Joe Mozden Jr. is CEO of Sonic Foundrythe trusted leader for video creation, management solutions, and virtual and hybrid events.
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IBM, Toyota, Google, Dove, FedEx, Tide, Chobani – these are all brands, but some are associated with a company, while others are often associated with a product. These examples illustrate two very different approaches to brand management, respectively: one approach is centralized (under a company name) and the second approach is decentralized (to focus on individual products, which is also known as a “house of brands” model). .
The concept of decentralized brand management is often credited to Neil McElroy, a Harvard graduate who joined Procter & Gamble in 1925. McElroy noted that his Camay soap campaign competed directly with another P&G soap product. He suggested that P&G assigns responsibility for marketing products to individual brand managers rather than relying on a single marketing department for all products.
Centralized vs. Decentralized brand management
Over the course of my career, I have led initiatives in a variety of multi-brand environments, each with a different culture and business structure. Most recently, I led the transition of my current company from a single-brand to a multi-brand strategy. Through this experience, I have discovered that there are pros and cons to both centralized and decentralized branding strategies. Different companies will take different approaches depending on their mission, vision, values and culture.
The benefits of a centralized model include improved efficiency and reduced costs, as marketing costs are spread across multiple products; a consistent, convincing overall brand; and strong collaboration between teams and employees. The disadvantages of a centralized model include the potential for bottlenecks when multiple marketing initiatives require the attention of one team; less bandwidth for customized approaches to individual products; and fewer opportunities for the marketing team to develop in-depth knowledge of specific market segments.
The benefits I’ve seen in a decentralized model include specialized focus and expertise on individual products and their target markets; stronger and more specific messaging and positioning for each product; and potential for healthy competition between brands. However, there are drawbacks to a decentralized model, including higher marketing and staffing costs; reduced ability to develop and implement company-wide best practices; unhealthy inter-brand competition that can hurt morale and team cohesion; and the lack of a clear and consistent brand identity across the company.
Identifying the Right Brand Support Structure for Your Business
The cost-benefit analysis of a centralized versus decentralized branding strategy can become very complex very quickly. But here’s a thought: Instead of assuming this is an either-or decision, maybe your business can reap the benefits of both.
A distributed model with a balance between shared services and dedicated resources can enable companies to reap the benefits and minimize the drawbacks of both centralized and decentralized approaches. In a distributed model, a central group manages the overall brand and creates marketing collateral that can be used and adapted by local teams.
Regardless of the approach you choose, there are some common steps you can take to help cultivate synergy and a mutually supportive environment across your product or service lines.
Managing the culture and business infrastructure of a house of brands
The first step is to establish a baseline for what is currently happening in your product or service lines. Where are there overlaps between brands in terms of people knowledge and talent? Where are there gaps? What are the costs related to marketing individual brands compared to sales and market share?
By identifying overlaps and gaps, you can determine where to deploy expertise or budget to support brands that may be underperforming, while leveraging staff time and talent in high-performing areas.
By taking a distributed approach to brand management, you can capitalize on your company’s investments in both human resources and marketing resources. Consider appointing dedicated brand managers for each brand to ensure clear and independent leadership and accountability, but also foster connections between brand managers and between marketing, product and sales personnel for each brand.
Think carefully about the balance between shared services and dedicated resources. What can you afford in terms of dedicated resources for each brand? Where can you achieve clear economies of scale through shared services without sacrificing clear and strong brand messaging and support?
Finally, clarify how each brand’s strategy contributes to and supports the company-wide strategy, and share that information with the entire organization to ensure understanding among employees at all levels and within all parts of the organization. Communicate the successes and opportunities achieved and encourage the sharing of best practices.
Creating a climate of proud brand ownership, along with a commitment to teamwork and the support of other brands, can create a mutually supportive environment that benefits not only your brands, but also your employees and customers.
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