Nearly 20 years ago, global M&A sprees combined with massive product innovation required the likes of Unilever and Nestlé to carefully assess their portfolios as well as scrutinise any arguments for the creation of new brands.
In February 2000, Unilever famously embarked on a global programme to reduce its number of brands from 1600 to 400 in five years. Coining the term ‘power brands’, Unilever shifted budgets from smaller, local, regional or niche brands to brands like Dove and Persil. It also leveraged the ice-cream Heartbrand to connect local heritage brands (Walls in the UK, Algida in Italy, Langnese in Germany, for example) and act as a platform for international powerhouses (Magnum, Cornetto, Solero, for example) across more than 40 countries.
Telecoms quickly followed suit and we experienced a shift from a world where even an audience-specific mobile tariff would have its own brand to largely monolithic portfolios across the entire sector. Today, you would struggle to point out a non-endorsed sub-brand for one of the major telecom brands.
FMCG companies may not be monolithic, but all the major players increased the prominence of their corporate brand endorsement over the last decade. Nowadays, most of the revenue of Unilever and P&G is estimated to come from a combined group of about 30 brands.
It’s ironic, then, that many of the consultancies behind those famous portfolio efficiency projects are holding increasingly proliferated brand portfolios that are straining not just marketing budgets and internal resources, but the amount of attention they can command in the market.
Common drivers of proliferation
While M&A probably remains the key reason for proliferation at the top of B2B brand architectures – across divisions and subsidiaries, the situation is even worse on the deeper levels – among products, services and solutions (the semantic minefield of those terms will have to wait for another time). Brand proliferation is a common scenario in big, complex, diversified corporates. It's now further stimulated by two seemingly contradictory market-wide trends: the drive to productise services and the bundling of small products and solutions into more complex services.
Service-focused sectors, like professional services, are creating productised offerings more than ever before. Digital environments, where users self-manage, and where small competitors can disrupt traditional services, create pressure for services to be broken down into leaner, nimble, more affordable offerings. A world of interconnected platforms, big data and ubiquitous access is connecting services and giving rise to dashboards, making even complex solutions behave more like products.
Companies launch new services as products, or break down old services into products (typically through SaaS models), or add productised aspects to their complex services. It’s no surprise, therefore, that the line between service and product is being blurred.
To further complicate things, as productised offers mature, they grow into fuller solutions, integrate with other products, and are then repackaged and often rebranded as new service propositions.
Productisation presents a new challenge to the brand architecture of corporate brands where monolithic reliance on one corporate masterbrand has been, with good reason, the best practice for years.
The journeys that many companies have been on in recent decades has meant significant expansion of their portfolio of brands. Multiple mergers and acquisitions combined with service and product innovation means the number of brands, sub-brands, extensions, endorsements and other entities has kept growing. As the needs of business units become more sophisticated, there’s a risk of things getting complicated when what is needed is a new radical simplicity.
Why is brand proliferation a problem?
Most brands are born on the liability side of the balance sheet and few cross over in their lifetime. A new brand requires initial investment to create and promote it. Later, it requires ongoing investment beyond the different campaign costs to maintain and evolve it. Brands rarely stay static in the long-term. Before you know it, you have multiple new cost centres in your organisation and might even have several international brand programmes running at the same time. Such multiplicity can be a substantial burden on your budgets, time and peace of mind. Worst of all – they can seriously confound both existing and prospective clients.
Is brand proliferation an emotional problem?
While marketing teams might see brand proliferation as a nuisance to corporate brand systems, it is important to bear in mind that the teams driving the creation of new brands almost always do it with a strong conviction that they are doing the right thing.
Some common objectives include:
- Creating interest in the market
- Promoting the innovation of an offering
- Establishing expertise and specialisationin a new space
- Creating a short-hand to describe complex offering.
The above reasons are felt to be mission-critical, and the human inclination to understand complex concepts by abstracting them and giving them simple labels is hard at work here. Brand creation easily becomes the go-to solution for the above scenarios. The common belief for a lot of people is that by creating a product name, a distinctive look and feel, and potentially adding a logo and some brand identity elements, they are creating equity for your company. Sadly, that’s rarely the case.
Professional services firms are particularly tricky, as they are often partnerships. When someone earning a million dollars per annum wants to create a new brand, there are very few corporate brand teams that can stop them, regardless of whether a well thought out set of brand guidelines are in place or not.
Brand architecture projects are politically and emotionally charged. Politically, because brand owners in the organisation see the brands they manage as power which they are reluctant to give up. Emotionally, because when consolidating portfolios, reducing the number of brands and eliminating many in the process, people feel like the work they put into creating and growing the brands is erased. Pain or no pain, for the c-suite, the financial benefits of a consolidated and focused portfolio are hard to beat. That’s why, quite often, it takes external consultants to help the company make it through the process and help possessive brand owners let go of their brands for the common good.
The way forward
In a world of such complexity, the simple and best practice of ‘extend the masterbrand for as long as it’s credible’ still stands, but it isn’t enough to avoid proliferation.
What is, in fact, needed is clarity around an iconic brand and simplicity around a focused brand story. In reality, most of the objectives listed above are achieved more efficiently by using brand communications within the monolithic brand system in creative ways.
And while brand proliferation is running amok again, the many shades of monolithic approaches have evolved too, giving way to a new generation of ‘flexible monoliths’ – Google and its dynamic relationship with the Alphabet stable, or Kantar’s branded house which lets the group’s operating brands remain unified but not uniform.
To avoid proliferation in a sustainable way, you need to give people alternative routes of action. Developing these routes begins with a clear, efficient and flexible brand architecture toolbox. It then requires education, planning and the development of robust communication tools that can replace the need for brand creation.
So, if people around your organisation can’t seem to stop creating brands, ask yourself – are they simply compensating for a lack of better tools?
Originally published on B2B Marketing.