Entertainment and brand architecture are now front and center as the Paramount-Warner Bros. merger unfolds.
New York Magazine has a story about David Ellison and what Mr. Ellison may or may not do with Paramount and Warner Bros. once the Warner Bros. purchase finalizes. If you are interested in brands, skip the juicy parts of the New York Magazine story and hone in on this paragraph:
“Ellison now has $79 billion in debt and a boatload of problems to solve. How do CBS and CNN coexist? Nickelodeon and Cartoon Network? The 65-acre Paramount studio lot in Hollywood and the 100-acre Warner Bros. lot up the 101 in Burbank? And how do you operate two movie studios under one corporate roof? Last year, Paramount announced a version of A Christmas Carol starring Johnny Depp – his first major American film since the trial with Amber Heard – while Warner Bros. announced its own version of Dickens ’ tale directed by Robert Eggers with Willem Dafoe as a potential lead. Is there room in one company for two Scrooges?”
These highlighted problems are not just in the bailiwick of financial engineering. Brand management is front and center. If you know brand architecture principles and the available options, figuring out how to manage a situation such as the Paramount-Warner Bros. marriage provides extraordinary clarity and a blueprint for resource allocation, communications, and brand value.
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Take Marriott, the largest hotel operator. Marriott owns many brands and has segmented them into different groups. Marriott is considered an outstanding hotel operator. Not every hotel carries the Marriott name. This is because Marriott has a clear brand architecture understanding and framework. In their luxury hotel grouping, only one brand has the Marriott moniker, JW Marriott. The Ritz Carlton and The St. Regis are not labeled Marriott. Yet, if you stay at a Ritz Carlton or The St. Regis, you do gain Marriott’s Bonvoy loyalty program points.
Fairfield Inn & Suites by Marriott does carry the Marriott connection in its name, as does Courtyard by Marriott and Residence Inn by Marriott. Marriott provides authority and hotel management excellence to these brands. Which do not have the same sort of pedigree as St. Regis and Ritz Carlton.
The reasons for naming and connecting portfolio brands are not haphazard choices. Marriott has a clear brand architecture.
So does Toyota. Toyota does not brand Lexus as a Toyota brand. Yet Lexus owners know that behind every Lexus is Toyota excellence, reliability, quality and innovation. Hyundai leadership wanted to follow the Toyota-Lexus approach with the entry of Genesis, but Hyundai dealers wanted to be able to sell this high-end Genesis brand.
HBO made a brand architecture mess, confusing customers with the initial HBO Max relationship and naming. HBO still keeps customers in the dark about HBO versus Max. The brand architecture has been mismanaged from the get-go. Confused customers is not what a brand needs. The indecision of which brand was the authority and for what each brand stood was and still is bewildering.
Scope Mouthwash used to be a stand-alone brand. Now, it carries the Crest brand name on bottles. Scope is now part of the Crest dental health brand promise.
In the early 1990’s, my business partner and I worked with IBM. ThinkPad, the laptop, developed by IBM engineers, was created by a skunk-works group in Boca Raton, FL., far away from Westchester, NY. The belief, at the time, was that those immersed in the mainframe business would not be able to visualize and actualize a laptop. When Lou Gerstner arrived as CEO, he made it very clear to the ThinkPad team: this is an IBM product. If you cannot live with ThinkPad branded as IBM, you might consider working elsewhere. The power of IBM’s reputation in computing supported ThinkPad’s reliability, quality, and performance, so much so that ThinkPads were part of the NASA space vehicles.
I consulted for Electrolux AB for 9 years. Electrolux AB owns many well-known brands globally, such as AEG, Zanussi, Molteni, and Frigidaire. One of our first tasks was a brand architecture for Electrolux. Would each brand be Electrolux AEG or AEG by Electrolux or AEG, for example? These are not simple choices. Each approach reflects a particular brand architecture, which affects customer perceptions and resource allocations.
At the time, Electrolux owned Husqvarna, the manufacturer of outdoor equipment (bought in 1978; spun off in 2006). Husqvarna management was so aghast at the possibility that the Husqvarna brand would carry the Electrolux name, that management refused paychecks that carried Electrolux as the payor.
The purpose of brand management is to achieve enduring, profitable growth for the business. Having a clear, actionable, agreed-upon brand architecture is absolutely essential.
Here is a Brand Architecture Primer. There are five basic brand architecture approaches: Hallmark, Solo, Extension, Family, and Combination. Although each management consulting firm and ad agency has its own names for the approaches, these are the available options.
Hallmark
A Hallmark brand stands for familiarity, quality, leadership, trustworthiness, area of excellence, shared values, heritage, and brand character. IBM, for example. GE before it broke into 3 businesses.
A Hallmark brand tends to be a corporate brand. Especially in industrial brands, the brand that really matters is that which carries the company name. In industrial companies, brand values are very closely linked to company goals. The Hallmark approach to brand architecture is efficient, durable and flexible. The Hallmark brand reduces costs, gives customers a sense of community, provides a seal of approval and creates common ground.
