power’s “Europe’s Favourites”

• Timeless Wisdom: Thomas Aquinas on Taking Risks

Column: The Strategic Backbone Behind Brand Hierarchy Trees

A few weeks ago I wrote a column titled An Introduction To Brand Architecture where I discussed some of the most common portfolio strategy pitfalls I have encountered in working with brands — big and small.

Today, I will dive a little deeper into the “language” we should be using when we talk about brand portfolio strategy and how understanding what underpins a brand hierarchy tree is actually more important than the tree itself.

But first, let’s unpack hierarchy trees.

Brand Hierarchy Trees

If you Google “brand architecture” today all you’ll encounter are loads of over-simplistic articles on the types of brand hierarchy trees that are out there, as a proxy for the work of developing a brand architecture itself.

For starters, brand hierarchy trees are the output of a well-thought out brand portfolio strategy. They are a visual representation of how the brands in a portfolio relate to each other and might interact, but they are not the strategy in itself.

Take for example a commercial. What you see is the output, not the strategic thinking behind it. As a matter of fact, excellent marketing communications bring to life key decisions made throughout the account planning process without explicitly saying it.

The craftmanship of the ad business involves taking dozens of hours of research, customer interviews, insight development, brand codes integration, alignment on strategic category entry points, budget management, pre-testing, media planning, etc. and simplifying it down to just 15-30 seconds of communications that delivers on a desired key message.

It’s an expensive yet highly effective process when done right.

When it comes to brand portfolio strategy, the same concept applies. There are dozens, if not hundreds, of critical decisions that need to be made before a visual representation of a brand architecture can be drawn up.

And, while most marketers have only heard of the hierarchy tree model, there are actually several other models that bring this strategic work to life — such as “brand groupings”, where you configure brands into logical groups that have a meaningful characteristic in common (i.e.: technologies, segments, quality, etc.); and “brand network models”, a close relative of the “brand universe model”, where you create a visual representation of how the various brands in your portfolio influence each master brand and the associated purchase decision.

For what it’s worth, hierarchy trees are great — simple, easy to understand, and well-known by most brand managers. They involve organizing your portfolio into something that resembles an organizational chart with both horizontal and vertical dimensions, where sub-brands and endorsed brands branch out into individual product-market entries.

Now that we understand the various outputs of brand architecture work, let’s dive into the elements that go into it.

Brand Portfolio Cornerstones

When we look at a brand hierarchy tree, with a trained eye we can immediately identify which strategic decisions were made by that company just by tracing back the relationships between the various pieces of the tree.

The brand right at the top is typically a corporate brand. These brands represent the organization as a whole, and aim to reflect its heritage, values, culture, people, and strategy. An easy example of this would be Procter & Gamble. You can’t buy any product called P&G, but this corporate brand owns several product-brands that sit underneath it.

After that you typically run into a master brand. This would be the parent brand that is the primary indicator of an offering — effectively, the point of reference. Think Toyota being the master brand that defines a line of cars.

Sometimes, a master brand will have a sub-brand underneath it as a way to modify the associations of the parent brand which, though they remain the primary frame of reference, now can be stretched into a meaningful segment by adding associations (Sony Walkman), personality (Calloway Big Bertha), a product category (Ocean Spray Craisins), and even energy (Nike Force).

A common alternative to a sub-brand are endorsed brands. These brands sit underneath a master brand and can be fully endorsed, token endorsed, or shadow endorsed in order to gain credibility and substance. Oftentimes, endorsed brands are endorsed by corporate brands instead of product brands, because the former bring associations with innovation, leadership and trust that are particularly relevant in endorser contexts (i.e.: Disney’s The Lion King). But, master brands can, and oftentimes do, endorse other brands if they carry those types of associations with them (think Toyota shadow endorsing its luxury line of cars Lexus, guaranteeing a certain level of reliability and consistency along with it).

Lesser common types of brands you might find in portfolios that can also play major roles in advancing a business’ strategy are:

• Branded differentiators: these are brands that define a feature, ingredient, service, or program, effectively creating a point of differentiation for a master brand that needs to appear superior (i.e.: Lipton Tea with a Flo-Thru bag as a branded differentiator).

• Alliance brands: these are co-branded offerings that yield an immediate, credible response based on the resources and brand strengths of the two firms (i.e.: Ford Explorer Eddie Bauer Edition).

