BRANDED HOUSE VS. HOUSE OF BRANDS WRITTEN BY
For many startup spirits companies, the question of whether to build a “branded house” or a “house of brands” is a critical one to answer for their company and brand’s future success.
hether you plan on launching just one product or dozens, considering your company’s strategy for brand architecture and how it will evolve over time is a critical first step to ensure your brand’s success and ultimately its strength in the market. The “Branded House vs. House of Brands” comparison refers to the two primary ways of structuring a business’s brand(s) and products.
4 BENEFITS OF A CLEAR BRAND ARCHITECTURE
1. Improves the cost effectiveness of your 3. Provides clarity and consistency to your brand and marketing investment.
2. Aligns brand positioning and value propositions appropriately with market segments.
brand vision and marketing efforts.
4. Creates a clear decision-making
framework for launching new products and updating existing products, allowing you to be more nimble and dynamic.
HOUSE OF BRANDS STRATEGY 4 REASONS TO BUILD A HOUSE OF BRANDS
1. If any issues arise with one of your products the other products remain largely unaffected.
2. You can launch more niche-focused brands that can
live apart from the parent brand, allowing you to craft your messaging specifically for each segment.
3. Creating separate brands allows for premium
and value products to live separately from one another. Your value brands won’t detract from the quality or reputation of your premium brands.
4. If your growth model or exit strategy includes selling portions
of your portfolio, creating different brands allows you to sell a brand versus the entire company to reposition or raise capital.
This is a multi-brand strategy. In this brand architecture, all the products produced by your company bear their own unique brand names as opposed to your company name. Most established alcohol beverage companies have historically operated as a house of brands. For example, Brown-Forman owns Jack Daniel’s whiskey, Herradura tequila and Finlandia vodka. These are all stand-alone brands within their respective alcohol categories. Companies that follow this model are marketing-driven organizations in which each separate brand is supported by a marketing staff and a substantial marketing budget. The advantage of this model is the ability to create numerous strong, independent brands that each stand credibly within their own category unfettered by your other brands. The downside of the house of brands architecture is the significant resources required to support such an approach. Few organizations have the marketing talent and financial resources required to make this type of approach successful.
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