House of Brands vs Branded House: A 2024 Guide to Effective Brand Architecture Strategies

Hello, brand strategists! Let's talk about a crucial decision in brand architecture: Whether you're a tech startup or an established brand trying to diversify product offerings, deciding how to structure your brand portfolio is crucial. You may encounter two prevalent strategies: House of Brands and Branded House. This choice shapes how companies present themselves and their products to the world and is crucial in shaping how your products are perceived in the market. In this guide, we'll break down both strategies, look at real-world examples from 2024, and help you decide which approach might work best for your brand. Let's get started!

To Unite or Diversify?

Now more than ever, consumer attention spans are getting shorter, famously shorter than a TikTok video, which makes brands face a crucial decision: should they unify under one powerful banner or spread their bets across multiple distinct identities?

House of Brands: The Multi-Brand Approach

Think of a House of Brands as a family with different personalities. That's essentially what a House of Brands strategy is all about. Companies adopting this approach maintain a portfolio of separate brands. Each brand has its unique identity, personality, target market, marketing strategy, and position. This allows for diverse branding approaches under a single-parent company.

Pros :

• Flexibility: Each brand can develop its unique identity and have the flexibility to enter new markets without diluting existing brand equity.

• Risk Management: If one brand faces a crisis, it doesn’t necessarily affect the others.

• Market Segmentation: Targeted marketing to specific audience segments without brand overlap.

Cons:

• Higher Marketing Costs: More resources are needed to market multiple brands. Each brand needs its love and attention.

• Complexity In Management: Managing multiple brand identities can be challenging.

• Potential For Internal Competition.

Real-World Example: Tolaram Group

Tolaram Group, a Singapore-based conglomerate, exemplifies the House of Brands strategy. As of 2024, their portfolio includes:

• Power Oil: A popular cooking oil brand in Nigeria.

• Hypo: A household cleaning product line.

• Multipro: A distribution company.

• Dufil Prima Foods: A food manufacturing subsidiary.

Each of these brands operates independently, targeting different markets and consumer needs. For instance, Indomie is immensely popular in Nigeria and Indonesia, where it is seen as a nutritious, tasty meal option. Power Oil targets health-conscious consumers seeking quality cooking oil. This structure allows Tolaram to innovate and adapt within each category across different countries without the risk of one brand's failure impacting the others.

Branded House: The Unified Approach

A Branded House is like a strong personality (the Master Brand) that influences and supports all its products and services. That's the Branded House strategy in a nutshell. This strategy is about leveraging a single, powerful brand across various products or services. All products and services share the same overarching brand identity.

Pros :

• Efficiency: Unified, cost-effective marketing efforts lead to cost savings.

• Brand Equity: Easier cross-selling opportunities mean new products benefit from the established reputation of the master brand.

• Consistency: Strong, unified brand recognition arising from clear and consistent messaging across all products.

Cons:

• Risk: There is a higher risk if the brand image takes a hit as a crisis in one product can taint the entire brand.

• Limited Flexibility: It is harder to target diverse market segments.

• Potential For Brand Overextension.

Real-World Example: Apple

Apple, the poster child of the Branded House approach, continues to dominate in 2024. From iPhones to MacBooks, AirPods to Apple Vision, and the Apple Watch, each product benefits from the powerful Apple brand. This strategy ensures that new products launch with built-in trust and loyalty. When Apple introduced the Apple Watch, it leveraged the existing customer base and brand reputation, ensuring immediate recognition and acceptance. However, this approach also means that any misstep, like the controversy over iPhone battery performance, can impact the entire brand, demonstrating the interconnected risks of a Branded House strategy.

The Hybrid Approach: Best of Both Worlds

Some companies opt for a middle ground, adopting a hybrid approach by combining elements of both strategies. Amazon is a prime example (pun intended). While most services fall under the Amazon brand umbrella (Amazon Prime, Amazon Web Services), they maintain separate identities for acquisitions like Whole Foods and Zappos.

This strategy allows companies to enjoy the best of both worlds – the strength of a unified brand with the flexibility to maintain distinct identities where it makes strategic sense.

Deciding What’s Best for You

Selecting between a House of Brands and a Branded House isn't like picking between vanilla and chocolate ice cream. It's a strategic decision that depends on various factors:

Key Considerations

• How diverse is your target audience?

• How do you want to position your brands in the market?

• What level of risk are you willing to tolerate?

• What are your brand’s long-term business goals? Your mission and vision?

• How diverse are your product offerings?

• What are the available resources that you are willing to allocate?

Industry-Specific Tips

• Tech Industry: A Branded House often works well due to the need for a unified tech ecosystem.

• Consumer Goods: A House of Brands can be beneficial due to the diverse nature of product lines.

Future Trends in Brand Architecture

As we move through 2024, emerging technologies are reshaping brand strategies:

• AI-powered personalization: Allowing brands to tailor experiences within a unified framework.

• Metaverse presence: Brands are creating unique identities for virtual spaces.

• Sustainability focus: Companies are launching eco-friendly sub-brands or rebranding entirely to emphasize sustainability.

Brands are exploring new ways to create cohesive yet flexible identities across multiple platforms and realities.

Wrapping Up

Whether you choose a House of Brands like Tolaram, a Branded House like Apple, or a hybrid approach, the key is consistency, clarity, and adaptability. Your brand architecture should align with your overall business strategy and be flexible enough to evolve with market changes.

Remember, there's no one-size-fits-all solution. Both strategies have their perks and pitfalls, so it’s about finding what aligns with your vision. The best strategy is the one that resonates with your target audience and supports your business goals while staying true to your brand’s core values.

So, which approach appeals to you? Are you Team Diversity like Tolaram or Team Unity like Apple? Or are you eyeing that middle ground?

Share your thoughts on your preferred brand architecture strategy in the comments below.

Author: Prince Okeke