Introduction
Literature Review
The study presented here is concerned with the appropriate brand
architecture for services markets. Thus, in the literature review section, it is
necessary to introduce and explain the notion of brand architecture before
focusing more specifically upon brand architecture in a services context.
Although the importance of brands in the marketing of services has been
highlighted by a number of writers (Berry 2000; Dall'Olmo Riley and de
Chernatony 2000; de Chernatony and Dall'Olmo Riley 1999; Dibb and Simkin
1993; Zeithaml 1981), far fewer studies have focused upon the nature of the
"brand architecture" adopted by services organisations.
Brand Architecture in Services 1045
"An organising structure of the brand portfolio that specifies brand roles and the
nature of relationships between brands."
related to those of the monolithic brand and branded house discussed above.
Equally, the individual product branding approach is akin to the branded
approach discussed by Olins, (1995) and the house of brands of Aaker and
Joachimsthaler, (2000). In between, there are strong and weak company
endorsement positions, as can be seen from Figure One.
and with the potential to yield important insights. McDonald, et al. (2001)
suggested that services are requiring of a tailored approach to branding
strategies. Olins, (1995) noted the importance of the decisions faced by
services firms in deciding whether to emphasise corporate or product
specific brands in their marketing efforts. More generally, Petromilli et al.
(2002) suggest that many companies have trouble keeping their brand
portfolio in order and, in addition, may lack clear brand architecture
strategies, both when building business generally and when acquiring and
merging.
Thus, empirical investigation into brand architecture in a services context
will provide an insight into how organisations approach the management of
their brand portfolios and whether reliance upon the corporate brand is, as
suggested by the literature, the predominant approach. In addition, the study
will also help to highlight lessons from perceived good practice and from
strategies which practitioners felt were less successful.
Methodology
Results
The relevant literature suggests that the corporate branding approach to the
management of brand architecture, rather than the endorsed or individually
branded structure, is likely to prevail in services markets. The data reveals
that, although different terminology was used, some practitioners indeed
identified primarily with the corporate approach:
It is really, (Brand B), (Brand B property services) which is a sub-brand but very
similar, using the same sort of graphics as (Brand B) does. (Participant B)
It would just be, you know, personal loans from (Brand E) we only use (Brand E),
that is as far as it goes in terms of branding. (Participant E)
Thus, some support was apparent for the corporate branded approach. In
addition, it is evident that the one overarching corporate brand approach
1052 James Devlin
receives most support and is seen as most suitable by smaller, less diversified
institutions and in non-traditional suppliers of financial services. Simplicity
and the presence of strong core brand values to leverage were the primary
drivers the decision to brand in a corporate manner. It is conceded that there
are examples of very large and complex institutions tending towards the
corporate approach. However, and interestingly, the corporate branded
approach did not emerge as the dominant brand architecture strategy, as
discussed below.
At the other end of the spectrum, there was general agreement that the
individually branded structure, (i.e. service specific brands, such as the
Orchard and Vector accounts previously offered by Midland Bank and even
endorsed service specific brands, such as Leeds Liquid Gold) are of limited
value:
/ wouldn't expect them [service specific brand namesj to have any saliency in the
market place.. .I'm trying to think of one [a service specific brand namej that's
worked...There aren't many, I'm really trying to think and I can't. (Participant
A)
It seemed like a good idea for about 10 minutes, we had an account called
(Branded Account B) and things like that, but these were account names...We are
very committed to our brand being (Brand B) and our products sitting within
that. That's a very conscious decision that we made...we believe there is much
more mileage and ability to be able to drive a brand like (Brand B) rather than
develop a product brand or whatever it might be, separate from that. (Participant
B)
We've had things [service specific brandsj which I personally think are irritants. I
think we had a little cluster of products we called (Service Specific Brand C).
This is to me a waste of money, a waste of time, the attempt of a product manager
to differentiate something that they produced and is really just an irritant.
(Participant C)
Participant B also hinted that individual or sub brands may be introduced for
Brand Architecture in Services 1053
internal and politically motivated reasons, to mark one's territory and signal
it internally. Participant D highlighted the risk of diluting the message of the
main brand by using individual service or sub brands:
The risk of individual service brands and sub-brands causing confusion was
also highlighted, a significant consideration in a market environment where
consumer interest and understanding are limited:
By sub-branding you can offen obscure what it is you are trying to sell people
because if the market is calling something (say) an ISA and you call it an Orchard
I don't think its particularly helpful...What you need to do is make things clear
and transparent to the customer and sub branding can mitigate against that.. .I'd
rather call a pension a pension. (Participant H)
Better value strategy is based around (Main Brand Gl) because it's the
relationship and distribution brand, and then using our key competency brands
and to give us the breadth of bank assurance: (Main Brand Gl) being the
competency in banking, (Main Brand Gl) being the competency in mortgages,
(Main Brand G2>) being the competency in life pensions and investments.
