1. Brand Hierarchy Helps Customers Understand Your Value Proposition Clearly

A brand hierarchy performs as a type of navigational tool for your customers because they use it to calibrate your brand against other buying options they have. The clearer it is, the easier it is for them to find their way to a choice in which your brand best fits their needs or wants. 

This is clearly illustrated in the way many successful brands adopt a “good, better, best” approach. That allows them to satisfy needs at all levels of the market. Having a mid-market brand, a budget version and a premium version is sometimes done under a single brand name, in which case it is known as a master brand hierarchy. 

A well-known example of a master brand hierarchy is the brand Apple. As well as its premium offerings, Apple offers its lower-priced products under the Apple brand. Other strategies entail using separate sub-brands for different tiers within its range – as for example with Avast, Avast Premium and Avast Ultimate. 

Image via Adweek © Apple

Sometimes a brand owner will decide to use different branding entirely for its product range. This is known as a ‘house of brands or independent brands’ as seen for example in the brand portfolio; Banana Republic, Gap and Old Navy. 

Image via Fortune

Whatever approach is taken, a clear brand hierarchy helps customers navigate to the right choice, leading to less lost sales or frustrated customers. A strong brand hierarchy within your brand strategy also enables you to market your product or services far more effectively.

© Johnnie Walker

A case study is the blended whisky Johnnie Walker. It uses a consistent master brand hierarchy, but separate different colour palettes are assigned to sub-brands equating to different price points. The King George V product has such a different price point it sits outside the main sub-brands. But by keeping it all under Johnnie Walker, the brand owner can apply a serious marketing budget.

Related: Brand Hierarchy Fundamentals for Multiple Brands To Avoid Confused Customers or Stagnant Sales

2. An Effective Product Pipeline Needs a Strong Brand Hierarchy

While some brands can stand still, most brands need a pipeline of new products or services to adapt to evolving marketplaces. Even a supposedly simple brand like WD-40 has a large range of product innovations at any given time. 

Image via © WD40 Company

But launching new brands, brand extensions or sub-brands ad hoc can damage a brand overall. It also reduces the likelihood of success for the new launch. In truth, this is a common problem and one I’ve seen with countless numbers of SME/SMB clients and customers worldwide.

A strong brand hierarchy enables you to match the pipeline to your brand assets and business growth strategy. You wouldn’t launch a new product if you didn’t have the technical know-how to produce it. Similarly, you shouldn’t launch a new product or service if you don’t have or can’t develop the right brand assets to support it.

Related: Brand Innovation – How to Identify New Growth Opportunities 

3. Deciding How to Maximise the Value of New Brand Assets is Much Easier with a Strong Brand Hierarchy

Often a brand will inadvertently generate new assets over time through organic ad hoc growth. For example, customers ask you to tweak your existing product or service and at some stage you realise that you have basically generated a separate offering. 

A lot of B2B service firms experience this, as client requests move their offerings into adjacent areas which can end up being quite different, though connected. The same applies to firms developing new technology. 

Sometimes it makes sense to keep it in-house, but sometimes it works better spun out as a separate brand. The right brand hierarchy helps make these difficult decisions easier and more data-driven, so you can maximise return on your investment and achieve higher sales.

A case study is UK software SME Gladstone. Gladstone is itself a sub-brand of software house Jonas Software. Gladstone specialises in leisure management software. As clients used that leisure software management, an adjacent opportunity emerged for software which enabled the measurement of corporate and public sector health initiatives. 

However, rather than confuse the Gladstone brand, the company decided to launch a new brand for this related but separate opportunity, which it named iMPACT. This allows the Gladstone brand to maintain its clearly defined brand hierarchy, while capitalising on the initiative measurement opportunity with the iMPACT brand.

Related: How to Use Brand Building and Culture Integration to Unlock More Value from Mergers, Acquisitions and Divestitures

4. Brand Hierarchy Forces Clarity About Your Brand Positioning

Brand positioning is important because it enables you to differentiate more strongly relative to your competitors. Despite that, a lot of brands limp along without it. It might seem tempting to do the same, and focus instead on urgent needs in manufacturing, invoicing, sales and the other concerns that are pressing for many business owners. Tempting though it may seem, that seriously limits your prospects of success. it also reduces you to constantly competing on price.

