Brand Organizational Structures

Arens and Weigold provide an overview of the most common organizational structures of marketers large and small. There is one small point of clarification, which amounts to a rather large point of difference.

The Brand Management System

In the modern marketplace, organizations with multiple product lines usually operate with a brand management system. Brand-managed companies include Procter & Gamble, Kellogg’s, Unilever, and Nestle. Because of the power of branding, these companies have found it more advantageous to create separate brand identities for each of their product lines. Each brand group, under the leadership of a brand manager, has autonomy to make all decisions about how to build equity for their brand in the marketplace. Under this structure, the centralized marketing department operates as a service provider to the brand managers (these groups are often called marketing services departments).

The brand management system was first successfully deployed at Procter & Gamble in the 1930s, as proposed and developed by Neil McElroy (who later became Secretary of Defense under President Eisenhower). The idea of brand management is to give each brand group the autonomy to operate more independently and flexibly in response to changing market conditions. Another central component is competition. Each brand manager must carve out a unique niche for their brand or compete with other brand managers with similar product groups—from the same company!

An additional benefit of the brand management system is that if one company brand is damaged, it does not spread to other company brands.

These brand managed systems are typically seen as decentralized organizations. Because there are multiple brand managers, they have a more horizontal structure, as opposed to the vertical, top-down centralized model.

Arens and Weigold classify companies with brand managers as "centralized”; in most cases, they are seen as decentralized. They go on to discuss decentralized structures, pointing out that in these organizations brand managers have autonomous responsibility for marketing decisions related to their brand. The distinction made between this and the brand managers in the centralized system is quite subtle. In general, brand-managed companies are considered decentralized.

In contrast to the brand management system is the single-brand company. When a corporation markets its product lines under one brand (Starbucks, McDonald’s), there is need for one brand manager, and that individual usually takes the title of marketing director, marketing manager, or chief marketing officer.

Megabrands

A third basic organization structure is that of the less-common megabrand (or superbrand). This is when a brand is seen as so well developed, successful, and powerful that it is leveraged and applied to all products, even when they are in completely different product categories and industry sectors.

The classic example is the Virgin brand. Founded by entrepreneur and tycoon Richard Branson, Virgin has expanded beyond its core businesses of travel and entertainment and now consists of more than 400 companies, most operated under the Virgin brand.

In terms of brand insulation, the opposite of what holds for brand managed companies is true for megabrands. If the brand is damaged through some negative event, all of the company’s operations could be tainted.