Carving out a compelling brand strategy in a crowded market and fierce competition

To have any real hope of success in a crowded market, a brand must stand out. It’s a huge challenge in today’s often saturated marketplace but not an insurmountable one. There’s always a way to carve out a unique positioning, and doing so will sustain growth and relevance over time.

Here, we’ll explore effective ways to build strategies for establishing a distinctive brand presence, maintaining brand strength, and ensuring resilience in the face of evolving market dynamics.

Understanding your core identity

The foundation of any strong brand lies in a deep understanding of its essence. This means identifying your brand’s purpose, positioning and unique value proposition and aligning these with the brand mission, vision, and values. Our approach always begins with a thorough analysis of these elements to ensure that they align with both the business objectives and the customer’s needs.

Tip: Conduct internal workshops and stakeholder interviews to distil your brand’s essence. Use this information to craft a compelling brand narrative that resonates with your team and your customers.

We helped a paint-manufacturing business develop a compelling unified brand identity, purpose, culture and company values by conducting key person interviews to understand what the employees believed the organisational drivers and barriers were and the shifts that needed to occur. As a result, we incorporated various sources of information to define and develop the most relevant brand strategy.

Putting data-driven insights into practice

Data analytics is powerful. It’s essential to make the most of it to uncover hidden opportunities and craft strategies that are both innovative and informed. By leveraging data, brands can gain valuable insights into customer behaviour, preferences and trends, allowing them to make informed decisions that drive growth.

Tip: Proper data analytics tools and methodologies enable continuous monitoring of market trends and consumer behaviours. These insights can be used to refine your brand strategy and stay ahead of the curve.

Yellowwood treats data as a tool for building metrics that help make better decisions. For example, we used data to guide us in executing a comprehensive market-entry strategy for Pernod Ricard, a global alcoholic beverage company, aiming to penetrate 48 markets across Sub-Saharan Africa. Starting with a meta-analysis of multiple sources, Yellowwood developed a bespoke index to assess market opportunities. Through qualitative and quantitative research, local habits, attitudes, and behaviours were understood and quantified. Additionally, market distribution and trade immersions informed a robust route-to-market strategy. The output of this work resulted in a market-entry strategy addressing entry markets, a regional strategy, a route-to-market plan and a pricing and distribution strategy.

Cultivate a people-first approach

A successful brand places people at the heart of its strategy. Combining insights and cultural context is necessary to drive creative and communications excellence. Our people-first approach ensures that our strategies are not only innovative but also deeply connected to the audience they are meant to serve.

Our GenNext research provides a deeper understanding of South African youth which enables brands to engage successfully with young people and drive impact. This focus on understanding and addressing the needs of the younger generation has helped numerous brands stay relevant and impactful.

Tip: Regularly engage with your audience through surveys, social media and community events to understand their needs, preferences and pain points. Use this information to create personalised and meaningful brand experiences.

Build and maintain strong relationships

Strong relationships with clients, stakeholders and partners are essential for long-term brand resilience. Yellowwood emphasises the importance of collaboration and engagement at all levels of organisations to ensure that brand strategies are aligned with business goals and stakeholder expectations.

Tip: Build conducive client relationships that include regular check-ins, feedback loops and collaborative planning sessions. This will help you maintain alignment and foster trust among your stakeholders.

Ensure adaptability and resilience

An ever-changing market landscape means that adaptability is crucial for maintaining brand strength. With a forward-thinking approach, brands can be in a position to identify growth opportunities and adapt to evolving market conditions.

Tip: Stay agile by regularly reviewing and updating your brand strategy to reflect changes in the market. Be prepared to pivot when necessary and always keep an eye on emerging trends and technologies.

Making long-term success a reality

Carving out a unique brand strategy in a crowded market requires a combination of strategic insight, data-driven decision-making and a people-first approach. Yellowwood’s expertise in growth, communication, data, and youth strategies gives brands the support they need to achieve sustainable growth and maintain their strength and resilience over time. To begin transforming your strategic vision into a powerful reality, get in touch.

