What Is Brand Hierarchy and Why Does It Matter to Your Master Data Management?

Have you ever looked closely at a product label and been surprised to see the name of a parent company in small letters in the corner? This is an example of brand hierarchy. To put it simply, brand hierarchy represents how a company’s products and sub-products are linked to its parent brand. It also defines how these brands interact with each other. Some companies may choose to operate under a simple umbrella brand, where all products are closely linked to the parent brand. Others may choose to adopt a complex brand hierarchy due to their business model.

For example, a large shipping organization might operate under a simple brand hierarchy where all its product lines are closely linked to the parent brand, using the main brand name with modifiers such as freight, express, ground, etc. On the opposite end of the spectrum, consumer packaged goods companies often operate hundreds of independent brands across the globe. In this case, there is little indication to the consumer that the shampoo and the cheese they’re purchasing might actually be made by the same company.

The Importance of Brand Hierarchy

How people perceive your brand depends on the structure of your company, including its various business lines and the geographies they operate in. The structure of your brand hierarchy will have a significant impact on your operations, and it is imperative to choose the one that suits your business model.

Here are a few factors to consider when deciding which hierarchy structure is right for your business:

• Ensuring clear and consistent brand positioning: Successful business growth comes from great communication with your target customers. If you have strong name recognition in the market, you don’t want to confuse consumers with ad hoc messaging that doesn’t resonate with your original brand. Bringing new products in under a similar brand name and ensuring messaging ladders up to the parent brand can solve this.
• Reaching your target audience: A brand hierarchy enables you to create different yet consistent messaging for products targeted to different sets of customers or across multiple geographies. You may want to implement a simple brand hierarchy if your products all have a similar consumer. But if your products need to reach different demographics or regions, you may be better off with a more complex brand hierarchy.
• Telling a compelling brand story: It is not unusual for a company to launch different brands and products to grow its business. Some organizations may plan to do so organically by expanding their product portfolio in the same segment they are operating or by launching a completely new product. Some businesses may also choose to grow by acquiring other businesses. 

However, companies may face challenges in making sure that they are telling a compelling brand story across their product portfolio. Implementation of a robust brand hierarchy can enable you to convey your brand story effectively. It acts as a guiding principle whenever you are launching a new product or adding a new brand into the mix.

• Avoiding competition among your products: Some companies use different brand names for similar products within a specific category. For example, a consumer product company might want to use different brand names in its soap category, like Sparkle, Clean or Scrub. If all these products were linked to a single brand name, it would be difficult for consumers to choose among them. And, most likely, they would settle on using only one product. However, with different names, a single consumer could conceivably use all three products rooted in the robust brand hierarchy of the company because they appear to have different functions. 

Competition can also prevail between a product and its sub-products without the correct implementation of brand hierarchy. This usually happens when your sub- product becomes more popular than the original product itself. To prevent this, you need to create a distinct brand image for your sub-products that is closely related to the parent brand. This will ensure the image of the original products is never lost.

Whether your business is operating under a simple hierarchy of umbrella brands or a complex hierarchy with a mix of in-house brands, hierarchy management plays a key role in sustainable business growth. But it can have big implications for your master data management.

Without proper hierarchy management, your customers and employees alike could become confused about brand relationships. And it can make it difficult to effectively analyze and use your customer data, which is where technology can help.

Irrespective of which technology you implement, a robust hierarchy management solution should include:

• A simple yet intuitive interface for business users to consume master data
• A singular version of truth for every user
• A way for business users to understand the complex relationship between associated brands and other master data domains

The Benefits of Implementing a Clear Brand Hierarchy

• Increased brand recognition: When a brand can position itself to relate closely to a consumer’s needs, it enhances consumer trust and loyalty. It also creates brand recognition in the mind of the consumer. With increased brand recognition comes increased brand equity, which ultimately benefits the business.
• More effective marketing and advertising campaigns: When there are firm parent-child brand relationships established, it makes it easier for companies to launch new products into the market with minimal marketing investments. In this case, a new product brand leverages the brand equity of its parent brand. The new brand then registers in the consumer’s mind with the same trust and credibility as the parent brand.
• Improved sales and revenue: A clear brand hierarchy structure eliminates competing product brands and maximizes revenue by avoiding cannibalization among an organization’s own products. Companies with a brand hierarchy containing multiple separate brands can effectively launch similar products with different brand names and gain a bigger market share. It also enables the company to swiftly exit the market if the newly launched brand performs poorly without impacting overall brand sales performance.
• Accurate business reporting: A clear understanding of the brand architecture and the relationships between the different brands is vital to present accurate and timely information to business leaders for key decisions. These reports are key for any audits, accounting purposes or decisions that drive product efficiencies across the brand portfolio. For example, say you have a product that is sold under two different brands in different geographies. It is essential to consolidate product revenue or inventory details across these brands. That way, when you share the report with the line of business head, they have an accurate idea of how the brands are performing together.

