Medical Device Link.

Originally Published PMPN June 2004

Brand Matters

Martyn Tipping

When you’re building a new home, it’s a good idea for your contractors to work from the same set of blueprints. The architect determines what room goes where, ensures that each room has the correct wiring and plumbing, and makes sure that all of the rooms work together to create a stable and enduring structure.

In today’s business, brand architecture serves the same purpose. It is the blueprint for organizing, managing, and presenting your brands to the marketplace. This helps corporate decision makers answer strategic questions such as:

• How are your company’s brands and subbrands related to, and differentiated from, one another?
• How many brands should be supported, and what resources should be allocated?
• Are there any gaps in your current portfolio, and how should these be addressed?

When it comes to brand architecture, there is no “one size fits all.” Different corporate strategies require different brand architectures. For example, such companies as General Electric and Mercedes-Benz use a masterbrand strategy. The corporate brand is used as the dominant brand across a range of products and services. Other companies, like Procter & Gamble and General Motors, adopt a multibrand strategy. They create a group of stand-alone brands that operate independently and, in many cases, compete against each other.

Brand architecture is a powerful, strategic tool in the pharmaceutical and medical device market, which has seen so much merger and acquisition activity in recent years. A company’s brand architecture helps to determine which brands survive a merger and which ones fall by the wayside. 

As the number of major healthcare companies in the market diminishes and product diversity increases, brand architecture is becoming more important as a tool to manage brand portfolios. Often, the larger the company, the more likely it is to contain a jumble of brands and products that compete for precious resources and confuse customers. Given this environment, most brand architecture programs are founded on the principle of “less is more.” With fewer brands to support, companies can concentrate resources on key brands and realize economies of scale in both manufacturing and communications.

Unilever’s “Path to Growth” strategy, launched in 2000, is a great example of “less is more” brand architecture. The objective of the Path to Growth is to reduce the number of brands from 400 to 140 over five years. This will enable Unilever to reduce the cost of operations and to invest the savings in additional marketing for the company’s most important brands. By 2001, Unilever’s 400 leading brands accounted for 84% of sales and are expected to account for 95% in 2004. And by 2003, global purchasing savings amounted to more than $1 billion.

Of course, Unilever is not the only company to realize that a well-defined brand architecture helps you leverage the strength of your current brands. Roche recently launched Amplicor HPV, a new diagnostic test to detect the cancer-causing human papillomavirus. Amplicor HPV could have been launched as a stand-alone product brand. However, because Roche’s Amplicor range of diagnostic products has become world-renowned as a line of sophisticated reliable tests, HPV was included in the Amplicor brand family. In making this decision, Roche has added the strength and credibility of the Amplicor brand to the new product. At the same time, it is expanding the relevance and strength of Amplicor.

The word “architecture” can make it sound as though a company’s brand portfolio structure is set in stone. Like any element of corporate strategy, a company’s brand architecture should be reviewed and updated at least annually to accommodate any changes in the internal or external operating environment. 

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