Brand architecture is a critical component of an organization’s overall business and marketing strategy. Companies must make important decisions about how to structure their brand portfolio. The main architectural options are using a branded house or opting for a house of brands approach. In this comprehensive guide, we will compare the pros and cons of these brand strategies and when each is appropriate.
Introduction to Brand Architecture
Brand architecture refers to the organizational structure that manages a company’s brands and products. There are three primary brand architecture models:
- Branded house – Multiple products and services are marketed under a single brand name.
- House of brands – Products are marketed under multiple brand names that are independent of the parent company brand.
- Hybrid – Uses a combination of branded house and house of brands strategies across the brand portfolio.
The choice between a branded house versus house of brands has significant implications for brand identity, marketing, and business strategy.
Key Differences Between Branded House and House of Brands
There are several important distinctions between these brand architecture strategies:
- Brand identity – Branded house shares unified identity across all products. House of brands develops independent identities for each brand.
- Marketing – Branded house has shared marketing strategy. House of brands allows tailored marketing plans for each brand.
- New products – With branded house, new products are launched under parent brand. House of brands launches new brands.
- Customer perception – Branded house seeks to build parent brand equity. House of brands cultivates equity for each brand separately.
- Risk – Problems with one branded house product can hurt the parent brand. With house of brands, risk is better contained.
Here’s a table summarizing the key differences between a Branded House and a House of Brands:
| Key Differences | Branded House | House of Brands |
|---|---|---|
| Brand identity | Shares unified identity across all products. | Develops independent identities for each brand. |
| Marketing | Has shared marketing strategy. | Allows tailored marketing plans for each brand. |
| New products | New products are launched under parent brand. | Launches new brands. |
| Customer perception | Seeks to build parent brand equity. | Cultivates equity for each brand separately. |
| Risk | Problems with one product can hurt the parent brand. | Risk is better contained within individual brands. |
Branded House Example
Virgin is a classic branded house. Virgin uses its powerful parent brand across many different products and services:
- Virgin Atlantic (airline)
- Virgin Mobile (cell service)
- Virgin Hotels (hotels)
- Virgin Voyages (cruise line)
The Virgin brand name carries across these various industries to provide brand recognition and unity. This allows Virgin to leverage its brand equity across its portfolio.
House of Brands Examples
Procter & Gamble operates a house of brands with many standalone brands:
- Tide (detergent)
- Bounty (paper towels)
- Pampers (diapers)
- Crest (dental products)
- Gillette (razors and shaving)
P&G develops totally separate brand identities and marketing. Consumers typically don’t associate these leading brands together under the Procter & Gamble parent company. This provides flexibility to tailor branding and positioning.
These examples showcase how branded house and house of brands strategies manifest differently, even when selling diverse products. The choice ultimately depends on brand objectives, target markets, and other strategic considerations unique to the business.
Benefits of Using a Branded House Strategy
Here are some of the advantages of structuring a branded house:
- Increased brand awareness – Extending a powerful brand name across the product portfolio boosts visibility and reach.
- Enhanced brand equity – Sharing one brand identity accumulates and leverages brand equity.
- Marketing efficiencies – Branded house pursues unified positioning and allows marketing costs to be consolidated.
- Clear customer understanding – Customers immediately recognize what the brand stands for across all products.
- Seamless customer experience – Well-executed, customers have consistent positive branded house interactions.
Benefits of Opting for a House of Brands
Alternatively, here are some potential benefits of a house of brands model:
- Flexibility – Products can be uniquely positioned to target specific markets and segments.
- Customized marketing – Each brand is free to create marketing plans tailored to product and buyers.
- Risk management – Problems associated with one brand have limited damage on other brands.
- Acquisition strategy – House of brands makes it easier to acquire new brands and smoothly integrate them.
- Specialization – Teams can build deep expertise around managing each individual brand.
When to Use a Branded House Strategy
Certain business conditions and objectives make a branded house architecture advantageous:
- When extending brand equity across products makes sense
- When marketing resources are constrained
- When company name recognition is higher than individual product brands
- When streamlining customer experience across product lines is beneficial
- When products complement each other or share interconnected use cases
When a House of Brands Works Best
In other situations, a house of brands structure amplifies key benefits:
- When existing brands already have strong independent recognition
- When products distinctly target separate segments or markets
- When customers do not associate individual brands together
- When separate brand positioning is needed to compete
- When mitigating risk of negative brand association is critical
Conclusion: Choosing the Right Brand Architecture
In closing, there is no universally superior brand architecture model. The optimal approach depends on an organization’s unique needs and objectives. Key factors like brand equity, customer targeting, and risk management must be evaluated to determine if a branded house or house of brands is strategically aligned. Brand architecture is a long-term, foundational choice – fully assessing the implications allows companies to maximizes their brand assets and marketing investments.
