To understand the house of brands strategy it is best to take the example of a father who likes to let his children have their own paths and build their reputations without any personal involvement into their personal matters. However, it is always there on their back but passively and quietly. This is why you will see that in this brand architecture the sub-brands become recognized, get the attention and seem like independent brands. Any reputation that the child brand builds does not necessarily and directly strengthen the parent brand or a certain quality of it.
Consumer goods, hospitality, and F&B industries are oftentimes the common users of this type of strategy. They take up this strategy to address the segmentation in the consumers and create a brand that becomes a representative of that segment. Another reason why they use the house of brands strategy is to push away other companies from the market.
Examples of House of Brands Architecture
Proctor and Gamble, often abbreviated as P&G, is one of the best examples of this strategy. There is no doubt that P&G has its own worldwide reputation as well, but its children brands have their own identity too. Gillette, Tide washing powder, Ariel Washing Powder, Pampers, etc. are all examples of brands that are independently known around the world but they are all the children of a generous father who does not want to tap into the reputation of its children nor wants its own reputation to pave the way for its children’s careers.
Another great example is of Unilever. Rexona, Dove, Lux, Sunsilk, Lipton, Knorr, etc. are all children brands of Unilever but you hardly give Unilever the credit for how great these products are. Often pitched against Maggi, Knorr is more like a brand fighting its battle alone without any help from Unilever. Tencent, a Chinese conglomerate, uses a mix of brand architectures but its sub-brands that follow the house of brands strategy include WeChat, PaiPai, QQLive, QQ Player, iTQQ, etc. At times, the parent brand can jump into the picture but only subtly to give some power to its child brand, for example, Scotch Brite from 3M.
Pros and Cons of House of Brands Strategy
The best thing about this strategy is that one brand can represent and target many different consumer segments. It does not have to appear that all the different types of products are coming from the same brand because this puts the loyalty of customers in danger for the parent. The reputation it might receive from some successful products might get nullified by some of the failed products. With the house of brands strategy, if a child brand fails, it fails on its own behalf and does not affect the parent brand’s reputation.
As for the cons, the biggest problem with this type of brand is the budget. Since the parent brand has to work every brand from the scratch, it has to spend a lot in advertising and marketing it. It is like the parent brand is managing independent companies and has to worry about each company’s marketing separately.
So, while it may seem that the parent brand in the house of brands strategy is the generous father that wants its children to follow their own paths, it must also not be forgotten that the father is going into obscurity so if the child fails, its failure does not affect the father’s reputation.