(Participant G)
Participant G elaborated upon the role of various brands within the brand
architecture and continued by explairung that customer perceptions were the
driving force:
It comes back to the fact that in consumers' minds' banks do banking, insurance
companies do insurance, and building societies do savings and mortgages. And if
you try to be a bank assurance supplier, which we are, it is very, very difficult to
stretch your banking brand across the total range of meeting customer needs.
(Participant G)
Expertise, (Main Brand HI) has a heritage in retail investment, (Main Brand
HI) has a heritage in long to medium term savings products, (Main Brand H3)
has a reputation of serving a particular community, which is the IFA community.
So there are both distribution channel factors and they have a heritage in different
areas. (Participant H)
Brand Architecture in Services 1055
If you own boats, it is the place to be, you want your yacht or boat insured, (Main
Brand C5) is the place to be. They understand boats, and they have a competence
which is product based, has a product route to it, rather than a relationship route.
(Participant C)
{Main Brand C4) was invented by us, by the addition of the asset management
arms of (Main Brand C3) and the asset management arms of (Main Brand C2) to
product a brand that had an asset management competence. (Participant C)
Other participants expressed the view that different brands could be useful
in maintaining relationships with different groups of customers, both
generally and in post-merger situations:
I suppose my view again is that you've got two routes when you make that
merger you either say, right, we'll have one super brand, or you keep the brands
separate and run them separately. [You would keep brands separate] because there
are two separate markets you are going for and you can get a greater overall
market share by doing it separately. (Participant A)
If there is a lot of customer association with a brand like say "Scottish Widows"
or "Cheltenham and Gloucester" then, assuming that, that's a true brand
association and one that you can leverage sensibly and profitably then that's
probably more powerful. (Participant F)
We currently operate a basket of brands where you could argue it's called a sun
and planets type approach, whereby the sun is the major brand which is
advertised and communicated and has a relationship role with the customer, and
the planets may be brands that are quite famous through their history, [orj may be
brands that aren't so famous, but they operate more on a product delivery
platform rather than a relationship platform, the reason being is that in the
market in which we operate relationships are key. (Participant C)
It just so happens if you then find that the marketplace actually wants an offering
which has a relationship with access to specialist competencies, then you can find
a way through to both what the customer requires and wants and also something
that's economically sensible. (Participant C)
They also have to span different competence areas and on balance have historically
not been able to demonstrate a competence in the area that Scottish Widows have
demonstrated, so therefore it makes sense for them to retain the Scottish Widows
name and brand probably, but it is a competence brand rather than a relationship
brand, whereas I think they are trying to build Lloyds-TSB into a relationship
brand. (Participant C)
The (Main Brand C2) role is changing from being the retail brand to the product
brand.. .manufacturer brands and product brands are similar but I think it's quite
possible for a manufacturer to have several product brands (Participant C)
Brands are known for being product providers Ifor instancej Halifax sells
mortgages. Prudential sells insurance and pensions, Lloyds-TSB provides
banking services. But as organisations begin to become much more "multi-
Brand Architecture in Services 1057
product", companies must make the transition to become much more of an active
brand with the consumer, become much more "customer-centric" than
"manufacturing-centric". (Participant H)
I think 50% of (Main Brand G3) business comes from the IF A market, so there
you have to make sure they don't confuse that channel, so it's a very careful
balancing act, so it is not just a branding issue there's also business issues around
it as well. (Participant G)
I think the junior version of the beast would match brand to channel, so use the
brand as a means of avoiding channel conflict. We've been there, done that, got
the T shirt and its not as simple as that, no! (Participant C)
Thus, with regard to strategies for managing brand architecture, the two
primary motivations for adopting the common multi-corporate approach are
to retain relationships with distinct groups of customers and to signal
distinct competencies to the marketplace. It should be noted that both of
these motivations also apply potentially to post-merger situations, a
pertinent observation given the large number of mergers and acquisitions
which have and continue to take place in financial services markets.
