Connect and protect

Getting masterbrand strategy right requires companies to build effective emotional connections with each brand’s audience and then mitigate against reputational risk. Brittany Golob discusses portfolio brands.

In 2015, the Volkswagen Group was the centre of a scandal related to vehicle emissions transparency. It suffered reputational and fiscal damage as a result. But, it managed to contain the impact to the VW consumer brand, sparing in the process other brands within the group like Bentley, Skoda and Porsche.

A portfolio of brands requires a deft handling in crisis situations. But for companies that set up effective masterbrand strategies that allow for enough flex within the family and strong emotional ties with target audiences, both parent and sub-brands will succeed.

Crisis comms

When crisis hits, as it did for VW, there is a risk of a sub-brand damaging the parent and sibling brands. Similarly, if the masterbrand undergoes a crisis, it may affect the sub-brands. “This is one of the risks of a purely branded house approach,” says brand consultancy Siegel+Gale’s west coast managing director, Katie Conway. “If everything is connected, a crisis in one area can impact perceptions overall. But many companies see the benefits of a branded house approach – for example, efficient impact and accelerated growth – as outweighing the potential risks.” 

In 2023, Bud Light was the subject to a widespread US boycott because of a collaboration with a transgender influencer. There was nearly a 30% dip in sales in the months following, according to the Harvard Business Review, without the swift recovery generally noticed after boycotts of the like.

But, CEO of AB InBev, Bud Light’s parent brand, said in an earnings call in February 2024 that Bud Light stablemate Michelob Ultra wound up gaining shelf space and growing sales as a result. The impact of the boycott was limited to Bud Light itself, it didn’t reach the parent company or sibling brands. In fact, a sibling brand managed to gain ground as a result.

Andy Lipscombe is the director of brand strategy at FreshBritain, a consultancy that specialises in portfolio brand consultancy. He says that crises can be mitigated when there is a family of brands by building strong connections with each brand’s individual audiences. This was why Volkswagen was able to maintain the reputations of its brands unaffected by the emissions scandal. “I think what they do is they defer the connection with the consumer – the reputation – with each brand, rather than the group themselves. So when they had their emissions scandal, they were able to compartmentalise that.”

Masterbrand strategy

Getting the masterbrand strategy right relies on understanding the audience of each brand and building a strategy to meet their needs.

This is what tech giants have done well in recent years. Alphabet’s creation as the parent brand of Google in 2015 or Facebook’s introduction of Meta in 2021 were examples of companies wanting to expand their propositions without diluting their consumer brands or their connections with users, says Will Biondi, strategy director of DeSantis Breindel.

But, he adds that B2B companies often create families of brands in the same manner, but for slightly different reasons. There may be regulatory requirements that demand the development of different corporate entities or it might be a way to simplify a convoluted brand architecture in a company that has grown through acquisition. He says, “[Masterbrand development] just makes sense to sort of strive towards building equity in brands, but to take a really diligent approach to protect against risk, whether that’s legal or regulatory. It can also be used to introduce capabilities in a different sort of product set.”

Conway agrees, pointing to Microsoft as a good example.

“Many years ago, Microsoft intentionally kept the Xbox brand separate from the corporate brand as they were worried about the conservative, stodgy image of Microsoft negatively impacting perceptions of Xbox. Additionally, the brand targeted a niche audience, and having a distinct sub-brand allowed them to create a compelling personality and value proposition aligned with gamers. Later, as Microsoft sought to increase its relevance, it created a stronger connection to Xbox while leaving room for distinction. For example, the logo now shares visual language with other key Microsoft brands, and Microsoft appears in the website header.”

Microsoft has kept some sub-brands at arm’s length while integrating others quite firmly within the family. Its parent brand is strong worldwide, but Xbox had its own distinctive audience groups to focus on. Lipscombe says masterbrand strategy relies on “looking to find a unique emotional brand meaning that best embraces product architecture or consumer reach.”

Building connections is the priority.

Major League Soccer (MLS), one of the fastest growing sports leagues in the world, has a unified league brand as well as individual club brands that are joined by a common set of guidelines. The MLS is a family of brands with the masterbrand working seamlessly in tandem with the club identities across broadcast and physical touchpoints. Each club has its own personality, but shares core visual guidelines – like the use of an individual club shield as a primary icon. 

