Brand Architectures were developed over time in fast-moving consumer goods (FMCG) markets, but they do help out in high technology marketing as long as we keep in mind some of the differences between FMCG and high technology products, which we will go into shortly.
Basic Brand Architectures – House of Brands
This architecture puts all its marketing funds behind establishing an individual product as a brand, not the company. In fact consumers may not even know the company behind the product. For example, did you know that Braun shavers and Giorgio fragrances are owned by Proctor & Gamble, who created the discipline of brand management?
You need big bucks to create product brands, but the results in FMCG markets can be worth it. P&G has over 14 brands that exceed $1 billion dollars in annual sales. However the investment required is beyond the reach of most hi-tech companies. P&G spends about 7% of sales on advertising alone and was the largest US advertiser in 2007, spending over $2.6 billion dollars, more than twice as much as the nearest competitor, which was General Motors. Unless you are a pure-play internet retailer that percentage is way beyond your reach.
Basic Brand Architectures – Branded House
The other key approach focuses on the company behind the brand, not the individual products. Primarily used by smaller consumer packaged goods companies, the advantage of this approach where you build the company as the brand is that the investment required for brand-building is considerable less than trying to build individual product brands for a number of reasons. One principal reason is the level of promotion required for introduction of new products is significantly reduced.
A classic example is Heinz (57 varieties) where the Company name is dominant and the product brand is subordinate. Heinz Ketchup, Heinz Pickles, Heinz Relish, etc.
But wait … there’s more!
Basic Brand Architectures – Branded House of Brands
One of the first FMCG companies to utilize this approach was Kraft Foods. It’s basically a combination of the two above approaches. In some cases the company name is dominant like Kraft Macaroni and Cheese. In others the product name/family is prominent, like Velveeta Cheese. The advantage here is that you carve out funds to promote your best known product brands and use the company brand to help promote the lesser ones.
Even the big guns in FMCG, like P&G and Heinz, have some element of both the Branded House and House of Brands approach too, though they have different emphasis. P&G would be a “branded HOUSE OF BRANDS” and Heinz would be a “BRANDED HOUSE of brands” (emphasis intended).
In today’s world most large companies have become some form of a Branded House of Brands, while most firms, in number are primarily Branded Houses.
So what’s the relevance to High Technology companies?
High Technology Branding Architectures
High technology branding is dominated by the “Branded House” approach, primarily due to the promotion funds available compared to FMCG companies (remember P&G’s 7% of sales advertising budget?), but there is a second strong reason based on the differences between high technology products and consumer packaged goods products.
The Key Difference
In FMCG, the product and its packaging DO NOT CHANGE (or change very gradually over time so as not to waste the brand equity that has been built over a long perdiod of time (Ivory Soap has been around for over 125 years and Coca Cola for almost 115 years).
In high technology products, you either change or you die! If you do not keep up with the pace of available technology in your products, it’s easy to become “a one hit wonder”. Silicon Valley is a graveyard of those that had only one success, or fell into “the Chasm”: Four Phase, Convergent Technologies, Eagle Computer, Go Corporation and others. I deliberately do not include Dot.Bomb companies like Pets.com, Webvan and others because there was never a ”There” there.
If that wasn’t enough, in order to serve some unknown MRP or manufacturing need, the model numbers seem to change almost daily. Do most consumers know what a Dell S2409W Monitor is, or how its quality compares to a Dell UltraSharp U2410, which costs twice as much? Remember, we are not the market. We’re not talking about whether or not we would, or should, know the difference. Can the average consumer tell the difference? If not, they are just both 24” widescreen LCD monitors that display 1920 x 1080 video. (Yes, I know the U2410 can go up to 1980 x 1200, but HD resolution is “good enough” for, and way beyond what, most people have attached to their PCs or Laptops today (08/15/09). In a year we will be able to get a new model of the same size with improved performance at the same, or lower price.
What this means is that any brand equity (other than the company brand equity for Dell) developed by the U2410 will likely be lost. I don’t mean to pick on Dell here, name the PC and peripherals manufacturer and they all have the same issue. There is one big exception … Apple. Let’s take a look at what they do and how it might help you and your company.
Apple’s Product Brand Approach … Branded House of Family Brands
Apple seems to understand one thing better than any other high technology company … “ease of use promotes use”. If it’s easy, people do it more often. That’s one of the reasons many of their customers are so passionate and you have to pry their Mac, iPod or iPhone from their “cold dead hands”. For most Apple consumers, the products have a compelling blend of style, ease of use and support (think Genius Bar).
I once heard Steve Jobs describe what technology products should be when he was asked, why anyone needed faster processors? His answer was, the best use of new technology is wrap consumers in a “user-seductive” environment they would never want to leave. Who says sex doesn’t sell high technology products?
Extended Ease of Use
For Apple “ease of use” also means simplified product families to make things easier for consumers to decide … think Good, Better, Best. This was not always the case for Apple. Their original portable product was a family of one. As a result, there was no comparison, or trade-off a consumer could make except between an Apple Portable and a whole slew of IBM-compatible portables.
But there were some approaches in other markets that might have given Apple some ideas. European car makers may have led the way. BMW over time developed their key brands into the 3-Series, 5-Series and 7-Series. Mercedes developed the C-Class, E-Class and S-Class and Audi the A4, A6 and A8 brands. Compare that to GM who had multiple brands with small, medium, large and sports models.
Whether originally by accident, imitation, or original design, Apple, like Caesar decided to divide Gaul into three parts in every product family. The product lines rarely have more than three core models (yes, there are some limited available options, but in mainstream notebooks it’s a MacBook Pro 13”, MacBook Pro 15” and MacBook Pro 17”). Apple also uses an approach I’ve referred to since 1990 as “Cascading Technology” to maintain their average selling price for each model with very little change over time. With each revision to the products, the consumer gets more memory, a faster processor, more disk storage, better graphics performance and possibly a better display than before, at the same price point.
As a result of a limited number of individual products the brand equity built is in the MacBook Pro product family and the target market segments tend to sort themselves out on the basis of screen size s a surrogate for relative mobility.
This is just one product family example. Apple’s entire approach embraces this philosophy. Marketing promotion funds are conserved since Apple primarily promotes three-ish brands: MacBook Pro, iPod and iPhone. The actual models and their specifications and names may change but their brands and what they represent don’t change over time. This enables Apple to build more brand equity per dollar spent than other approaches and is the route that most high technology companies should take.
Plagiarism is the Sincerest Form of Flattery
Apologies to C. C. Colton, who in 1820 said “Imitation is the sincerest of flattery” … but I’m guessing he would be amused if he were around today…
There may only be one Apple and you may love them or hate them, but why shouldn’t you take every good idea they have and use it? Remember actual resources, market position and management will vary, so you need to tailor things to what you and your company can realistically achieve.
But be careful, some things take a long time … like the iTunes Ecosystem. Many mobile players are rushing headlong to try to duplicate in 1 to 2 years what it took Apple 9 years and numerous iterations of hardware and software to achieve the level of success they enjoy today (without another major competitor dominating the market). I’m not optimistic about their chances for success.