Thriving in Tough Times: Adapting to Changes and Challenges

Economic downturns usually translate into serious business challenges that test their resilience and ability to adapt. The current local and global landscape presents a myriad of challenges for maintaining growth and operational stability. But, believe it or not, it’s not all doom and gloom.

With the right strategies and enough flexibility, companies can overcome these obstacles and even thrive during tough times.

A strategic approach to resilience

Adopting a growth mindset is essential to thrive in tough economic climates. That involves viewing challenges not as insurmountable barriers but as avenues for innovation and improvement, strategically leveraging skills and industry experience to craft effective growth strategies. To start with, business leaders need to fully comprehend the challenges at hand. From there, they can begin to investigate ways to transform them into opportunities.

Making the most of data and insights

Data is one of the most powerful tools available to businesses. A well-formulated data strategy can unlock valuable insights about the market, customer behaviour and emerging trends. By harnessing the power of data analytics, businesses can make informed decisions that drive sustainable growth, even during economic downturns. It’s about asking the right questions, seeking unconventional insights, and using this knowledge to steer your business in the right direction.

Adapting to thrive

A business should aim for more than mere survival – it should aim to thrive. For that to be possible, flexibility in business operations and strategy is crucial. This might mean diversifying product lines, exploring new markets, or adjusting business models to meet changing demands. Such adaptability empowers companies to tackle challenges head-on. By enhancing digital offerings or streamlining processes, businesses can set themselves apart from competitors (without having to reinvent themselves) and flourish.

Leveraging cultural shifts to subvert economic challenges

Understanding and capitalising on societal changes can provide a strategic edge for businesses facing economic difficulties. By leading the change and embracing cultural shifts, such as increased digital engagement or evolving consumer values, companies can harness new opportunities. Aligning business strategies with these shifts enables businesses to effectively address economic challenges, drive growth and position themselves as market leaders.

A home-grown success story

South Africa has a pretty unique economic and social landscape, so copying and pasting formulae from global markets doesn’t always work. In fact, this often puts a lot of unnecessary pressure on businesses as they try to become something they are not. Yet numerous local companies have found ways to adapt and stay ahead as challenges loom. Some notable examples can be seen in the retail sector’s response to the e-commerce boom.

With the challenges companies faced from changing consumer behaviour and the need for digital transformation, South African retailers recognised the importance of adopting e-commerce solutions to remain competitive in the long term. That meant ensuring fast and efficient delivery and competitive pricing, especially given the rise in price sensitivity among South African consumers.

Checkers is one company that rose to the occasion. They tackled the challenges above with their Sixty60 grocery delivery app, focusing on user-friendly online shopping experiences and integrating digital processes. As a result, they were well-positioned to weather the storm of lockdown restrictions that followed soon after (and the resulting downturn) as other retailers struggled to play catch-up. They demonstrated that even in the face of unprecedented headwinds, a business can expand its customer base and drive growth.

Finding a way forward

The path to thriving in tough times is paved with challenges but also with market opportunities for those willing to seize them. By focusing on strategic adaptation, leveraging data for insights, and fostering an environment of flexibility and innovation, businesses can build resilience and set themselves up for long-term success.

The key to converting the challenges businesses face into opportunities for growth lies in taking a smart approach to adopting insights and strategies for future readiness, regardless of the prevailing economic conditions. It takes more than perseverance to get it right because, ultimately, it’s not the biggest and strongest that necessarily survives but the one most responsive to change.

Get in touch to chat with us about a tailored strategy to overcome the challenges your business faces.

Thought Leadership Wandile Nzimakwe

Brands & Branding remains true to the cause of successful branding which depends on human instinct to keep it real.

 

 


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Yellowwood Ask Y Study

At Yellowwood we believe that brands have the power to change organisations and human behaviour for the better.

Core to accomplishing this has been to keep asking why until we get to the insight that can unlock this change. The first annual Ask Y study seeks to better understand the drivers/motivators of human behaviour in South Africa to ultimately help businesses build sustainable growth strategies.

We hope that our approach provides frameworks for businesses that enable stable and consistent long-term approaches to strategy while simultaneously allowing for variation in people’s motivational factors and the ambiguity of a volatile, ever-changing business environment.

