L'Oréal is one of the world's most successful cosmetics and beauty products companies, which has been consistently achieving volume, value and profit growth even during times when its competitors have faced a setback. What is the secret behind this continued success? Many things perhaps, but its brand architecture strategy is definitely one of them. The company has an amazing plethora of brands and sub-brands - about 500 in number, which are marketed in around 130 countries. The use of brand architecture as a strategic marketing tool and its dovetailing with the overall marketing mix has put the French company, L'Oréal, in an advantageous position, compared to its competitors. There is perhaps a lesson in L'Oréal's approach to brand architecture for many other companies.
Brand architecture is a comparatively new and upcoming concept in the marketing domain. It refers to the way a company structures, names and positions its brands. According to Aaker and Joachimsthaler (2002), "Brand architecture is an organizing structure of the brand portfolio that specifies brand roles and the nature of relationships between brands".Kapferer (1997) points out two main functions of a brand: (1) to distinguish different products from each other; and (2) to indicate a product's origin. He highlights that as a company's product portfolio expands, it becomes difficult to realize both these objectives simultaneously, thus creating the need for a specific brand architecture strategy. Kapferer explains six brand architecture strategies, each of which ascribes a different degree of relative importance to the individual product and its origin. Figure 1 graphically illustrates the six brand strategies based on positioning alternatives, as described by Kapferer.
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