April 14, 2021
All businesses need to diversify, to grow by creating new products or services, or acquiring other businesses. But should your additions join an existing brand or be launched as their own entities?
The goal of any brand strategy is to build a strong, trusted brand. You’ll get more return on investment from your marketing or digital budget and as Accenture’s Competitive Agility Index shows – brand trust has a direct impact on the bottom line.
But building a strong brand has never been harder, not only is trust at an all time low, there are a dazzling number of different touchpoints and possibilities for engaging audiences across various channels.
Brand management is more complex than ever and it becomes infinitely more complicated when you’re managing multiple brands and sub-brands.
So as your organisation grows and diversifies, how do you stop your brand from becoming a beast? Is there a better, simpler way?
We hate to be the bearers of bad news, but there’s no definitive answer to this.
However, there are two broad-brush approaches you should consider – whether to go in the direction of a branded house or a house of brands. In this article, we’re going to look at the pros, cons and nuances of both.
Option 1: Branded house
Apple has a lot of different brands: iPhone, Mac, iPad, and so on. But they’re all distinctively Apple and come under the same umbrella. This makes Apple a branded house; a company that offers a range of different products that are all closely linked and incorporated under the primary Apple name.
Keeping all your sub-brands together under a single identity has certain benefits.
It can help you maintain complete consistency in terms of your overall business values, purpose, and offer. It doesn’t matter what brands you choose to build or introduce in the future. Everything has the same inherent brand message running right through it.
For example, Apple is known for its beautiful, aesthetically pleasing products.
Consumers choose Apple brands without needing too much thought. That’s because they know what to expect from products within the wider Apple ecosystem. There’s no opportunity for separate brands to dilute the strong Apple vision.
And should Apple decide to launch a new brand in the future, they’ve already got a fully-formed audience base. They can piggyback off the strong brand equity that they’ve already built. They can reuse some of the same design components and elements that are already attracting and engaging with the right people.
That makes it more cost-effective to launch.
But there are a few downsides. For example, every time you choose to re-evaluate one brand, you have to think about what those decisions might mean from a broader perspective. You need to consider the impact they’ll have on your audience. Some businesses also find that taking the branded house route also limits them in what brands they can launch in the future. Something totally different can leave audiences confused!
Option 2: House of brands
Like Apple, Unilever manages a number of different sub-brands, but each of these brands stands on its own. This makes Unilever a house of brands. Each brand has its own target audience, and own identity, although there’s a similar theme – household and care – running throughout.
Separating your brands and giving them all their own individual identity has its merits, too. Looking to grow rapidly and build a huge audience pool? Brands that each have their own distinct target audiences can help you achieve just that. It can be a highly effective way to diversify.
The autonomy of each brand can work in your favour, too. If one brand’s reputation is shaken, it doesn’t necessarily mean that other brands in your network are affected. This can reduce the negative impact.
A few years ago, Costa Coffee ended up in hot water for reports of poor working conditions for its staff. Did those reports impact sales of Coke? Or Fanta? No.
Why would they? There’s nothing that would associate a coffee shop with a fizzy drink. Except for the fact they’re owned by the same company.
But once again, there are downsides. For starters, each brand will have its own production team, with different processes. It’s not surprising that, with a house of brands, there can be massive inconsistencies in the way each brand will interpret the parent brand guidelines. With consistency a major driver of consumer trust, getting it wrong can have a pretty big impact.
Operating house of brands also comes with higher costs, there’ll typically be a development cost, a maintenance cost, and a support cost. And brands may need to operate on different platforms, or use different systems. This can work out well for some – like the Unilevers of this world. But it’s not always a practical approach for smaller companies.
Key questions to ask yourself
There are some key questions that can help you to make a smart, informed decision that’s best for your business:
1. What brand equity do we already have?
If you’ve already worked to build trust and loyalty with your brands, keeping everything together all under one branded house means you can capitalise on success.
2. Is there any crossover?
Do your brands all connect to each other closely (e.g. Apple’s devices)? Or are there definite distinctions between them (e.g. Mars having both snack brands and pet food brands)?
3. What are your capabilities?
Do you have a strong operating structure and capacity to manage separate multiple brands simultaneously? If so, going down the house of brands route can help you grow quickly.
4. What will give you value for money?
From a design, development and marketing point of view, having assets that just need to be re-skinned can help to keep the costs down. Compare that with the need to create something completely different, and completely bespoke, every single time.
5. What about brand love?
Customers don’t just choose brands with their heads, they use their hearts. However you choose to bring your brands together, consider your audience and which approach can have the biggest emotional impact.
Consistency is key
Regardless of the direction you take, it’s important to invest well in your brand and intentionally drive your strategy so you can deliver a consistent experience that builds trust.
Again, there’s no right or wrong answer on how to go about this. Branding is complex. But if you’re not sure which way to move forward, we can work with you to find it.
Have a look at some of our design work and get in touch.