 

Africa’s Opportunity in the future world of work report highlights

We recently launched a report that investigates Africa’s opportunity in the future world of work. View the video below for highlights from the launch event.

Up, close and very personalised

In the film ‘Field of Dreams’ an out-of-luck farmer played by Kevin Costner sees a vision for a baseball field in his cornfield. He builds the baseball field from his vision spurred by the voice telling him that if he builds it, ‘they’ will come. Before long, dead baseball players take to the field and Mr Costner’s character wins all his detractors to his vision.

The same adage applied to business hasn’t seen such a happy ending and has proved to be one of the biggest marketing fallacies of all time.

Ford invested some USD400 million in its Edsel model introduced in 1957 and taken off the market three years later as it literally didn’t go anywhere. Americans in those days were looking for smaller, more fuel efficient cars. In the 1980s, RJ Reynolds experiment with smokeless cigarettes actually went up in smoke along with its USD325 million investment.

The real world

Despite mounting evidence, the world of business is replete with examples of companies that aim for the same happy ending as the movie, failing to realise that movies have one director that decides how it must end while in the real world every customer is that director.

Netflix uses an army of designers, data scientists, and product specialists who control algorithms that recommend content to its users around the world. The team analyses how subscribers click, watch, search, play, and pause, and uses the data to fine-tune the company’s mostly invisible personalisation technology that decides which titles appear on your Netflix homepage. In reality its Netflix that decides how you chill!

Traditionally, brands segmented their markets using demographic and/or psychographic data, categorising customers in silos of Living Standard Measures and then used the lowest common denominator to inform their go-to-market strategy.

It’s a new world

The world today is hyperconnected – any check-in’s, relationship status changes, baby bumps and showers, bachelor parties, new holidays and memories all feed into algorithms that track you. No one is anonymous. Despite growing concerns around privacy, customers want to be treated as ‘individuals’ and they are gravitating towards platforms and companies that understand and offer this.

The shift to a more individualised society that values experiences more than goods has resulted in a strong drive towards personalisation. People are taking longer to move out of home, choosing to get married and have children later if at all, and living longer, healthier lives.

These shifts have created the time and resources to lead a life much more focused on meeting individual needs rather than those of our families or employers. The rise of this more self-serving society has driven the application of technology to deliver much more personalised experiences.

It’s personal

In the world of advertising personalisation lives on a broad spectrum, it can mean behavioural targeting developed into a fine art by Google, the creative use of social data such as Facebook, the kind of collaborative filtering practised by Netflix, or a combination of any of these. The risk is that human desires cannot always be accurately predicted by machines and inaccurate assumptions can easily exasperate customers. For example Urban Outfitters in the US experimented with simple gender personalisation showing women’s clothes to women and men’s clothes to men, only to find it ticked the annoyance box amongst women who also shopped for their husbands and boyfriends and vice versa.

If we look beyond advertising there are some very good examples of brands that are using data to drive a more personal experience for customers. Whether you want to inspire consumers to go and buy your product, provide them with an unparalleled experience or even go as far as customising that experience – brands are using myriad of approaches that push insight into actionable and achievable ideas.

It’s customisable

NIKEiD for example allows customers to design their own products based on a wide range of options and have them delivered within 3 – 5 weeks. This offering is now extended to one of their other brands, Converse. This has required Nike to develop strong direct-to-customer (DTC) purchasing and delivery channels, something that had previously been handled predominantly by retailers. In 2017, DTC sales contributed as much as 30% to Nike’s revenue.

Another approach is to build customisable software into your products that can offer personalised advice. Oakley partnered with Intel to create the Radar Pace training sunglasses with built-in earbuds that respond to voice commands. They have a virtual coach that offers personalised data, guidance and encouragement during your workout. A significant benefit of this approach is that it builds credibility through demonstrable expertise in addressing a genuine customer need.

A third approach is to sell standardised goods but offer them in customised packages. A brand that has been doing this successfully is L’Oreal. In 2014 the company launched the ‘make-up genius’, an app using Augmented Reality (AR) technology to allow users to scan their faces and experiment with L’Oreal’s vast range of make-up products. Users can try individual products or complete looks, as well as make in-app purchases.

