Finding the Right Business Structure

Explore 4 Types of Business Structures & How They Work

Parent companies often create child companies for a variety of reasons, including expanding their portfolio of products or services, entering new markets, or expanding their contributions. From a marketing and branding standpoint, the way parent companies structure their child companies can have a significant impact on their success. In this case study, we will explore the different ways parent companies structure their child companies and how it affects marketing and branding.

"Change has a considerable psychological impact on the human mind. To the fearful it is threatening because it means that things may get worse. To the hopeful it is encouraging because things may get better. To the confident it is inspiring because the challenge exists to make things better." - King Whitney Jr.

1. Standalone brands: Child companies create a new brand that operates independently of the parent company. The child company has its own name, logo, and identity. This structure allows for the child company to have its own unique identity and appeal to a specific target audience. Examples of standalone brands include Dove (Unilever), Lexus (Toyota), and Hulu (Walt Disney). From a marketing and branding standpoint, standalone brands allow for focused messaging and positioning, which can lead to a more loyal customer base.

2. Sub-brands: Parent companies create a sub-brand that is part of the parent company's brand family. The child company has its own name and logo, but it is associated with the parent company. This structure allows for the child company to leverage the parent company's reputation and resources while maintaining its own identity. Examples of sub-brands include (Apple) iPhone and (Microsoft) Xbox. From a marketing and branding standpoint, sub-brands allow for cross-promotion and cross-selling opportunities, which can lead to increased revenue and customer loyalty.

3. Endorsed brands: Parent companies create an endorsed brand that uses the parent company's name in conjunction with the child company's name. The child company has its own name and logo, but it is highly endorsed by the parent company. This structure allows for the child company to leverage the parent company's reputation and resources while maintaining its own identity. Examples of endorsed brands include (Nestle) KitKat and (Procter & Gamble) Tide. From a marketing and branding standpoint, endorsed brands allow for increased brand awareness and credibility, which can lead to increased sales and customer loyalty.

4. Hybrid brands: Parent companies create a hybrid brand that combines elements of standalone, sub-brands, and endorsed brands. The child company has its own name and logo, but it is associated with the parent company. This structure allows for the child company to have its own unique identity while leveraging the parent company's reputation and resources. Examples of hybrid brands include (Toyota) Lexus and (General Mill) Yoplait. From a marketing and branding standpoint, hybrid brands allow for flexibility in messaging and positioning, which can lead to increased brand awareness and customer loyalty.

The structure of parent companies and child companies can vary based on their strategic goals. The way in which parent companies structure their child companies can have a significant impact on their marketing and branding efforts. Understanding the different structures helps companies make informed decisions that align with their marketing and branding goals.