Dynamics of International Brand Architecture

DYNAMICS OF INTERNATIONAL BRAND ARCHITECTURE:

OVERVIEW AND DIRECTIONS FOR FUTURE RESEARCH

Abstract

Brands play a critical role in a firm's international marketing strategy. A coherent international brand architecture is a key component of the firm's overall international marketing strategy as it provides a framework to leverage strong brands into other markets, assimilate acquired brands, and rationalize the firm's international branding strategy. This paper looks at the various components of international brand architecture and the different types of architecture found among a sample of large international consumer goods companies. Based on these initial insights, some key issues that need further research are identified.

Introduction

Branding is a key element of a firm's marketing strategy. Strong brands help establish the firm's identity in the market place, and develop a solid customer franchise (Aaker, 1996; Kapferer, 1997; Keller, 1998). Owning the number one or two brand in the product category provides manufacturers with a weapon to counter growing retailer power (Barwise and Robertson, 1992). A strong brand name can also provide the basis for brand extensions, which further strengthen the firm's position in the marketplace as well as potentially enhancing the brand's value (Aaker and Keller, 1990). As firms move into international markets, branding plays an important role in its marketing strategy. In particular, a judicious branding strategy provides a means to enhance the firm's visibility and integrate strategy across national markets (see Khermouch, Holmes and Ihlwan, 2001).

In markets outside the U.S., the concept of building strong brands in order to establish market position is relatively recent (Court et al. 1997). Markets are often fragmented, characterised by small-scale distribution, and lack the potential or size to warrant the use of heavy mass media advertising needed to develop strong brands (Barwise and Robertson, 1992). In addition, firms have typically expanded the geographic scope of operations on a piecemeal basis by acquiring companies in other countries or entering into alliances across national boundaries. As a result they often acquire national brands or ones with limited visibility. Consequently, companies operating internationally need to identify opportunities for strengthening their position through improved co-ordination and harmonisation of brands across countries and building a cohesive and effective architecture for their brands.

An international brand architecture provides a structure and a rationale for branding decisions at different levels of the organisation and for different geographic locations. In essence, this architecture provides the principles that guide the effective use of brands so as to develop a strong positional advantage in international markets. It should establish which brands should be emphasised at what level in the organisation, i.e. corporate, product business and product, how brands are used and extended across product lines and country, and how far branding is harmonised and co-ordinated across national borders. Without a well-conceived international brand architecture, the firm will be at a competitive disadvantage, suffering from inconsistencies in brand identity across national markets, lack of a strong corporate or product identity in international markets, and the inability to maximise the value of brands across national boundaries.

The present paper develops a framework for understanding the design and composition of a firm's international brand architecture. Current perspectives on international branding and brand architecture are first examined. A conceptual framework identifying the elements of international brand architecture is developed based on the findings of a field survey of the international branding strategies of a number of large consumer goods companies in Europe. Each of its components and the typical patterns of brand architecture found in these companies are then discussed in more detail. Finally, some directions for future research are suggested, designed to provide improved understanding of this important area of research.

Perspectives on International Branding

Most discussion and research on branding, whether in domestic or international markets focuses on the equity or value associated with a brand name and the factors which create or are the underlying source of value (Aaker, 1996; Kapferer, 1997; Keller, 1998). Considerable attention has, for example, been devoted to examining how the value embodied in a brand and its equity can be extended to other products without resulting in dilution of value (Aaker and Keller, 1990). This interest has been stimulated in part by the increasing market power and value associated with a strong brand and in part by the prohibitive costs of launching a successful new brand. In international markets, interest has been centred around global branding - defining the meaning of a global brand, discussing the advantages and pitfalls, and the conditions under which building a global brand is most likely to be successful (Roth, 1995a,b; Quelch, 1999).

While this focus is appropriate for a relatively few high profile brands such as Nike or Coca-Cola, it ignores the complexity of the issues faced by the vast majority of multinational firms who own a variety of national, regional and international brands, at different levels in the organization, spanning a broad range of diverse country markets. Typically, these brands differ in their strength, associations, target market and the range of products covered, both within and across markets. Equally the use of brands at different organisational levels may vary from company to company. Some firms such as Sony, IBM or Phillips emphasise branding at the corporate level. Others such as Beiersdorf mostly have brands at the product business level, such as Nivea and Juvena, while yet others such as P&G, have primarily product level brands.

In determining whether to emphasise branding at the corporate level as opposed to the product level or whether to adopt a hybrid structure, the firm needs to consider the role of corporate image as well as the diversity of its product businesses. Corporate brands provide strong identity for the firm's products in the market place, but do not enable differentiation of specific product businesses or product lines. Equally, negative publicity relating to a specific product or the firm's policies will affect all products and product businesses. Product-level brands facilitate differentiation