With over 20 million users globally and product trials up by more than 65 million in 2015, L’Oreal may not be making unique products for individuals, but the ability to customise a basket of goods, creates a feeling of personalisation. Commerce has followed customisation, as sales rose by as much as 36% in 2017.

A world of opportunity

Data is abundant and offers a world of opportunity, but brands have to earn customer data by providing a form of a value and a highly personalised experience is seen as valuable to customers.

In deciding what to pursue brands need to evaluate the risk and rewards of doing it well versus getting it wrong – and, moreover, the risk of not doing it at all.

Why own when you can rent?

The creative destruction of the access economy is disrupting traditional industries and creating new opportunities. The rent or buy conundrum is one usually faced by prospective home-owners but it is increasingly applicable to entrepreneurs as well.

The traditional model for starting a business involves investing in tangible assets that can be put to work to earn an income for shareholders. However, technology has forever changed this traditional paradigm.

The advent of companies like Uber, Rent the Runway and Airbnb have shown that it’s no longer necessary to own the assets required to run a business. In fact, in many ways it’s better not to own them. Instead, the real value is in owning the platform that enables you to connect potential consumers with the owners of underutilised assets.

Collaborative capitalism

This concept has come to be known as the access economy, a model of collaborative consumption that allows people to rent goods rather than own them outright.

In many ways, this access economy can be described as collective capitalism that allows personal assets to be pooled via an internet-based intermediary platform at competitive prices that match dispersed networks of willing sellers with willing buyers.

By connecting idle resources with latent market demand, the owners of those resources are able to monetise assets that were not being fully utilised.

Airbnb allows everyday people to rent out a room or a portion of their homes to visitors seeking accommodation, thus enabling them to earn an income they would’ve otherwise missed out on.

Similarly, services like Uber and Lyft enable anyone with a car to provide a ride service to people seeking transport. By facilitating convenient transacting between private owners of resources and those who want to use them, the access economy is able to massively boost efficiencies, often resulting in better pricing for consumers than traditional industries.

Access versus ownership

This is why services like Uber are able to undercut traditional metered taxis. Of course, this raises the question about whether it’s worth owning any assets at all.

Society, particularly millennials and city dwellers, increasingly view access as preferable to ownership, particularly for goods that are only used.

As recently sited in the McKinsey Automotive report, in a world in which cars are not in use 95% of the time on average in urban cities, ownership can be a burden.

One of the most significant societal drivers of this trend is the rising population densities of major cities. Currently 54% of the world’s population live in urban areas and that number is expected to rise to 66% by 2050, according to the United Nations Department of Economic and Social Affairs.

This is also driving a shift in social conventions with people no longer viewing ownership of assets as a necessary sign of achievement. For example, even in cities where public transport is unavailable or unreliable, services like Uber are not only allowing people to forfeit owning a car but it is even becoming fashionable. It’s the perfect example of the market solving a customer need.

Trading non-tangible goods

The access economy also allows people to trade non-tangible goods. The internet has spawned a host of platforms that connect workers with people or companies needing specific ad hoc tasks completed.

A truly innovative example is Eden McCallum, a company that is simultaneously bringing the access economy to the world of consulting while also redefining its business model.

Eden McCallum specialises in matching client requests with highly qualified freelance consultants who have the requisite experience and expertise to complete the task. This provides a tailored solution to the client at a highly competitive rate while the consultant enjoys the freedom and flexibility that comes with being an independent corporate advisor. Rent the Runway is another access economy success story.

Founded in 2009 as an online service that allowed women to rent designer dresses and accessories for special occasions instead of having to purchase them, the company has since grown into a fully-fledged retail operation with bricks and mortar stores in several major cities across the US with over 6 million customers. It has also attracted significant venture capital and was recently valued at $1 billion, giving it coveted ‘unicorn’ status.

This reach of the access economy even extends to financial services. Peer-to-peer (P2P) or social lending allows people to get unsecured personal loans directly from industry peers or interested investors.

