Should companies globalise their branding architectures? Should they just duplicate them when entering new countries and continents? It is a fact that most branding architectures have been created slowly, through time in the domestic market. They benefited from low media costs, and a lower competition. This is why we so often find ‘product brand’ architectures. They resulted from the acquisition of a company by its main competitor: to avoid losing market share, the acquirer decided to keep the brands apart. Can the same portfolio architecture be applied when entering Russia or the United States?
In Russia, as in many former communist countries, there is a unique opportunity to rapidly take a dominant position by investing fast and heavily as long as western competitors are not there, and media costs remain low. This is what Frito Lay did. This means capitalising on one brand, used as source brand or endorsement, and rapidly pushing new products into new segments.
In the United States, the challenge is the media and distribution costs. The consequence is the obligation to nest products under an umbrella brand which remains to be created. As a result we see what can be called a ‘vertical crunch’ of brand architectures. There are in fact two types of ‘vertical crunch’.
The first is a bottom-up crunch, when a mere descriptor becomes a driver (the way consumers name what they buy). For instance in Europe, the whole shampoo line of l’Oréal Paris is sold under the brand Elsève: its many products have names such as Color Vive and Energance. In the United States, Elsève has not been launched. Instead of three levels, there are only two levels (l’Oréal Paris and a wide range made of names like Vita Vive, Nutri Vive, Hydra Vive, Curl Vive, Color Vive and Body Vive).
The other is a top-down crunch, when a mere endorsing brand becomes the driver. For instance in Europe the famous biscuit speciality Pim’s is called Pim’s by Lu. In the United States, it is Lu Pim’s.
Companies also exploit local equities to carry international brands. For instance, all Unilever’s global ice cream concepts (Magnum, Solero and so on) are endorsed by a local house brand, acting as reassurance by its long-established proximity and familiarity in the country.