Organisations may choose to retain separate brands in the post-merger brand
family if they are associated with distinct competencies, or if it is felt that the
relationships with customers would be damaged if brands were dropped or
changed. In this respect, an interesting half way house is the approach
adopted by Lloyds and TSB who simply amalgamated both brands by
adding a hyphen in between when they merged. Arguably, brand
amalgamation has been less prevalent in retail financial services than other
areas of financial services (such as investment banking or accountancy) or
other industries. This is probably due to the desire to retain customer
relationships with the separate brands which are assumed to have distinct
positions. However, despite the doubts expressed by some practitioners, the
experience of Lloyds-TSB suggests that retail financial services firms should
1058 James Devlin
(Main Brand DI) retail has a very clear understanding of its brand and its
positioning in the market, and when we consider branding, sub-branding or
branding our product lines, we do that on a very standard brand management
model to decide whether to enter a new market with a new association or we are
talking to existing customers with a different offer...But what the group doesn't
have is an idea of how to manage its brand portfolio, so what we have is a
significant number of brands that bang up against each other. (Participant D)
Participant C emphasised that pragmatic choices may not coincide with those
which may be theoretically the most desirable, indicating that the scale of the
business, the range of customer segments and the dynamics of the market
may mitigate against using one main brand:
Two extreme options, one is a collection of unrelated, stand alone brands, the
other extreme is a single mono brand, within that there are a variety of shades of
opinion and one of which is that a portfolio of equally important equally
supported consumer brands, is another option along that continuum. That
historically was a route that we felt was a sensible route however economically it
may not be possible given the scale of some of our businesses. So scale is an
important issue here for how many brands you have and how you use them
appropriately, so is market dynamics and the segments that you want to operate
in and the two issues do not always coincide in theory so therefore you have to
make practical pragmatic choices. (Participant C)
the marketing budget without any obvious return. In the relatively few cases
in which such an approach was adopted, it was not normally deemed a
success. There was also a suggestion that such strategies may be driven to a
large extent by internal concerns, such as brand managers attempting to
mark their territory and make their product or product group look different
and perhaps more important. Therefore, before embarking upon such a
strategy, managers should be aware that such an approach has rarely yielded
success in the past. Also, managers should be aware that both academic
theory and the vast majority of practitioners are in agreement as to the
limited value of the branded approach in financial services. Managers must
ensure that they are certain that an individual or sub-brand is effective in
adding to the brand essence of the offering and should be clear as to exactly
what value is being added in the eyes of consumers by the addition of the
sub or individual brands. Managers should note that they must ensure that
their perception as to the role and value of the sub or individual brand is
informed by the perceptions of consumers. Retaining a consumer focus
should help ensure that managers only attempt to sub or individually brand
for the correct, externally motivated reasons, rather than for predominantly
internally, politically motivated ones.
The findings indicated that the most common approach to management of
brand architecture in retail financial services is a "multi-corporate" one with
institutions having a family of main brands in their brand portfolio, often in
the form of brands traditionally associated with separate companies. One of
many examples would be Lloyds-TSB having Cheltenham and Gloucester
and Scottish Widows as core components of its brand architecture. The two
main motivations according to those responsible for formulating brand
architecture strategy are to help maintain relationships with different
customer groups and/or signal distinct competencies. It is important to note
that both of these potential justifications also apply to post-merger situations,
when brand strategists face brand architecture choices as to whether to
maintain, delete or possibly even amalgamate brands.
From a managerial perspective, the maintenance of separate brands must
bring benefits to offset the increased costs, both financial and other, of
maintaining separate brands. When having separate brands in the brand
portfolio in order to maintain relationships with different customer
franchises, managers must ensure that the case for maintaining separate
brands is proven, i.e. that rationalisation of the brand portfolio would
weaken relationships. Both after merger, but also in an ongoing fashion,
organisations face a choice. Either they maintain their complete brand family,
or delete one or more brands and replace it with another existing brand or
amalgamate brands in some way. All other things being equal, separate
brands should only be maintained if the strength of customer relationships
Brand Architecture in Services 1061
would otherwise suffer to a greater degree than the potential cost saving
associated with deleting the brand. To provide an example; when HSBC
acquired the Midland Bank in the UK, it quickly deleted the Midland Bank
brand and replaced it with HSBC (as part of its overall brand strategy of
having mainly an overarching corporate brand). This move was greeted with
scepticism from commentators as the time and some of the participants in
this study were still questioning the wisdom of such a move. However,
provided the cost saving of no longer having to maintain the Midland brand
more than offsets the potential loss from the weakerung of the customer
franchise over time, then it is a sensible strategy. Managers need to consider
such matters, rather than automatically assuming that the maintenance of
brands is essential, or that more brands are inherently better than fewer. In
particular, managers need to heed the views of consumers in this respect. It
may be the case that managers are assuming that consumers have a strong
relationship with a particular brand and that is used as a justification for
keeping the brand in the organisation's brand architecture. However, diligent
research may reveal that the consumer franchise would not be adversely
effected by brand deletion. This is a significant point as, given the
widespread consolidation which has taken place in financial services, there
has tended to be brand proliferation within many organisations' brand
architectures. Due to vested interests and internal politics, the degree of
rationalisation may have been less than that acceptable to consumers in a
number of cases. Managers should not assume that customers will be upset
or somehow disenfranchised by brand rationalisations, they should establish
consumer perceptions on such issues.