Amanda Kicera, vice president of club marketing at Major League Soccer, says, “With the eyes of the world on our sport and on Major League Soccer over these next few years, we have a tremendous opportunity to not only drive more awareness and inspire new fans of MLS, but to also enhance engagement amongst existing fans. While we do encourage clubs to follow certain brand-building principles and processes, we always support our clubs in their efforts to build their own distinctive identities and encourage them to tell their stories the way they feel is right. They know their local markets and fanbases best, and we trust their teams to advise us on what we can do that will resonate in their markets too.”

Natasha Murray, chief client officer at media agency UM argues that audience understanding is the key to masterbrand strategy. She says, “In recent years we’ve seen lots of alcohol brands looking to expand from their core audience. Common sense variants like low and no alcohol are a ‘safe’ option, but some spin-offs – introducing different flavours for new audiences for instance – can be a riskier proposition. While growth is key, no-one wants to risk tearing down decades-worth of brand equity. The simple answer is, once again, market research.” 

Whether it’s a masterbrand that is tightly unified and interlinked, or one loosely assembled, all of the brands in the portfolio have to put the audience first in order to succeed. That strategy transcends B2B and B2C categories; it applies to every family of brands.

Murray says, “The masterbrand should represent what your audiences care most about, and consequently it acts as a core differentiator to what competitors offer – and this should extend across the brand set.”

Lipscombe breaks it down further and describes either a ‘branded house,’ in which “there’s a shared emotional meaning across all of their sub-brands,” or a house of brands where “there might be a silent group owner, and then there's not a huge amount of visibility or knowledge around these brands being part of the same company.”

Putting the audience first

However it is structured though, the parent brand and sub-brands will have distinct audiences to reach and build connections with. Lipscombe says those within a house of brands might have more freedom to flex and express themselves individually, but those within a branded house will benefit from the strength of the masterbrand’s emotional resonance.

Making a splash: FreshBritain completed the redesign of bathroom company Nuie, a sub-brand of The Roxor Group

Kicera says, “It’s difficult to call out one specific example, but to give it a more holistic look, we have fans at every stage of the funnel and at the end of the day our collective goal is to grow our league. While we at the league level have a role at each stage of the funnel, when it comes to collaborating with our clubs we feel we are best suited to support and complement at the top, driving awareness and passing warm leads along to them to nurture. We are incredibly proud of the continued work from our club marketing teams to grow their fanbases and brands as we believe we have some of the greatest fan environments and traditions in all of sports. The continued growth and momentum of our league is a testament to their talent and dedication, and we can’t wait to see all the great work that will be accomplished throughout 2025.”

For an investment audience, manoeuvring the brand at key moments, like IPOs or M&As may yield excellent results. Biondi says companies that create masterbrands or sub-brands at these key moments can see them “act as a multiple on your valuation. If you're able to present a really strong, interesting brand and show the market that you have a really deliberate story and vision in mind, it can pay off in terms of how you're valued.”

When speaking to customers, masterbrands can provide a sense of familiarity and trust. Conway says, “Endorsements can help instil trust in a new brand, and they can also signal a type of experience a customer can expect. Think of the Virgin family of brands – whether Virgin Atlantic, Virgin Hotels or Virgin Media – the presence of the Virgin brand sets the expectation for a customer-centric experience with a playful spirit.”

The business audience might require a different approach too, with subtle, but clear points of differentiation between the sub-brands within a portfolio. These individual brands can build connections with different types of clients, while quietly relying on the authoritative support of the masterbrand.

Creating those connections relies on building a strategy that takes into consideration the needs of each audience group. Lipscombe says FreshBritain does this by breaking down a company’s architecture and creating an archetype for each sub-brand and then crafting a brand that will be able to connect emotionally with each audience based on that archetype.

That’s what Volkswagen Group did right all those years ago. Its individual sub-brands made strong connections with customers that the emissions scandal could scarcely damage. But the auto industry might be due for rocky roads in the future too. Jaguar Land Rover introduced a house of brands strategy in March 2024 that will spin off Defender and Discovery into their own separate sub-brands outside of the Land Rover umbrella.

“How clients view mobility and how they interact with luxury brands has changed vastly in recent years, so how we present our brands, products and services must also change,” Patrick McGillycuddy, JLR UK's managing director, said in a release.

Time will tell if splitting the Land Rover brand proves an act of genius, allowing the company to reach a broader range of audiences based on different consumer needs. Or, if it is a dilution of each brand, with distinctions too fine to capture the attentions of the different market segments it seeks to inspire.

This article was taken from Transform magazine Q1, 2025. You can subscribe to the print edition here.