Brand Hierarchy: What It Is and Why It Matters

Why Brand Hierarchy Matters

Crafting and delivering an effective brand message is complicated in a crowded, competitive market. For organizations operating multiple brands, the task is herculean. That’s why establishing a sound brand hierarchy, or organizational structure, is crucial in speaking to the correct audience and delivering consistent brand messaging, even when the boundaries between businesses are blurred – or nonexistent.

What Is Brand Hierarchy?

A brand hierarchy describes the organizational structure a company assigns to multiple brands under its control. It determines how each individual brand interacts within the organization and how it is presented to consumers. The levels of the brand hierarchy vary based on the company’s needs or the characteristics of each brand’s products or services.

Brand Hierarchy vs. Brand Architecture

These terms are often used interchangeably, and while there are some subtle differences, there’s considerable overlap.

• Brand architecture is the structure of the company brands and how they interact with each other. It tends to define how two brands within the organization work together, often structurally, through shared resources (such as a single marketing team) or consumer-facing partnerships.
• Brand hierarchy defines the arrangement of each brand within the organization and is usually considered a component of brand architecture.

If the line seems blurred, it is; each element informs the other, and aspects of brand architecture and hierarchy often look different across industries and organizations.

Three Types of Brand Hierarchy with Examples

As you’d expect, companies have devised several ways to structure how their brands go to market. Not every company fits perfectly into the three categories below, but most will look familiar to marketers. For every example, several similar-yet-different hierarchies operate in the same industry.

The Branded House

The branded house approach assigns each brand a distinct, clear identity, voice and tone. No matter how diverse, all products and services share the same brand standards and messaging. This creates systemic efficiencies by focusing all marketing efforts on a single brand, maximizing its awareness wherever its products or services are available.

The branded house is the most common approach to brand hierarchy, but it does have one notable drawback. Investing heavily in a single brand may limit its value in new markets, causing confusion among consumers. For example, while Apple’s brand is among the most trusted in the world, it may have limited credibility if it decides to make sneakers – its brand doesn’t carry the same weight in footwear as it does in tech.

Hybrid Branding

Hybrid branding is an accessible, relatively quick option for companies making branding decisions, particularly after a merger or acquisition. Considered a form of co-branding, hybrid branding combines elements of two brands into a single identity. There are several advantages to hybrid branding besides convenience, including:

• Combines the existing value and awareness of both brands.
• Defines specific brand focus without detracting from the primary brand.
• Provides a degree of flexibility, and in time, a single brand may be removed from cobranded materials if/when it no longer adds value.

Spotting an example of hybrid branding is pretty easy. In many cases, the co-branding elements will include elements of both legacy brands or use connective language, like DoubleTree by Hilton.

The Hilton Hotel brand is a successful example of hybrid branding. The model retains the brand recognition of legacy brands, such as Hampton Inn, with the premium brand characteristics of Hilton, which has operated as a leading luxury hotel and resort chain for decades. Both brands add a unique value, and the parent company benefits as a result.

Examples of the Hilton Brand Hierarchy

• Hampton by Hilton
• Tru by Hilton
• Embassy Suites by Hilton

Hilton is also an example of hybrid branding’s flexibility. In addition to co-branded offerings, Hilton also operates its flagship Hilton Hotels & Resort brand independently. This allows the company to retain its unique identity for strategic locations and at higher price points than many of its co-branded alternatives.

House of Brands

Also known as a family of brands, this type of brand hierarchy is deceptively common. The house of brand strategy positions individual brands to build and maintain unique associations despite being owned by the same company. One of the best examples of a family of brands is PepsiCo, which actually derives most of its revenue from snacks, not soda. PepsiCo owns and operates brands across the food and beverage industry, even multiple brands within specific segments.

PepsiCo captures additional market share by leveraging branding to appeal to specific demographics, price points, or geographic markets.

It’s worth considering just how many brands PepsiCo operates, many within the same market; you can probably see why this strategy works so well.

Beverages

Pepsi, Mountain Dew, Gatorade, Tropicana, Aquafina (among others)

Snacks

Lays, Doritos, Cheetos, Ruffles, Fritos

Breakfast/Cereal

Quaker Oats, Life, Cap’n Crunch

The family of brands has several advantages beyond the ability to directly address multiple audiences and market segments. One is risk mitigation; a PR disaster for one brand won’t necessarily impact sales of other brands owned by the same company and may even increase sales if handled properly.

However, marketing for multiple brands does increase operational costs and budget, the exact opposite characteristic of a branded house, which is all about efficiency.

Brand Hierarchy Strategies: When To Build the House

Companies make branding decisions all the time, but changing or adopting a hierarchy tends to happen during periods of structural change.

Entering a New Market

One of the most common reasons to develop or redefine a brand hierarchy is the introduction of a product or service. This is typically when a branded house decides to enter a new market. If Apple really wanted to make sneakers, it would probably develop a new brand to operate within the sneaker space. Launching a new brand reduces consumer confusion and mitigates the risk of a negative reaction or business repercussions for the parent company.

Rebranding

Sometimes, a brand needs a new look. After a poor performance, quality concerns, or to address a new geographical market, companies can breathe fresh life into a specific product or service by refreshing or redesigning the brand’s visual assets or relaunching with a new voice and tone. This can further differentiate similar product offerings to target price points (which is why General Motors has GMC and Chevy) or allow a specific business to function more independently, which tends to benefit both the parent company and the subsidiary.

Mergers & Acquisitions

Mergers and acquisitions drive many brand hierarchy decisions, often over relatively short periods of time. They can be complex and often sensitive processes that substantially impact both the “splash” of the acquisition and the long-term success of the new organization. The structure must also meet the immediate and long-term needs of the brand, especially if there are additional acquisitions on the horizon.

The Takeaway: Structure Dictates Messaging and Success

Establishing the right brand hierarchy isn’t something decision-makers take lightly. Brand architecture touches every aspect of company life, including internal organization, marketing needs, and public perception. Despite the potential consequences, it’s also an exciting time for marketers to weigh in on important branding decisions and position the entire organization for success.

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