Depending on how it goes to market, a company is faced with how to brand their product portfolio. This “Brand Architecture” is a critical decision for current and future business operations. In short, it comes down to whether the company will be a “Branded House” or a “House of Brands.” There are advantages and drawbacks to each. Once you understand the principles, it’s not as daunting as some might make it seem.
Figure 1: Marketers must weigh the trade-offs between the focus of a branded house and the flexibility of a house of brands. Below are brief descriptions of the different types of brand architectures a marketer may choose from, along with the pros and cons of each.
Branded House – A Single Master Brand
The one brand to rule them all. This is the brand to which all brand affinity and equity accrues. This is the brand you want the world to have a relationship with, whether that be existing customers, prospects, market influencers, etc.
A master brand is the hallmark of a “Branded House” strategy. Think of BMW cars. All their models carry the BMW brand front-and-center. There are different series: the “3” or “5” series, for example, but it’s always the “BMW blank Series.”
Pros: A master brand allows the maximum amount of control a company can have over their brand, because there’s only one. It’s also a very efficient way to build your brand architecture. Naming and positioning decisions are greatly simplified and a unified brand presence can resonate well over a long period of time with the market. One consistent look, feel, and position is a very powerful force with consumers. A master brand works best when a company is focused on one particular market or segment.
Cons: A master brand is also very restrictive. Brand extensions are more problematic as they must be sure to reinforce the positioning of the master brand. Companies with strong master brands may find themselves “branded into a corner” so to speak. Unique and memorable opportunities may have to be sacrificed in deference to the master brand.
Figure 2: BMW is a single, monolithic brand. The master brand is paramount. Products are all part of a larger whole and brand equity resides with BMW.
House of Brands with Sub-brands
A company with many sub-brands can often be thought of as a “House of Brands” composed of different brands which are usually in very dissimilar markets. Each brand stands on its own with little or no recognition of a master brand. Sticking with our car example, GM is a house of brands (or sub-brands, if you will.) Chevrolet and Cadillac are two well-known sub-brands of GM.
Pros: Maximum flexibility. A company can easily target diverse segments within a market with a similar product using different value propositions without risking dilution of a master brand. For example, Disney created the Touchstone brand to release movies to more mature audiences while keeping the purity of the Disney brand position. Likewise, a company can also enter new markets with products they might not want associated with their other brands. P&G and Unilver are good examples of this strategy.
Cons: Maintaining a portfolio of sub-brands is more complex than a single monolithic master brand. Each unique brand requires its own value proposition, distinctive positioning, and management. That’s costly in both the amount of people as well as the dollars needed to create awareness and sustainability behind each new brand. A company will probably organize distinct business units around each brand
Figure 3: Unilever is a classic House of Brands. No one goes to the market to pick up a can of "Unilever." The brand is only important to the stock market. But everyone knows Unilever's sub brands.
In its early stages, a company may find itself using a master brand strategy, only to later recognize the need for various sub-brands as it chooses to enter different markets. In this case the result is a strong master brand in one market, and sub-brands in other markets which have no public tie to the master brand. Nestlé is known for confections, but they also make dog food. Nestlé could have tried a brand extension of the master brand, but the smart move was to create sub-brands like Alpo.
When deciding on what type of brand architecture you’d like to create, or working with a portfolio of one or more existing brands, think about where the company is now as well as where it wants to be in the long run. Then make the trade-off between the focus of a single master brand and the flexibility of a sub-brand.