Branded house or house of brands? Should a business focus on a corporate brand or deploy a host of individual product/service brands? There seems to be lot of debate lately within the blogosphere, and I wanted to add a few thoughts.
The most recognizable sample of a house of brands is Proctor and Gamble (P&G). P&G positions their products (Crest®, Tide®, Dawn®, Olay®, Vicks®, etc.) as individual brands, separate from the P&G name.
On the other side, Sony is a good example of a branded house. You hear Sony Walkman®, Sony PlayStation®, Sony Pictures®, etc. All of Sony’s products and services prominently feature the Sony name. They leverage the power of the Sony brand and function under one recognizable name.
It’s safe to say, the branded house philosophy makes more sense financially, since you are investing in one brand and allowing your multiple services or products to leverage that investment and the focus of the corporate brand. This works perfectly as long as your products or service brands align with the overarching position of the corporate brand, and your products or services serve complementary markets.
Conversely, Toyota realized their house of brands worked to their advantage when Toyota experienced a major loss and it was required to recall many of its vehicles. Because of this, the Toyota Division experienced a 12 percent loss in vehicle unit sales from January 2009 to January 2010. However, the Lexus brand, owned by Toyota, enjoyed a nearly 20 percent increase over the same time period. (1)
With no clear connection or visible affiliation between the brands, Lexus weathered the crisis with little if any damage even though they experienced some of the same recalls.
Toyota works hard to keep the brands separate and during the most recent chain of events, it paid off in a big way. It should also be noted that both Toyota and Lexus are powerful brands. Toyota placed number eight on Interbrand’s top 100 global brands in 2009. Lexus holds the 96th position on the same top 100 list. Very impressive. (2)
Branded house or house of brands? If you can leverage the energy, positioning, brand equity and value of one corporate-focused brand, it is a business decision that can be both strategic and cost-effective.
In the end, it pays to think carefully about your brand portfolio strategy. Developing a winning strategy depends on multiple variables and setting a strategy that aligns directly to your business objectives.
Resources:
1. http://pressroom.toyota.com/pr/tms/toyota-reports-january-sales-153392.aspx
2. www.interbrand.com/best_global_brands.aspx
4 Comments
These kind of questions are so abstract that they don’t make that much sense.
While there are general tendencies (I hesitate to call them rules), it is always a matter of context as to what works best. There are so many different strategic and marketplace considerations that it is hard to draw general conclusions. To be sure, a branded house is more “efficient” there a many many areas when this isn;t the best strategy. . For example, when you want to sell a product line, not having a corporate brand stuck to it can make it easier. Or in beer marketing, having a craft brewer endorsed by its mega-corporate owner would turn off the target market.
What one can do is map the different types of conditions where one model works better than another. This structural map would be of use… a general question is only thougth provoking
Harry, thanks for your feedback. I believe you and I are on the same page. I have been reading multiple blog posts and articles lately claiming one method over another. Making those blanket statements or decisions without researching the multiple variables can be very dangerous for any organization. While some general claims can be made on either method, a solid brand architecture requires research and a calculated strategy that directly aligns to your business objectives and core brand.
Interesting blog. Personally, I think taking the house of brands approach demands time, resource and budget investment to support them, which is not possible for most businesses with multiple product lines to do well.
It is perhaps easier to build a single unifying brand and then over time extend. When you buy Sony, Apple or Virgin you know what you are buying into.
Keep up the good work and ignore the detractors.
Rene, yes, it would be great to have the budget and resources (time included) Sony, Apple or Virgin have to enable best practice options. But as you indicated, this is not possible for many businesses. Thanks for your input and kind words.