This effectively cuts out middlemen like banks or financial institutions, resulting in more attractive interest rates for both borrowers and lenders. P2P platforms like Zopa allow people to get loans for everything from funding a business to paying for medical bills.

Although the access economy has massively disrupted traditional industries it has also attracted a lot of money. The Boston Consulting Group (BCG) estimates that $23 billion in venture capital has been poured into the economy since 2010.

Investors are not only drawn to the entrepreneurial agility that these disruptive platforms have engendered, but also their hyperscalability.

In conclusion

The power of technology means popular sharing platforms are able to deliver agility at incredible scale as increased demand is added to the system. This plays a significant role in creating concentrated markets due to the network effects upon which they thrive.

A local example of this is Takealot’s expansion into multiple categories including books (Kalahari), food (Mr. Delivery) and clothing (Superbalist). With the access economy expected to grow to around $335 billion by 2025 according to The Current and Future State of the Sharing Economy, we can expect a lot more investment to pour into fledgling platforms.

That creates both opportunities and challenges for players looking to either ride, or avoid, this coming wave of creative destruction.

Experience trumps channel

Brands need to show up in relevant environments with tailored offerings and a seamless purchasing journey.

Multiple channels

In this modern business age some of the most valuable (and profitable) customers typically make use of multiple channels when transacting.

This has prompted companies to move from a sales model where the same products were made available across multiple channels to one where customers are able to shift seamlessly across channels, even when making a single transaction, without disrupting their purchasing journey.

In other words, if you begin processing a transaction on your mobile phone and then log in on your laptop later that day, ideally the same prospective purchase should be tracked or logged to facilitate a seamless transition for the client from one interface to the next.

Keeping track

This obviously requires companies to have the ability to track and identify customers as they shift across multiple platforms, and ideally offline channels as well.

Brands like Amazon have been pioneers in this sort of positioning which has been dubbed ‘contextual omnipresence’. This is not only about seamless transacting, but also about ensuring customers can purchase your product as and when they might want it in the optimal format and price point. But while technology can allow you to create a presence for your brand in almost any environment, you have to ask whether your brand is relevant and credible to your customer base in that particular environment.

Efficiency challenge

In addition, you need to ask what your brand is doing in that environment that adds value to customers, enhancing their overall experience.

While minimising the amount of time and effort it takes for a customer to make a purchase is regarded as a significant value add, this is typically only recognised and appreciated the first time it happens and quickly becomes an expectation. One-touch and voice command ordering are great examples of this type of value.

New tools

A development to be wary of is the rapid growth in search through voice. Customers searching for items using voice technology will not be presented with the same variety of options using traditional search tools. This creates a big opportunity for incumbent players to use new technologies to lock-in prospective customers but also creates a higher barrier to entry for new market players.

The proof that voice-enabled technology is the next big thing is illustrated by Amazon’s recent decision to retire its proprietary Amazon Dash devices, which used specialist wands and buttons to help clients track household items that were in short supply and then facilitate automatic ordering. Amazon Dash button used a small device that could be placed around the house and programmed to order certain consumer goods like washing powder at specific times. Amazon discontinued the service on 1 March 2019 saying product subscriptions and voice-activation services like Alexa had evolved sufficiently to replace Amazon Dash.

The future of retail ordering is therefore clearly heading in the direction of voice-enabled technology.

Voice technology

If you want to utilise new technology to make purchasing easier you need to understand your customer and use the right purchasing technology for the environment.

Modern data analytics is a great tool to better understand your customer and the environments in which your brand, and product may be relevant. Combining this, with more traditional methods of research, can provide real insight into the need your brand could fulfils in a way that will deliver value to the customer and the business in a sustainable way.

The second area is building purchasing technology that can operate seamlessly across platforms and devices in fewer steps. As we become accustomed to simpler ordering processes, our tolerance for anything longer is reduced. The more intuitive it is for customers to make the purchase decision, the more likely your brand is to benefit.

Privacy and permission

While gathering customer data can yield incredible benefits, if you want to harvest customer data you need to offer a very clear value-exchange if you want to get customer permission to use their information.