• Branded energizers: not to be mistaken with differentiators, these can be products, promotions, sponsorships, programs, distinctive brand assets, and any other entity that by association significantly enhances and energizes a target brand (i.e.: M&M’s characters).

Typically speaking, any organization’s portfolio will include at least one or more of the above.

Portfolio Roles

Now that we understand the types of brands a portfolio might have and how they are strategically different from one another, next we need to layer on their particular roles in advancing a business’ objectives.

Strategic brands are those with special importance to the organization. In other words, these brands MUST succeed and therefore should receive whatever resources are needed to do so. Strategic brands fall into one of 3 buckets:

1. Power brands: they generate significant sales and profit but don’t quite achieve cash cow status;

2. Future power brands: they are projected to become power brands in the future, although they’re small now, and;

3. Linchpin brands: these will directly influence (as opposed to generate) significant sales and market position in the future, effectively playing a key role in positioning the business to realize its future vision.

Next you have 3 key roles that that are more common in larger organizations:

• Silver bullets: typically differentiators or energizer brands that are strategically important for the organization and therefore warrant over-indexed levels of investment to get there (i.e.: Frito Lay’s Flamin’ Hot branded differentiator, which is capitalizing on a growing consumer appetite for spicy foods in the US).

• Flanker brands: used to fight competitors trying to undercut another brand in your portfolio, typically through lower prices. Flanker brands are great to insulate strategic brands from value erosion by shifting the point of reference away from them (i.e.: Havoc, as a flanker brand for Doritos to combat Takis).

• Cash cow brands: these are large brands that are well-established and therefore require minimal investment to maintain their strong market position (i.e.: Microsoft Office).

Making Choices

As you can see, there are several choices a manager must make before piecing together their brand hierarchy tree.

While the above is not exhaustive and largely taken from David A. Aaker’s quintessential book on brand portfolio management titled Brand Portfolio Strategy: Creating Relevance, Differentiation, Energy, Leverage, and Clarity, it serves to illustrate the great lengths in strategic thinking one must travel in order to devise a portfolio of brands that will complement, supplement, and protect one another.

Understanding these key differences between the strategic nature of brands and their respective portfolio roles will open up your eyes to how your competitors are choosing to play and where your portfolio might be lacking in the face of broader market changes.

These concepts are not meant to overcomplicate things — if anything they are necessary to drive clarity within a portfolio of brands.

Imagine an organization that kept adding brands to its portfolio without regard to what role each will play and potential interactions they might have with the others in the hierarchy tree, let alone what level of investment each will require to succeed in playing their part in advancing the business’ objectives.

These are major decisions, and must be made far in advance of a fancy brand hierarchy tree.

Inspiration: Paddy Power’s “Europe’s Favourites”

To my fellow Canadians who have never heard of Paddy Power, you’re not alone. I had to look up who these guys were before understanding why this ad scored the maximum rating of 5.9 on System1’s ad measurement tool.

Paddy Power is an Irish bookmaker known for offering sports betting, online casino games, and poker, with a reputation for humorous marketing and controversial promotions (thanks, ChatGPT).

Now, there are a few reasons why I like this ad so much:

• The usage of iconic British celebs that have well-established mental associations in the minds of the local customer base (i.e.: Danny Dyer);

• The usage of hilarious stereotypes about English people in the eyes of their fellow European friends;

• And the usage of witty joke after joke, even leaning into the online viral meme about four English dudes who dressed in tight clothing to show their muscles.

This is an instant hit with the audience they’re going after. And contrary to what other gambling apps are doing with their adverts who just keep hitting you with a never-ending barrage of deals and potential bets, Paddy Power actually gives you several good laughs in exchange for 60 seconds of your time.

Timeless Wisdom: Thomas Aquinas on Taking Risks

“If the highest aim of a captain were to preserve his ship, he would keep it in port forever.” — Thomas Aquinas

More of PPA:

• 🤝 Connect with Pedro on LinkedIn and/or X

• 🍻 Come by the WJ office for a brew

• 💌 In case you missed it:

  • The Strategic Importance of Knowing Your Numbers

  • What Marketers Get Wrong About Social Media

  • An Introduction To Brand Architecture

PPA 

Pedro Porto Alegre is a seasoned marketing professional with in-depth experience building brand and communications strategies for top-tier B2C and B2B organizations across Canada. His repertoire extends from crafting and executing integrated multi-media brand marketing campaigns to the commercialization of performance-driven innovations for multimillion-dollar and nascent brands alike.