With a Hallmark brand, the portfolio brands are generic descriptors, such as GE Jet Engines or GE appliances, prior to its reorganization, or IBM mainframes.
When I first arrived at Electrolux, the generic divisions were wet (washers, dishwashers), dry (dryers), hot (cookers) and cold (refrigerators). At the time, as a manufacturing enterprise, Electrolux saw itself as a Hallmark brand with a portfolio of generically defined motorized products.
Solo
Solo branding began in earnest with P&G. Under the Solo branding approach, each product has its own design and a relevant, differentiated benefit.
P&G treated Crest as a solo brand – it was toothpaste. Tide was powder laundry detergent. If you wanted a liquid laundry detergent, you bought Era.
Originally, Mars took this Solo approach . There was 3 Musketeers (chocolate and nougat); Milky Way (chocolate nougat and caramel), Snickers (chocolate, nougat, caramel and peanuts). This was way before Mars had brand varieties and extensions such as Snickers Almond or Snickers Ice Cream. M&Ms had two offerings: plain and peanut.
Solo branding as an approach is also quite effective, highly focused and provides accountability.
Extension
Extended brands are brands that deliver a relevant differentiated benefit across multiple product designs allowing customers different ways to interact with the brand. Advantages of a brand extension approach is that it is efficient, flexible, dynamic, strengthens the customers’ convictions in the brand promise and increases customer share.
When Samsung started to sell its appliances in the US, it was helpful that many people owned Samsung mobile phones. The Samsung mobile phones create a link to the Samsung brand, which supports innovation, reliability, and quality.
P&G took Tide in this direction. You now can buy Tide in powder, liquid, Pods, Tide Free Tide with Bleach and so forth.
Arm & Hammer has an extension brand architecture. You can buy Arm & Hammer Baking Soda, toothpaste, deodorant, liquid hand soap, laundry detergent, dryer sheets, cat litter deodorizer, carpet and room deodorizer, for example.
Family
There is a tendency today to use the Family branding brand architecture approach as brands buy other brands or introduce new ones. Family branding is the approach for Paramount-Warner Bros. But, there are two ways to manage family branding.
With family branding, there is an authority brand delivering innovation and QLT – quality, leadership, and trustworthiness. Underneath the authority brand is a parent brand that delivers relevance and each relevant brand parent has a group of differentiated brands.
General Motors is the authority. General Motors has Cadillac, GMC and Buick as parent brands. Cadillac has a group of differentiated brands such as Escalade and Lyriq. GMC has Yukon, Denali. Buick has Enclave and Envista.
Kimberly-Clark has Kleenex and Huggies. Huggies has diapers in a variety of offerings, such as Pull-Ups and baby wipes. Kimberly-Clark is the authority with innovative expertise in paper goods, while Huggies is a relevant baby care brand with a group of differentiated brands.
Family branding comes in two flavors. There is Endorsement branding and Master branding.
With endorsement branding, the relevant brands, such as Cadillac or Huggies, are emphasized, while the authority brand, General Motors, reinforces QLT. Fairfield Inn by Marriott lets a guest know that Fairfield Inn is supported by the authority (QLT) of Marriott. It is Embassy Suites by Hilton.
With Master branding, the authority brand is emphasized. Hilton Garden Inn; Hilton Grand Vacations. BMW uses a master brand approach.
With brand architecture, no single approach may be the ONE for a brand portfolio. Marriott and Hilton use endorsement branding, master branding, and solo branding.
Electrolux first instituted the Master brand approach, but then switched to an Endorsement brand approach as the established European brands believed in their own power. Now, the branding is more flexible.
Combination
As for combination branding, there are two distinct options: co-branding and component branding.
Co-branding is basically a brand-with-a-brand. Both brands share a common identity with the brand promise. Taco Bell Doritos Locos Tacos; Citi AAvantage Card.
Component branding is a brand-within-a-brand. Most famously, Intel inside (your computer). Pop-Tarts with Smuckers. Karastan carpets with Scotchgard. Timberland boots with Gore-Tex. Frying pans with Teflon.
Brand Architecture is not a save-all. However, a portfolio of Paramount-Warner Bros.’ size requires a lot of strategic brand management thinking. Both Paramount and Warner Bros. must be understood in terms of authority, area of expertise, trustworthiness, quality, leadership, innovation and heritage. Is there an authority brand to cover both Paramount and Warner Bros.? Or is either Paramount or Warner Bros. the authority brand? Where do the other pieces in the two portfolios fit? What are the brand promises for each of these entities? How do these entities interact? How do these brand relate to each other within the portfolio? Are there any brands that are the same? What is the plan to build a brand when there is a merger of two brands?
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Again, this is not easy. And, yes, there will be people who are not happy. But having a framework, such as a brand architecture approach, will be critical. Paramount and Warner Bros. are two great brands. Financial engineering will undoubtedly happen. To generate enduring, profitable growth, it is worth implementing a brand-architecture approach to managing these brands.
Brand management is business management.
Contributed to Branding Strategy Insider by Joan Kiddon, Partner, The Blake Project, Author of The Paradox Planet: Creating Brand Experiences For The Age Of I
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