Updated: Oct 1, 2020
It's rare you come across established companies that simply offer an audience one single thing. As they grow they usually extend their offerings. However, as soon as you begin to offer multiple things you need to present each offering in a distinguishable way so that your audiences know what they are buying. But how do you do this without confusing them? Do you create new brands for each offering or simply offer them something different as the main brand?
These are the strategic questions I like to help tackle!
There are two main models for managing brand portfolios (also known as brand architecture). These are known as two different types of metaphorical "Houses". Let's go house hunting and see which one you are...
Brand architecture model 1: House of brands
In this house, every room is completely different. As you walk from room to room there is little or nothing that joins each room together in a recognisable way.
A 'house of brands' is a multitude of separate offers designed to serve multiple audiences. The main company stays behind the scenes whilst the individual brands are in the spotlight. They are individual, isolated brands which stand and fall on their own merit. Employees see themselves as working for the individual brands and not so much the main company. Customers associate meaning to specific offerings and are less concerned about the main company which produces those offerings. Each individual brand typically has focused teams which aim to acquire new customers and help to create specific customer experiences.
Examples: Proctor and Gamble, Unilever, Google, Coca-Cola, PepsiCo, Mars Food, Kellog’s, Kraft
Advantages: Each brand is free to express itself to its desired audience as it wishes. They can become very focused and meaningful and thus get a larger reach and stronger following. Any negative experiences a consumer comes across with one sub-brand will not cause negative feelings towards the companies other sub-brands.
Disadvantages: Each brand must be built and managed separately - this can become overwhelming and costly. Any positive experiences a consumer has with a sub-brand will not be carried on to the other sub-brands. The parent brand can become confused - does it represent the brands, or do the brands represent it?
Brand architecture model 2: Branded house
In this house every room has a similar feel. As you walk from room to room you get a feel that each room belongs together as a complete whole.
In the 'Branded House' model, one overall company is the main 'mother' brand serving the same audience with multiple offers/products (sub-brands). Employees see themselves as working for the main company not for its products or offerings. Customers associate meaning in the main mother brand and are less worried about the specific offerings. There is usually one focused team which aims to acquire new customers and help to create specific customer experiences.
Examples: Dyson, Hewlett Packard, Lego, Marriott hotels, BBC, Nestle, FedEx, Virgin
Advantages: All products and services can share similar customers, budgets and positioning and therefore resourcing is easier. Customers who have a good experience with one sub-brand will feel favourable to the other sub-brands
Disadvantages: Offerings may not be as compelling or focused as competitors who do not need to cater for a “mother” brand. If too many sub-brands are introduced it can become difficult for customers to understand what you stand for and what you will do for them. Customers who have a negative experience with one sub-brand will feel less-favourable to the other sub-brands.
Can a Hybrid work? No. Not really.
You can run a hybrid of the above two models - but from experience, hybrids are incredibly difficult to maintain and manage and are very difficult for customers (and even staff!) to understand. Hybrid models tend to not be focused and for this reason, run the risk of fading into obscurity. They are hard to manage because one moment you are trying to create a focused amazing sub-brand experience but the next attempting to tie that into all of the other offerings the mother brand has created. A very difficult thing to do well.
In an ideal world, you would select a model above and run with it. Own it.
Which one are you?
So which model are you? Are you in danger of falling into a hybrid pit? Are you a house of brands managing focused individual brands for very specific audiences? Are you a branded house where all of your offerings are aimed at the same audience and everything ties back to your "mother" brand?
Whichever model you are operating I with you all the best in building the brand house of your dreams.