Branded House is one of the most commonly known strategies among various brand architectures. You could say it is the kid who puts his sticker on everything and says, “This is mine!” Or it is just the protective father who wants to be around his kids for their benefit. This strategy is the most famous strategy among most brands around the world.
Understanding the Branded House Strategy
Let’s think of a father who is already well-reputed in the family and among peers for many things, e.g., being a great father, a leading businessman, etc. Now, the father wants to spread his goodwill through his children, and of course, wants his kid to benefit from the goodwill too.
So, since the master brand remains on top and at the forefront of everything in this strategy, its children brands cannot be treated or seen as separate brands. They look more like products coming under the name of the same brand. However, these brands act just the way roots act for plants and trees, i.e., they suck minerals from the soil, but it’s the tree that grows bigger.
Why Brands Choose Branded House Strategy
While it’s the owners of these brands who can best explain their reasons for picking this strategy, we can explain this phenomenon based on two key benefits that brands obtain with this strategy.
Sub-brands Bask in Master Brand’s Reputation
Here, we can take the example of the protective and reputable father again. When a father has established a great reputation over time, its children can benefit from it. Imagine if Tim Cook’s brother wants to start a business and wants some of his friends to partner with him.
Keep in mind that Tim Cook is the present CEO of Apple and also a member of the board of directors at Nike. At this point, his brother’s friends will be keenly interested in working with him based on Tim’s reputation. Not to mention, they will know that they have Tim’s back to run their business. But here’s the thing, if Tim’s brother starts a business and it becomes a success, this will add even more to Tim’s glory.
You can see that in this type of brand model the reputation is reciprocated by both the parties. First, it is the child brand that benefits from parent brand’s reputation, and when the child brand becomes successful, the parent brand also sees a boost in its glory.
Cost-Effectiveness Is Much Needed
One of the things that matter for starting businesses is cost-effectiveness. Having too many expenses when market visibility and return on investment is not that high can be detrimental to businesses. With a branded house strategy, the parent brand can reduce marketing costs to a great degree. Rather than making efforts to promote different brands, the parent brand has to use fewer resources to promote only one brand.
The Danger of Using Branded House Strategy
While there could be other small disadvantages of using this strategy, the biggest one is that if sub-brands are not as good as the parent brand, their bad image tarnishes the parent brand’s image as well. This same thing happens in the families where the acts of the children are often associated with the parents and their upbringing.
Examples of Brands Using Branded House Strategy
As said earlier, more brands like to use this strategy. Apple and GE are the biggest examples. When you use an iPhone, iPad or Mac, you know it’s an Apple product, and whatever benefits these devices offer, you associate them with Apple. Similarly, you have GE that puts its name alongside all of its brands such as GE Money, GE Oil & Gas, etc. Thirdly, you have FedEx, the courier service, also benefitting from the branded house architecture. Some examples are FedEx Express, FedEx Ground, FedEx Trade Networks, etc.
So, now it is up to you to decide if you like the branded house strategy. Keep in mind that when you choose this strategy, every step you take influences your parent brand. What this means is that you will have to stick tenaciously to your vision to prove it. For example, if you stand for quality, you will have to deliver it through every brand, and if you stand for affordability, you will have to practice as a religion with every brand you introduce.