Brand Architecture

Company Portfolio 1:

“The Mahindra Group is a USD 20.7 billion federation of companies that enable people to rise through innovative mobility solutions, driving rural prosperity, enhancing urban living, nurturing new businesses and fostering communities. It enjoys a leadership position in utility vehicles, information technology, financial services, and vacation ownership in India and is the world’s largest tractor company, by volume. It also enjoys a strong presence in agribusiness, aerospace, commercial vehicles, components, defense, logistics, real estate, renewable energy, speedboats, and steel, amongst other businesses. Headquartered in India, Mahindra employs over 2,40,000 people across 100 countries”. ( https://www.techmahindra.com )

Approach:

Mahindra Group is a classic case of Branded House. It has expanded its business in multiple sectors across multiple spectra. It offers its products and services to a wide array of people in different segments. For instance, Mahindra cars like Xylo and Xuv are considered a perfect value for money for a middle-class family with competitive pricing and market standard features. Mahindra Group initiated with steel and automotive industry in 1945 followed by defense in 1947 and Club Mahindra is the latest in 1996 where affluent people can become members to enjoy a vacation in luxurious properties developed by Mahindra group at exotic locations. Their primary driver is the brand Mahindra which is a dominant driver across all their offerings. The sub-brands such First Choice or Agri Solutions have a modest driver role to be a descriptor with little or no driver. (Aaker & Joachimsthaler, ebook, p.15).

Drivers of Success:

Over the years Mahindra group has acquired many companies but one acquisition has become the quintessential acquisition which later became a Harvard Business Review case, it was the Satyam Computers acquisition. Satyam Computers Services provided a wide range of IT services such as engineering solutions, consulting, etc. It consistently ranked as the fourth largest Indian IT services company in terms of revenue, was listed in both the Indian and US stock exchanges, operating in 66 countries. However, in 2009, the top management confessed that the finances of the company were rigged for many years and the government of India intervened for a bailout. Anand Mahindra, Chairman, and MD of Mahindra group saw the acquisition of Satyam as a strategic opportunity to move to the next level of growth. ( https://www.techmahindra.com) The Mahindra group had such a strong brand image that it also helped to rebrand the tainted brand image of Satyam and blended with Tech Mahindra company. Branded House strategy has certainly worked for Mahindra group to grow into multiple industries leveraging the brand equity from one industry to another thereby maximizing synergies. (Rajagopal & Sanchez. R, 2004).

Company Portfolio 2:

“A US $44.3 billion corporation, the Aditya Birla Group(ABG) is in the League of Fortune 500.  The group has interests in sectors such as viscose staple fibre, metals, cement (largest in India), viscose filament yarn, branded apparel, carbon black, chemicals, fertilisers, insulators, financial services, telecom, BPO, and IT services. Anchored by an extraordinary force of over 120,000 employees, belonging to 42 nationalities. Over 50 per cent of its revenue flows from its overseas operations spanning 35 countries”. (http://www.adityabirla.com)

Approach:

Aditya Birla Group uses the Hybrid strategy because it has hundreds of products in numerous markets under many brands. Birla White Cement or Birla Sun Life-Insurance, Asset Management, Mutual Fund etc. are sub-brands that fuel the reputation of the parent brand. On the other hand, you have Idea, Van Heusen, Louis Philippe, Allen Solly, Pantaloons, etc. that seem (are) like freestanding brands. Hybrid brand architecture is used when a company has homegrown brands under the parent name while it is also acquiring/developing individual brands as a growth strategy (https://distility.com). ABG follows hybrid architecture since they started Hiladco in 1958 which became a branch for industrial raw material and was further used to grow into different industrial products. However, in the apparel business it has a license for Van Heusen in India but also owns its homegrown luxury clothing line for men called Louis Philippe which positions itself as an international brand with high pricing to target a particular segment. ABG acquired Pantaloons, an apparel store chain, in 2012 which had an independent brand and ABG kept it intact to leverage pantaloon’s brand with its own apparel brand by placing them in Pantaloons store. Now, both the brands have a great reputation and brand equity. (https://www.livemint.com)

Drivers of Success:

Hybrid structure helps ABG penetrate into new market segments without putting the parent brand’s reputation on the line. The association of the master brand with sub-brands like Birla cement or Aditya Birla Capital here has proved to be an opportunity (Aaker and Joachimsthaler, 2000, ebook, p14). The hybrid architecture also serves as a shield to the effects of mergers and acquisitions. Renaming the brands could alienate their respective customers. The development and support of a new, separate brand is expensive and difficult, however, in case of ABG, their B2B businesses cater to different customer segments compared to their apparel businesses, hence for them developing different brands for apparel and continuing their parent brand products for capital market and industrial raw material goods has proved to be lucrative in encompassing a large brand portfolio in its umbrella. (https://vtldesign.com )

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