Every company starts out by offering a product or service in an effort to produce revenue.
This is very basic.
The companies that succeed, however, go to great lengths to increase the value of their organization by avoiding commoditization. These brands utilize a strong brand strategy that maps out growth over time. And with growth comes opportunity; new product lines, brand extensions, or sub-brands – this is where brand architecture comes into the purview.
Developing a strong brand architecture to map out the future of a growing brand is essential – not only for internal organization but also for external brand recognition. Tackling this earlier rather than later sets your brand up for success in more ways than one.
For those trying to determine if sub-branding even makes sense – the aforementioned article also covers whether or not sub-branding makes sense for your brand.
Before jumping in, we need to start with some definitions:
Brand architecture is a hierarchy of related brands or brand names, often beginning with a parent brand, that describes its relationship to sub-brands.
A sub-brand is a secondary or subsidiary brand that leverages the associations of the parent brand.
There are three commonly used types of sub-branding:
- House of Brands
- The Branded House
- Endorsed Brands
Examples of Sub-Branding Scenarios
To better understand the three different types of sub-branding and how each structure is not necessarily one-size-fits-all, we are going to run through scenarios using fictitious brands we came up with (and yes, our creative department loved creating these with no boundaries).
Cleek (branded house example)
Cleek is an up-and-coming tech brand specializing in apps for iOS devices. With 1,300 employees and annual revenue of $400MM, Cleek is well on its way to cornering the market that it’s a part of.
BUT they are looking to expand.
On top of their iPhone apps, Cleek wants to create a social networking site for its users along with a cloud database for companies to store data.
Since Cleek already has solid recognition amongst its users, it makes sense for them to bolster this notoriety by establishing a branded house mode.
The branded house model is structured with one parent brand, in this case Cleek, as the overarching umbrella brand with multiple sub-brands below it (Cleek Social for social networking and Cleek Data for data storage).
These sub-brands use the same identifiers (name, logo, color, etc.) as the parent brand and are not independent from the parent brand. The sub-brands benefit from the parent brand’s existing brand equity to reach more specific audiences and markets related to the parent brand.</>
A tightly-held brand with separate sub-brands all benefitting from the recognition of the parent brand.
Internally, a lot remains unchanged as each sub-brand (or product line) runs independently from each other but shares oversight by leadership of the parent company.
Externally, however, bigger changes are at play as tasks like marketing, messaging, and outreach are now able to be siloed and deliver better user experiences (and therefore better results). To the delight of the individual teams, each sub-brand is now able to garner the external recognition it deserves, instead of the parent brand (and by proxy – all of its departments) sharing the praise.
Frostware (endorsed brand example)
Frostware is a business solutions company earning $1B in AGR while employing 1,200 people. This company is well known in its market as a top provider of software to businesses (B2B business model). However, they want to expand their services to also provide consulting for their software and are looking to enter the hardware category to bolster their software products.
While these new offerings are far enough apart from the original services of Frostware, they would still benefit from the brand recognition of the parent brand. It wouldn’t necessarily make sense to follow the branded house model that Cleek chose because the services are different enough to warrant their own branding. Software, hardware, and consulting are all widely different categories with their own unique conditions and competitors.
The endorsed brand model would be the best fit for Frostware. In this model, the endorsed brands have their own identities but are not separate from the parent brand. In the case of Frostware – the software consultancy and hardware products would become the sub-brands (branded respectively as techs and guardian labs), while its primary offering (software) would remain the sole offering of the parent brand.
These sub-brands already have a head start on the competition because they are an extension of Frostware – its recognition and trust in the marketplace extends easily. On the other hand, each offering gets its own branding and can begin building recognition and awareness apart from the parent brand:
- Separate branding
- Separate websites
- Separate user experiences
- Separate internal teams
- Separate audiences
acme construction (house of brands example)
acme construction is a construction firm made up of 130 employees and brings in about $200 million a year in AGR. In the past, they have only focused on construction projects but are now looking to branch out into office furniture and property management.
Those two things are quite different from acme construction’s original brand as a construction firm – it would not make sense to utilize the brand equity of acme construction’s quality construction work to promote their new brands in office furniture and property management.
The house of brands model would work best for acme construction. It involves a parent brand that has multiple sub-brands that are not related to each other. The sub-brands are independent from the parent brand and have their own identities, marketing strategies, and teams – with no mention of the parent brand. Bureau provides office furniture and MGMT
This model works best for acme because their plan to extend the brand reaches out in three totally different directions and into spaces that are unrelated to its primary offering. By following a house of brands architecture, acme’s construction brand won’t interfere with either of its sub-brands – and vice versa. Now, all three brands (acme construction, bureau, and MGMT) can exist in their own spaces, reaching their own audiences, and make a name for themselves in their individual markets.
Finding Architecture & Your Sub Brand Types
Selecting the right type of sub-branding for your company can seem overwhelming. The key is to look at your audience and your product. Are you looking to expand an existing offering like in the case of Cleek? Or are you looking to reach a completely different audience with a completely different set of offerings like acme? Your answers to those questions will help you decide which sub-branding type (branded house, endorsed brand, or house of brands) is right for your company.
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