Customers are increasingly aware of the fact that their data has value, and as a result have begun to expect something in return for sharing it. The value exchange required is different depending on the category, customer and the type of information requested. As concerns about data security, privacy and ownership increase and governments start implementing legislation to protect customers, the pressure to offer a clear value-exchange in return for customer data will mount.

Discounts on products can work, but some of the most effective examples of value exchanges are related to a compelling customer experience. This can range from entertainment through gamification; granting access to free content or the ability to co-create the product offering.

A crucial component of the value exchange will be confidence in the security of customer data, particularly when it comes to information that makes people vulnerable to financial breaches.

The need for speed

In an age where leisure time is an increasingly precious commodity, customers are placing an even greater premium on convenience.

The same adage applied to business hasn’t seen such a happy ending and has proved to be one of the biggest marketing fallacies of all time.

While there are multiple societal factors driving this change, perhaps the most significant is the pressure we feel to make the most of our limited leisure time. That makes convenience a critical driver of decision making, particularly when it involves a purchase.

Speedy retail

Nowhere does this manifest itself more pervasively than in the world of digital retail, where the combination of mobile telephony, online payments, sales data and analytics technology has facilitated incredible leaps forward in order and delivery time.

Where previously customers were happy to wait a few business days for delivery, today that can seem like an eternity in a world in which consumers demand instant or near-instant gratification.

Speedy delivery

Understandably, both established companies and startups are trying to capitalize on this rapidly growing trend.

In 2007 ‘Amazon Prime’ was launched guaranteeing one-day delivery. By June 2015 the company had launched ‘Amazon Prime Now’ enabling customers to get delivery in an hour. In the world of always-on digital retail, response times are counted in minutes rather than hours or days. Amazon rivals like Walmart and eBay have also responded with their own quick response delivery services. Even grocery stores like Tesco in the UK offer consumers the ability to shop online and have their groceries delivered seven days a week.

Locally, the service is offered by certain retailers like Woolworths although usually only in specific areas. Ride hailing service Uber is even capitalising on this demand for instant gratification with its own online food ordering and delivery platform. Uber Eats allows you to find food you like from local restaurants and have it delivered to your doorstep. South Africa is one of three countries along with Estonia and Finland where ride hailing service Bolt, formerly Taxify, is rolling out its own food delivery service to capitalise on this growing demand for instant service.

Andisa Ntsubane, Head of Marketing Strategy at Old Mutual, says even in the world of financial services, immediacy has become the name of the game. “Research shows that customers will visit four websites, select the ‘contact me’ option, and the first brand to call wins the business,” he says.

Luxury clothing brands like Burberry and Tom Ford are also embracing what is called the runway to retail model. Fashion conscious consumers used to have to wait months for exclusive brands featured at premier events like Fashion Week to make their way to their local stores. However, brands are now embracing the concept of immediacy by selling exclusive items at select stores in select locations immediately after fashion shows. Not only does this inject new publicity for the latest fashion collections but it also brings the runway experience to a wider audience.

As brands across a variety of sectors embrace new sales models or employ the power of technology to reduce waiting times and provide more customised product offerings, consumers are increasingly requiring stronger justifications from those brands that are not making the effort to do so. Some analysts have even gone so far as to say that the world has moved beyond the age of technology and is now firmly in the grip of the age of experience.

Customer centricity

Placing the customer at the centre of everything you do as a brand or business is increasingly becoming not only the norm, but the expected way to do business.

A transaction is no longer simply about an exchange of goods or services at an agreed price, but also about a memorable experience. Even the smallest micro-change in the quality of a customer’s experience can have an inordinate impact on purchasing behaviour.

Cutting out unnecessary red tape like filling out forms and time wastage is a crucial component of providing a more seamless shopping experience. After all, if you can’t make it easier for consumers to spend money with you then why should they bother doing so at all?

Mergers & acquisitions: How to manage growth with the right brand architecture strategy

According to Reuters, there were over 50,000 merger & acquisition (M&A) deals announced in 2018. By May, R26.6-trillion had been spent on M&As, more than seven times SA’s annual GDP.

