Home > Customer behavior, Identity and Branding, Lead generation, Marketing > House of brands vs. branded house: does it work for B2B?

House of brands vs. branded house: does it work for B2B?

There is often a discussion among consumer product companies between having a “house of brands” and a “branded house.” Most consumer product conglomerates, such as Procter & Gamble, Johnson & Johnson, and Colgate-Palmolive, use the “house of brands” strategy. In other words, the product has the main brand name: Crest, Scope, Listerine, Head & Shoulders, Tylenol, and so forth. Very few consumers could accurately say which brand is owned by which company.

We’ve also witnessed this start to move into the consumer electronics space. Companies like Samsung and Sony still put their name on everything, but iPod and Zune are the dominant brands, leaving Apple and Microsoft to a lower-level brand.

This is because people can only associate one brand with a product. Al and Laura Ries, in their book The 22 Immutable Laws of Branding, say that successful brands associate a target concept with their brand, and that subbrands and superbrands are recipes for disaster. Witness the lack of success with brands that try to be everything to everyone: Yahoo, GM, Ford, and to a lesser extent Hyundai, Yamaha, and Mitsubishi have not established a dominant foothold in their spaces because consumers have not associated a concept to their brand.

I wonder if this works in the B2B space as well. When I was with Secure Computing, the marketing department kept trying to make “Secure Computing” the dominant brand, and their products Sidewinder, SmartFilter, and SafeWord second-tier brands. But the three product names stuck with customers, and the brand “Secure Computing” did not. (One of the other weaknesses is that “secure computing” is a generic term, and shared its name with a magazine and a Microsoft initiative — but that’s another discussion.)

But many B2B companies prefer an umbrella brand, and they can be successful with it. Oracle and Microsoft have been successful with (or in spite of) this strategy. However, Symantec has seen their market share fall recently, and Network Associates split into four different companies after their umbrella-brand strategy fell short.

I think that given the choice, even B2B companies should market their product brands, not their umbrella brands. B2B products, even if they’re focused on one specific vertical or one specific business function, often have different audiences. All audiences will try to categorize the dominant brand — that’s just how the human brain works. And if that association is with the umbrella brand, but is the wrong association with the brand’s other products, then it’s an uphill battle. The “branded house” strategy will actually undermine the sales process and create an uphill battle with each customer.

Advertisements
  1. January 19, 2009 at 6:05 am

    Paul,
    I just discovered your blog and I’m enjoying it. Branding in B2B is a difficult and tricky concept, and it’s good to see your thinking on the subject. I’m not sure that there isn’t an argument to be made for branding the more digestible meme in B2B regardless of whether it’s a product brand or an umbrella brand.

    Given the effort to educate and explain many B2B products and solutions, digestibility of a meme has got to be a key factor – unlike toothpaste, where most people living in developed countries have a basic understanding of what toothpaste is.

    This would explain the shift from umbrella to product for companies like Microsoft as they evolve into ever broader areas (the concept of “what is Microsoft” becomes hard to wrap one’s head around). Whereas for smaller companies, focused on specific niches, the individual product SKUs are more alike in concept than they are different, so branding the company makes more sense.

    Thanks for the interesting read.

  2. Etch
    March 17, 2009 at 3:17 am

    Great reading, can you please give some examples of Branded house and house of brands? Is GM a house of brands? Is Chevrolet a Branded House?

    • March 21, 2009 at 2:55 pm

      General Motors is definitely a house of brands: Chevrolet, Buick, Cadillac, and GMC are the brands underneath them. (However, Chevrolet is a house of brands also: the Malibu and Corvette are brands underneath Chevrolet.) A more effective example is Procter & Gamble: Their brands (Crest, Tide, etc) are so strong that most people don’t know which brands are owned by P&G.

      Examples of a branded house: BMW and Mercedes, whose cars are known by letter and number combination so that BMW/Mercedes are the default brands. Secure Computing, a company I used to work for (recently bought by McAfee) was a house of brands for years: Sidewinder, SafeWord, and SmartFilter were the three main product brands from about 2000 to 2006. In 2008, they ditched the proper names for generic names, putting “Secure” in front of the generic term: Secure Firewall, Secure Mail, Secure Web.

  3. April 14, 2010 at 4:32 am

    Interesting points, although I have one objection. I would argue that Apple has a family brand architecture, the Apple being clearly exposed in every touch point, from product, to advertising and packaging etc. All their products build the master brand, by sharing the same strict visual profile and logo. They can afford to be so informal about their product names, because the Apple brand is well established and ever present. Officially there is always a close and direct link between Apple + product name. I think they skillfully manage to both focus on the product (verbal) and the corporate brand (often just the Apple icon) in a way that the two strengthens each other, and is perceived as a higher entity.

    • April 14, 2010 at 9:27 pm

      Actually, on second thought, Apple is a monolithic brand with a well segmented portfolio of strong product concepts/trademarks that are user oriented. A name does not equal brand. Even though the iProduct becomes a celebrity over night, the brand is Apple. The role of the brand is things like vision, strategy, attraction and premium pricing, the products deliver on needs and preferences. It seems to work, the way they execute.

      • May 12, 2010 at 11:46 pm

        I support Mr. Frogner view…Apple has without a question a monolithic brand architecture. The trust is in the apple brand and each new product delivers on the apple brand promise and ultimately strengthens apple as a brand…

        When looking at the 10 most successful brands globally, so is it interesting to see that 8 out of 10 is choosing a branded house brand architecture…(Apple, Google, Nokia, Vodafone, McDonalds, IBM, Microsoft and GE…)

    • May 17, 2010 at 8:40 pm

      The best way to determine a house of brands or a branded house: Ask users to identify the product they own. Yes, Apple has a very strong brand — but if you ask people “What smartphone do you have?” or “What music player do you have?” or “What computer do you have?” chances are they’ll say iPhone, iPod, and Mac. Not Apple. If you ask people what car they drive, they’ll say a BMW (the umbrella brand is much stronger than 325i) and Corvette (the product brand is stronger than Chevrolet). Apple is an odd animal, to be sure, since their company brand has a lot of meaning to users. But ultimately, their strategy is a house of brands strategy.

  4. Carol
    January 27, 2011 at 1:26 pm

    Do you have examples of product private label branding in an environment where several brands are represented operating under a single supply chain structure? I currently work in such an environment so while we want to use the house brand (company name) on products, some products are applicable across business units so the issue of sharing house brand products comes up as the brands want to keep those exclusive but the supply chain organization says it doesn’t make financial sense to stock a labeled and unbranded version even if actual product cost isn’t different. Supply chain is focusing on internal costs of holding inventory, safety stock, sku maintenance, etc.

    • January 28, 2011 at 9:33 am

      Unfortunately, I’m not familiar with the supply chains of private labels. I’ve worked mostly in B2B software, and never with consumer products. But maybe some of my other readers have experience with it?

  1. June 3, 2010 at 9:04 pm

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: