BrandMatters

Branded House or a House of Brands

Brand architecture is the way we organise, manage and go to market with brands. Think of it as the external face of our business strategy. To work effectively, the architecture must be well defined, reflect a clear understanding of the market and the brand strategies of our competitors, and align and support our business goals and objectives. While there are many different models of designing brand architecture, this article will look at two approaches: House of Brands, and Branded House.

House of Brands
Most consumer product brands use the house of brands strategy. That is, the product itself is the primary brand rather than the company. Take for example the following products: Listerine, Tylenol, Dettol and Head and Shoulders. Most consumers would have trouble identifying them with companies that actually own them (Johnson & Johnson, Colgate Palmolive, Reckitt Benckiser).

In the electronic goods market, consider iPod and Zune. While many consumers would be well aware that they are made by Apple and Microsoft, the product brand dominates, while Apple and Microsoft are relegated to a lower-level brand position.

Another example is General Motors. They make cars under a few brands: Cadillac, Buick. Chevrolet etc., each of which are strong brands in themselves. And underneath the Chevrolet (Chevy) brand there are more brands still – Corvette, Camaro, Impala, Aveo, Cobalt, Silverado, and Malibu.

The risk here is brand confusion. Brands that try to cast too wide a net risk ending up without a loyal following in any market or demographic (think Yahoo, Yamaha, or Mitsubishi).

Branded House
A branded house is where the company brand (or a main overarching brand) becomes the dominant source of identification and meaning. Let’s take Honda’s Acura as an example. Their range of cars are not given names; they have descriptors such as RL, TL, TSX, etc. making just Acura serve as the brand. Here we have a whole group of products working under the house brand.

Another example is Virgin. Their host of businesses is extremely diverse: record shop, credit cards, airline, and so on. Yet they all draw their energy from a single brand identity: Virgin. This stymies the brands at the product level, but the energy of the brand overall strengthens them despite the lack of shared product commonality.

Appropriate Brand Architecture
Between a branded house, and a house of brands (and everything in between) there things to take into consideration before embarking on either course. First, building multiple brands is very resource intensive. It takes time, money and energy to build a brand. Concentrating all resources into a singular brand can sometimes be the best course of action. Furthermore, research needs to be done to ascertain whether you’ll be hurting or removing pressure from the umbrella brand.

What about target market? It can be very hard for certain brands to move from one market to another. Consumers may be confused or even hostile to what they perceive as an unwarranted move into foreign market territory. Creating a new brand can help that transition.

If risk is a concern, then a house of brands can be an effective mitigation strategy. The classic case in this regard is the 1982 Tylenol scare. When Tylenol capsules became laced with cyanide there was an understandable massive plummet in sales. However Johnson & Johnson was able to emerge almost unscathed because there was minimal brand association between it and Tylenol.

Strategy
Crafting the right architecture for a brand is a strategic process. When made correctly it will produce a number of effective outcomes. It will allow the business to improve its cost effectiveness for brand and marketing investment, it will align brand positioning and value propositions appropriately with market segments, thus improving ROI. It will also make it easy to update individual products, thereby making the company more dynamic in the market pace.

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