SAB and AB InBev, Amazon and Whole Foods, Heinz and Kraft, AT&T and Time Warner, Microsoft and LinkedIn, and Bayer and Monsanto are all examples of M&As in recent years involving monoliths of industry, totalling R4.9-trillion.

As brands consolidate to survive, brand architecture strategy is becoming increasingly important.

Rephrasing the question

In 2011, The Economist asked: “Do companies have to buy others to grow?” This was a pertinent question for the time, given that companies had lots of money and little direction on what to do with it. After the financial crisis, frugal spending by the private sector meant they had plenty of cash, leaving many executives with the question of what to spend it on.

Eight years later it seems that the question, though still relevant, needs to be rephrased. Something like “Do companies have to buy others to survive?” would do better given the consolidation of one of the world’s biggest tech firms, Amazon.

Don’t be ‘Amazoned’

Amazon is known for growth via acquisition, which has put a number of businesses and industries under threat. In rumoured anticipation of Amazon going into the prescription drug game, pharmacy retail chain CVS purchased Aetna, a medical insurance company, in a merger worth R963-billion. Vertical integration is the new play by incumbents to fend off agile Silicon Valley firms, like Amazon, that have disrupted sleepy industries.

The Aetna-CVS merger isn’t the only example of companies trying to prevent themselves from being “Amazoned” – when firms are put out of business by the retail giant. Walmart has been on a spending spree, notably buying online retailer Jet.com for R13.9-billion in 2016.

As postulated byThe Economist, it seems that M&As have become less of an offensive play and more of a defensive one in today’s business environment.

Hire the architect before building the house

M&As are difficult. According to 2017 research released by KPMG, only about a third of M&As or takeovers add value to shareholders. Many companies struggle to integrate capabilities, cultures and brands. Clients and markets may also be confused by the new structure and how it would fundamentally change the business and its offering. Enter brand architecture.

Brand architecture is the deliberate and strategic design of the structure of a company that has numerous offerings or businesses. Virgin, for example, has multiple offerings under one brand: Virgin Atlantic, Virgin Mobile, Virgin Insurance and Virgin Active, to name a few. Telesure has taken a different approach. Auto & General, Hippo, Dialdirect and 1st for Women do not hold the same name as the “mother brand”.

There are various other approaches to brand architecture, but the one commonality is that there is always a strategic solution that is a best fit for the firm. Here’s a look at three broad ways to tackle the problem.

The three that be

Simply put, there are three overarching ways to construct your portfolio: branded house, hybrid, or house of brands.

Branded house involves multiple entities that are all named after the “parent brand”, often called a monolithic brand. Hybrid includes a range of strategies within one portfolio. This often involves an endorsement or strategic association with a parent brand. A hybrid approach is often considered a “catch-all” approach where the structure doesn’t fit the other two. House of brands are independent brands within a portfolio.

Where’s the money, honey?

Each of these three designs should be evaluated against the strategic needs of your business, notwithstanding the depth of your pockets.

As with any strategy trade-offs need to be made. In this case there is a trade-off between the level of investment behind the brand architecture strategy and the flexibility that each approach can give you.

Typically a branded house would require the least level of marketing investment, as the acquired company would be absorbed into the parent company, resulting in the management of a single brand. In addition to this, all marketing efforts would build equity back into a single brand. However, this approach means that there is a lot of control that the one brand may have over another, which may in turn create a clash of cultures as one brand absorbs another. This is most often the case when a merger happens.

On the other hand, a house of brands would require significant investment as you would have to manage several different brands that don’t ladder up or build equity into anything but themselves. However, this approach does give you flexibility as you may not be bound by enforced brand guidelines from other brands in the organisation that has acquired you.

A hybrid brand would fit somewhere in-between. The Coca-Cola Company, for example, has both a branded house (Coca-Cola original, Coca-Cola Light, Coca-Cola Zero, Coca-Cola Life) and a house of brands (Dasani, Fanta, Sprite, Fuze and so forth). In this case there can be both flexibility and control within one brand architecture strategy as well as varying levels of investment related to the brand architecture strategy in question.