How understanding latent customer needs can help develop better brand positioning strategies (page 1 of 2)

In the ideal scenario each brand in the portfolio serves a specific market segment, cannibalization is minimized and maximum brand equity is accrued for the parent company.

Marketers who understand the unmet or latent needs in the market are able to align Brand Positionings within the portfolio with these latent needs, or create new Brand Positionings that stretch the parent brand into new markets. By understanding the nature of Brand Architecture using the Conversion Model™ to determine how equity flows between parent and sub-brands, marketers are able to establish whether sub-brands should be positioned as part or separate to the parent brand.

In this article we present a case study where we measured the latent needs in the market, aligned theses with the current Brand Positionings, and used the Conversion Model™ to assist the strategic thinking behind the Brand Architecture.

First, some concepts

Before we get into the case study as such, an introduction to some of the concepts of brand management is in order.

The Brand Foundation is a useful tool in understanding and integrating information about the brand. One dimension of particular interest is that of Relevance. Relevance is simply the extent to which the brand meets the needs of different groups. A brand may have a product quality, but if that quality is not relevant to the market it is not going to be successful. Following on from Relevance, the Brand Position is the space in the consumer's mind that the brand wants to own (for example, FedEx owns "Next Day Delivery" ). Brand Positionings, in turn, fall within a broader Brand Strategy that moves the brand closer and closer to the Brand Ambition (the big vision). However, having Brand Positionings without having Relevance is useless, and this is where understanding the latent needs in a market helps.

Why are Brand Positionings and Brand Ambitions important when we think about Portfolio Management ? What happens when you have more than one brand in your portfolio ? Should they all have the same Brand Ambition ? Not necessarily. Each brand should feed into an overarching Portfolio Ambition (the ambition of the parent brand). Each individual brand ambition should operate synergistically to maximise the flow of equity to the parent brand. That's the theory. In practice, it seldom happens.

There are several ways in which companies structure their brands to achieve the objectives of the business strategy. When a Masterbrand architecture is used, equity flows from each sub-brand to the parent brand (because each sub-brand carries the parent branding). When using a Standalone or Portfolio architecture, equity does not flow to the parent brand but remains within each sub-brand (because the sub-brands do not carry any parent branding). In Shared (Endorsed) architecture each sub-brand accrues its own equity, but also allows for some equity to flow to the parent brand. In a Shared (Overbranded) architecture equity flows to the parent brand, but each sub-brand also accrues some of its own equity. Finally, what is called a Hybrid architecture is the most difficult brand architecture to manage. Some brands allow equity to flow to the parent brand, while others keep equity to themselves.

The case study

The parent brand (referred to here as "Acme Corp" to protect confidentiality) in our case study is an international industrial machine and tool manufacturer. "Acme Corp" operates in three sectors and owns several sub-brands.