Evaluating your brand hierarchy enables you to think about what your brand stands for and how it is positioned, so you can maximise your profit margins. Without a compelling brand hierarchy you are reduced to a commodity offering, competing on replicable factors such as pricing or features. A brand hierarchy elevates you above this by helping you communicate what makes your brand uniquely well suited to user needs or wants, compared to competitors.

Related: How to Build a Premium Tech Brand so You’re Not Just Competing on Features, Benefits and Price Discounts

5. A Clear Brand Hierarchy Makes Your Go-to-Market Strategy Clearer too

It can take a lot of time and organizational resources to make go-to-market decisions. What sorts of outlets, platforms or ecosystems you should use for routes to market and distribution, where you want to appear, how your pricing is pitched and similar topics are all major decisions that can be difficult to get right. 

A strong brand hierarchy provides the guide rails which answer, or help to answer, most of these questions. That enables you to focus time and effort on executing your go-to-market strategy well, not agonizing over it with hit-and-miss results or wasted resources.

Image via © Dulux Decorator Centre

A case study is paint maker Dulux. Its B2B Dulux Trade Paint is only available through trade channels. Its B2C Dulux and Dulux Professional products are available in retail channels. This is quite smart thinking – “Dulux Professional” makes retail customers feel they are getting trade quality paint, but tradesmen still feel they can differentiate themselves as only they can easily buy Dulux Trade Paint. Professional and retail users have different needs, product skills and budgets usually, so this allows a single master brand to stretch across both markets.

Related: How to Use Brand Positioning to Build Brand Impact in an Overcrowded Market

6. Brand Hierarchy Helps You Optimize Your Brand’s Profitability

For most brands, the key benefit of a brand hierarchy is the ability to optimize profitability. Typically, different groups of customers are willing to spend at different levels on your product or service. A single, undifferentiated brand strategy often means that you lose some potential customers, as well as leaving money on the table with others. 

A great example of this is the wine trade. Think about what happens when you go into a wine shop. Many customers struggle to differentiate between different brands and price points, so simply set a fairly arbitrary budget and use that budget to narrow down their consideration set, before plumping for a product whose quality they often don’t know but guess. Not only are shoppers frequently disappointed, they also spend less than they would if more wine brands used better constructed brand hierarchies.

A strong brand hierarchy structure enables you to repurpose the same set of basic assets to deliver against brand expectations for different customer groups or purchaser personas, with different pricing expectations and budgets. This enables you to serve a wider market, profitably. You can serve multiple levels at multiple price points, rather than having potential consumers turn away, or buyers all flock to your standard priced offering.

Image via Metro

A B2C service case study is the banking group NatWest. It operates a range of brands for local customers such as Ulster Bank and Royal Bank of Scotland, premium brands aimed at high net worth customers such as Coutts and Adam & Co, and brands which appeal to trade customers such as Lombard Finance. Using the same basic backend systems, the company is able to straddle a wide variety of B2B and B2C customers offering different value propositions from full service private banking downwards.

Related: 7 Ways Brand Collateral Helps You Grow Your B2B Business Profitably Even in a Hostile Market

Final Thoughts

A brand hierarchy, or brand architecture, can seem perhaps like a superfluous distraction when there are so many pressing demands and multiple tasks in building your business. In fact, a brand hierarchy is a simple but powerful tool that will help your business perform better both now and in the future. 

It helps you set out your stall, avoid confusion internally and externally, so your target users are more likely to choose you over competitors. A brand hierarchy makes go-to-market choices easier and enables not only more sales but also more profitable ones with easier up-sells and cross-sells.

A brand hierarchy, like a house foundation, is best laid sooner not later. Consider how to move forward with your own well-structured brand hierarchy today, so you can achieve higher revenue whilst also building your brand IP asset value.

Questions to Consider

1. What truly sets you apart from other brands your target users might consider buying?
2. How effectively do you compete at different price points in your business category?
3. Does your current brand hierarchy strategy enable you to identify potential new opportunities for your brand to increase revenue in the future?
4. How clear are you about your brand positioning relative to your competitors?
5. Does your current branding strategy help or hinder your go-to-market strategy?
6. Do you have brand assets that would resonate particularly well with a certain section of your target market?
7. Could you use a brand audit to re-evaluate your business to identify its strengths, vulnerabilities, and, most importantly, new opportunities for innovation and growth whilst also making your brand hierarchy stronger, so you can increase your profits?