Managers are also urged to consider options other than the bipolar
alternatives of brand maintenance and brand deletion, such as brand
amalgamation in some form. Such an approach is particularly prevalent after
merger in professional services, such as accountancy, law and merchant
banking. However, it is arguably less in evidence in retail financial services.
An exception is the case of Lloyds Bank and the Trustees Savings Bank (or
TSB as it was commonly known). When these two firms merged they became
Lloyds-TSB. All other things being equal, such a move either allows the
organisation to economise on the costs of maintaining two brands, or spend
far more on strengthening the one combined brand. The move was initially
greeted with some scepticism, although most commentators would now
agree that the strategy has been a success. Some negative comment was still
apparent amongst participants of this study. Obviously, the attitudes of
consumers is key in establishing whether there is scope for brand
rationalisation or brand amalgamation. To an extent, such attitudes may be
context specific, for instance consumers may be more loath to accept the
demise of a brand with a strong regional bond.
1062 James Devlin
The other main rationale for maintaining a family of corporate brands in the
brand architecture, rather than one overarching brand, was to signal to
consumers distinctive competencies in providing different types of financial
services. An example would be Abbey National using the Scottish Mutual
brand in the provision of insurance related financial services. Such an
approach makes sense if consumers do not perceive that one brand can span
all of the areas of competence required to deliver the range of financial
services in an organisation's portfolio. A further requirement is that brands
are associated with, and are effective at, signalling distinctive competencies.
In adopting such a strategy in the management of brand architecture,
managers have implicitly assumed that consumers do believe that different
competencies are required to deliver different financial services effectively
and that separate main brands within the brand architecture signal such
differing competencies effectively in the marketplace. Such assumptions
need to be backed up with evidence that consumers do hold such views. It
may well be the case that managers are spending a large amount of money
supporting separate brands to signal distinct competencies, when in reality
consumers do not perceive the need for different competencies and, hence,
separate brands. Thus managers may well be implementing brand
architecture strategies which are significantly more complex and costly than
is necessary.
The primary limitation of this study is the fact that the context is confined to
the field of financial services. Thus, the generalisability of the findings may
be questionable. Such a point is acknowledged, however, it should be noted
that the financial services context has been used with success in the past to
investigate branding and other marketing issues in services. Such a limitation
does not invalidate or necessarily diminish the value of the results and
discussion, but it does give rise to the one of the main recommendations for
further research; to investigate similar matters in other services markets.
Notwithstanding the acknowledged limitations, it is suggested that the paper
makes a valid contribution to an area of interest to academics and
practitioners alike.
Conclusions
This study employed the context of retail financial services as a case study of
the brand architecture of firms operating in a services environment. The
notion of brand architecture relates to an organisation's design and
management of its brand portfolio and in particular the number of brands
Brand Architecture in Services 1063
within the portfolio and the relationship between them. Previous arguments
advanced in the relevant literature suggested that services firms would rely
primarily on one overarching corporate brand. Findings from the current
study indicate a more complex picture in financial services. There was a
small amount of support for the corporate branded approach to the
management of brand architecture and, as expected, very little support for
the use of individual brands or the large-scale use of sub-brands. However,
the approach that received the most support from the data is a "multi-
corporate" approach where a family of main brands are incorporated into an
organisation's brand architecture. The main rationales provided by
practitioners for adopting such an approach were to maintain a strong
relationship franchise with different customer groups and/or signal distinct
competencies to the marketplace. The multi-corporate approach differs from
that predicted by the literature and represents an important addition to the
understanding of brand architecture in a services setting.
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