When it comes to brand architecture and hierarchy, there are several approaches to take. Two of the most common branding strategies are House of Brands and Branded House; but what is the difference? Let’s dive in!
A Branded House
Imagine your brand as a house. A big house where each room has its own unique function, but they're all part of the same structure. That's what we call a Branded House. In a Branded House, the parent brand is the heart of the home, and all its products or services are rooms that carry its name. This approach allows the parent brand's reputation to extend throughout the house, making it easier to add new rooms (or products) that benefit from the home's existing reputation. A Branded House is a strategy where all a company's products are sold under one roof, providing more control over production, distribution, cost and marketing.
Take the Google Suite for example. You might check your appointments in Google Calendar, write an email in Gmail, or get directions in Google Maps. Each of these represent rooms in the Google house, but they never overshadow the home as a whole. FedEx is another excellent example, with rooms like FedEx Express, FedEx Freight, FedEx Ground, and FedEx Office.
In the right situation, this approach can drive value creation and increased sales. Specifically, the parent brand can create added consumer value by distilling the many brand promises down to one, allowing the sub-brands to lean on the the parent brand's reputation. Take Amazon for example, because their brand trust and loyalty are strong, it makes it easier for them to gain consumer commitment with their other branded products like the AmazonKindle and Alexa.
Why have a Branded House?
Unified Identity: All products or services carry the parent brand’s identity, providing consistent messaging across all offerings. In this architecture, all the brands under the parent share a common form.
Strong Brand Equity: Each new product or service adds to the reputation and recognition of the primary brand, contributing to brand equity.
Simplicity: Managing one brand’s marketing strategy and messaging is straightforward compared to juggling many different brands. A single brand can also avoid confusion among consumers.
Resource Efficiency: With just one primary brand to build and promote, resources are used more efficiently.
Consistency: The primary brand provides a consistent experience across all its offerings. This reliability creates relationships with consumers, enhancing the brand’s strength over time.
A House of Brands
A house of brands on the other hand is like a housing development with each home having its own identity, voice, target audience and unique selling proposition – all while still being under the same development. PEPSICO and Estee Lauder Companies are great examples of a House of Brands. For instance, you get a bag of chips from Lay’s, not with PEPSICO Lay’s. When you want a pair of dressy sandals, you buy from Tory Burch, not from Estee Lauder Tory Burch. A House of Brands works well for many large consumer companies, but it’s not for every brand.
A House of Brands can include numerous brands, where each brand is independent of the others, often with different target audiences. The GAP is one good example where the name is associated with the parent brand, but sub-brands such as Old Navy, Banana Republic, and Athleta stand on their own.
With a house of brands, there is little emphasis on sharing across different products except for data because each product has its own image that needs to be maintained.
One main benefit of the house of brands approach is the ability to build distinct brand voices to serve and appeal to diverse audiences and capitalize on economies of scale, cross-selling, and association with other brands in the portfolio.
Why a House of Brands?
Diverse Target Audiences: One of the main characteristics of a House of Brands is the ability to cater to multiple, diverse audiences. Each brand within the house can be specifically tailored to meet the needs and preferences of a distinct target market.
Individual Brand Equity: Each brand in the House of Brands builds and maintains its brand equity. They are recognized and remembered individually by consumers, and their success doesn’t rely on the reputation of the parent company.
Separate Marketing Strategy: In a House of Brands, each brand typically has its unique marketing strategy and campaign, independently promoting its unique value proposition. They may even compete against each other in the market.
Operate Independently: Each brand in the House of Brands typically operates independently, with its own goals, strategies, and bottom lines. They may have separate management teams and business units within the parent company.
Brand-Specific Risks and Failures: If a brand under a House of Brands faces a scandal, failure, or any other issues, the damage is often contained within that brand. It typically doesn’t significantly impact the parent brand’s reputation or the performance of the other brands in the house.
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