Dr. Islam Gouda
Dr. Islam Gouda 17 January 2020

Branded House or House of Brands: Which is Better in Building Your Brand?

When creating a brand, one should consider both the branded house and the house of brands theory or the hybrid one. Both have their own pros and cons; however the market dynamics are the main determining factor for choosing whether to go with the first or the second strategy.

Any company in the world is like a house; it consists of the parents who are the custodian of the brand (the company), the neighbourhood which is the market, the neighbours who are the competitors, and the visitors who are the customers. The offspring of the parents are the services and the products provided to the customers.

The approach of parenting can differ from house to house; some choose to give freedom to the offspring to have their own characteristics, nicknames, and different clothing and hairstyles, and others choose to create strict rules and regulations in order for the fruit of their loins to look identical to them even holding their names with the word junior added as a symbol referring to the company.

This is basically the main difference between both the house of brands and the branded house theory of brand building and architecture.

The Branded House Example

Apple as an example chooses the branded house theory to promote its iMAC, IPhone, etc. The company has a very close relationship with its offerings yet each has his own characteristics and represents a different segment that has loyalty to the custodians as an approach to buy for believing in the quality and usability of the products.

The House of Brands Example

On the other hand, Unilever adopts the house of brands theory with products having their own names and characteristics that are very distinct from the custodians of the brand independently representing themselves in the market to the customers who buy these products based on their trust not in the mother company but the brand itself.

The house of brands approach requires huge amounts of marketing dollars invested in each brand with autonomy and freedom given in order to create strong ties in the market place with the customers rather than referring to the mother brand or the manufacturing company.

The Hybrid Theory Example

Other brands like Toyota chooses to use a hybrid approach in their brand building efforts, they use both the house of brands and the branded house to market their products. For example, Toyota produces the Toyota Corolla the most famous and one of the highly sold cars in the markets around the world, nonetheless, they have Lexus as a brand however they do not associate the product with the company with strong ties with it positioning such brand as much luxurious and suits a different segment of customers who have higher aspirations towards the product they want to own.

What is the Best Approach?

When building a brand, the brand strategist must look into elements like resources, visibility, reputation, and the market dynamics in addition to the customers’ needs and wants in order to determine which the best approach towards brand building is. Sometimes the matrix of brand promise and audience profile is the driver of the decision.

When brands create sub brands that have unrelated brand promises (i.e. what they deliver), which in turn have a very different buyer or audience profiles, it can also make sense to create a house of brands. Developing a house of brands can potentially compound the challenge of building your firm’s overall brand strength. And measuring the return on investment for a single brand is not nearly as challenging as measuring that same return on many parallel brands.

Perhaps the most important factor is the market or markets in which your company operates. If your business targets a single market, a branded house can boost brand awareness, optimize marketing spend and bolster reputation. If you have products or services aimed at significantly different markets, multiple brands can help to protect each market from the other, mitigating risk and ensuring differentiated messaging.

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