Developing a Strong Brand Hierarchy Using Reference Data Management

Traditionally, enterprises have been using enterprise resource planning (ERP) systems for hierarchy management. However, these ERP systems are designed for specific use cases. So, you may need to implement different ERP systems for product hierarchy and brand hierarchy management.

Also, many companies offer the same products in different geographies launched under different brand names. So, even if you implement a separate ERP system for brand hierarchy, it needs to illustrate the relationship between all the related brands of a single product.

Graph technologies, where there is a strict relationship between parent and child brand, can also be used to implement brand hierarchy. But this may not be an optimal solution for companies with complex brand hierarchies.

The ideal solution should create separate master data entities for brands using master data management. It can address the challenges of managing a brand hierarchy through a reliable source of unified views. These capture the relationships between parent and child brands and among other child brands as well. That’s where the Informatica Intelligent Data Management Cloud™ (IDMC) can help.

IDMC is the industry's first and most comprehensive AI-driven data management solution. As part of IDMC, Informatica offers reference data management services to help you unlock the true value of reference data sets.

Here are some best practices to help you create a robust brand hierarchy with our reference data management services:

1. Define brand hierarchy structure for your business: Before you start implementing a brand hierarchy, it is imperative to define the various elements of the brand hierarchy. For example, defining the regional and global brands, number of nodes, elements or brands in the hierarchy, levels of hierarchy, attributes related to each of brands and more.
2. Map brand hierarchy elements to reference master data: In any business, brands are closely associated with other master data domains, such as customer, product or supplier. Hence, you need to create reference master data with the elements of the brand hierarchy to depict the complex brand relationships.

   Informatica Reference 360 supports a complex brand hierarchy structure by allowing users to define multi-level hierarchies with the desired number and types of attributes at each level. It also provides an optimal user experience for managing reference data as a tree structure for brand hierarchical data to accommodate global as well as regional brands.

3. Provide support for point-in-time versioning of hierarchies: Reference data management solutions can allow for the creation of multiple versions of brand hierarchies, each with a unique identifier and timestamp. It enables business users to track changes to the brand hierarchy over time and revert to previous versions if necessary.
   

   The solution can also be equipped to provide an audit trail of any changes made to the brand hierarchy, including who made the changes and when. This will ensure accountability and transparency in managing reference data

4. Analyze the impact of hierarchical changes: In cases of mergers and acquisitions, you need to ensure that any changes made to the brand hierarchy structure resonate well with the transformed entity. There should be no adverse impact on other systems and processes. Analyzing the impact of hierarchical changes well in advance can help mitigate the risk and make a prudent call on a possible merger or acquisition scenario.
5. Implement a flexible data model: Business needs continually change, and your brand hierarchy must reflect this. Your brand presence might evolve in a specific geography or there may be changes to the attributes of a specific brand. This calls for a flexible data model so any new changes in the hierarchy structure can be implemented without disturbing the existing model.
   
6. Enable seamless data integration: A brand hierarchy structure consists of a lot of information about business relationships. Often, it’s required to integrate data into the hierarchy from various sources. Enterprises must ensure a data integration strategy is in place to flow data into the hierarchy structure from multiple internal and external systems.
7. Establish a robust data governance process: Many business entities need access to brand hierarchy data to support their business functions. A robust data governance policy will ensure that the brand attributes are accurate and consistent, the right set of people have access to the hierarchy and any data entry rules are set.

Get Started with Reference Data Management for Your Brand Hierarchy

Consumers are familiar with brand hierarchies for global companies in the retail and consumer packaged goods industry, as they consume these products in their day-to-day life. However, companies across several other industries, including automotive and hospitality, also maintain prevalent brand hierarchies representing various business lines.

Whether simple or complex, brand hierarchies play an important role in enabling business growth. Managing the hierarchy with reference master data management will help companies engage with the right audience by uncovering data intelligence about hidden business relationships.

To learn more about the Informatica reference data management services, visit our website here.