What may bring about abundant advantages in terms of goods and services and even operational efficiency can turn into distinct disadvantages for brands if their architecture is not purposefully built. Whether it’s a branded house, sub-brands, endorsed brands or house of brands, architecture defines how merged brands act and interact, both today and into the future.
Brands are built on the promise of a consistently rewarding experience. At the same time that consumers are demanding more experiences from the brands they buy into, they are putting less trust in them because of this very demand. As companies grow and acquire other entities under their umbrella (sometimes with little to no connection), the challenge for brand leaders is to ensure that every new brand that enters the fold complements and enhances (not dilutes) the brand promise.
This article provides a snapshot of four types of brand architectures and when it makes sense to adopt them
Four Types of Brand Architectures
1. Branded House
Branded houses are designations used in the branding and marketing of products or services. Branded houses are one way to express brand architecture. In the case of an extended branded house, all brand activity is organized under one parent brand umbrella. There may be individual brand designations for different product and service lines, but all roads lead back to the parent brand.
Very simply put, branded houses are meant to organize all brand activity under a single umbrella (a single company) with one logo representing that house. This means that there is no distinction between products or services under each brand name, except that they may have different names. It also means that the consumer has no idea which brands represent which lines of business for any given company because everything is housed under one parent brand name.
Pros of Branded House Brand Architecture
- Requires minimal effort from marketing team
- Easy to implement
- Consistent branding across all lines
- High brand equity (if parent brand has strong reputation)
- High operational efficiency (only one brand to promote)
Cons of Branded House Brand Architecture
- Tough to differentiate products from competition if parent brand doesn’t have high brand equity or unique value proposition
- Sub-brands may not be able to stand on their own without parent company’s support/reputation
Branded House Example: McDonald’s
McDonald’s falls into the branded house category. Regardless of what product you’re talking about – Happy Meal or Quarter Pounder or McFlurry – it all comes from McDonald’s, with no variation in branding or messaging. This works great for McDonald’s because of its high level of brand equity and positive reputation in the marketplace. To most people, seeing McDonald’s at the top of the burger chain (pun intended) isn’t a surprise, considering McDonald’s has been a part of our everyday lives
2. Sub Brands
Sub-brands are a form of brand architecture in which the parent brand is used to create new brands. The sub-brand will have a name that is related to the parent, yet it will retain its own unique identity.
Sub-brands allow for a company’s products and services to be categorized into different groups, each with their own individual brand. This can help businesses better organize their products and separate them from one another. In addition, sub-brands can help companies position their products in different ways, especially if they appeal to different target audiences.
One big advantage of sub brands is that the parent brand is still highly visible and consistent, showing scale and size and lending credibility to sub-brands. Disadvantages to this approach include dependence on the parent brand reputation, along with the operating expenses of managing multiple brands.
When considering if sub-branding is a good idea for your business, you should consider if you have a single product or service that can be segmented into multiple offerings, or if your market can be divided into logical segments that would respond better to an offering tailored to their needs.
For example, Apple is another great example of a company with many sub-brands. While the Apple brand is strong on its own, having sub-brands like iPad, iPhone and iTunes allows each piece of Apple’s business to be marketed separately and appeal to different target audiences.
3. Endorsed Brand
In an endorsed brand structure, brands and their products are sanctioned by the parent. These individual brands collectively take on greater market presence than their parent brand alone and represent something distinct under the parent’s banner. The parent’s endorsement denotes a certain level of expected delivery, but does not dictate each endorsed brand’s actions.
This is a common approach for corporations that want to leverage the loyalty of their customer base while also allowing them to provide a diverse range of products with their own unique value propositions and product offerings.
Advantages of Endorsed Brands
The advantages of endorsed brands include a unique brand promise, individual brands prioritized for faster market penetration, and quality assurance inherited from the parent brand.
Disadvantages of Endorsed Brands
The disadvantages of endorsed brands include the potential dilution of the parent brand, negative spillover from other brands and inefficiencies inherent in multiple brand management.
Example of Endorsed Brands
For example, Marriott International is the parent company for many different hotels under its umbrella, including JW Marriott, Renaissance Hotels, and Fairfield Inn & Suites. Customers who identify with Marriott’s core values have many choices when it comes to choosing where they stay (location, amenities, price point). Although each hotel provides distinctly different experiences, they all come with the promise of high-quality service and standards.
4. House of Brands
The house of brands model has one parent company over a series of stand-alone, disconnected brands. With this structure, most consumers are often not even aware of the individual brand’s affiliation with the parent.
House of brands is useful when you want to highlight the distinct benefits of a family of products. This allows you to communicate each brand’s value independently, and to be more flexible with your marketing campaigns for each product.
While a house of brands may offer more flexibility for individual products and campaigns, it can also be expensive to build and manage multiple brands. It can be difficult to maintain separate brand identities that don’t overlap, which can result in an inconsistent experience for consumers.
House of Brands is a multi-brand strategy in which different brands are created for each product, service or business unit that is then marketed and sold separately. The brands under the House of Brands strategy typically have no visible connection to their parent company.
The advantages of this approach include maximum market penetration with separate market segments and distinct brand promises and reputations, which helps avoid negative spillover from other brands under the parent’s banner. However, this model is the most operationally inefficient as it can contain hundreds of individual brands to manage. Further, without a parent’s presence, each brand is often commoditized and can have weaker consumer brand loyalty.
Companies That Have A House Of Brands Structure
Nestle: This food and beverage giant owns more than 2,000 brands including Nescafe, Gerber baby food and Purina pet food.
In sum, there are several brand architectures shown to work in the marketplace. The success of each structure will depend on the particular needs of each company and its brand/portfolio strategy. Companies should evaluate the options available within each category in order to determine which is right for them and their portfolio before making a decision. For more information on how to determine the right brand architecture for your company, Get Contact with Neu Entity, as your branding agency partner.
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