A brand is basically always the same, it is a way to identify a product. But when a company starts adding more products to its portfolio, things get more complicated. A company that controls hundred different products needs a system to manage these individual brands. This brand management system is also known as the brand architecture. On the most basic level, there are these possibilities.
- Umbrella brand: a company uses one brand, often the corporate brand, to centralize its branding efforts. Examples: Virgin (Virgin Atlantic, Virgin Cola), Harvard (Harvard Business School, Harvard Business Review) and GE (GE Finance, GE Jet engines).
- Branded house: each product of the company has its own brand, the company is the 'house' in which all the brands are hosted. Examples: Colgate (by Colgate-Palmolive), Knorr (by Unilever), and Tide (by Proctor&Gamble).
- Endorsed brand: this is a mix of the two options above. Although these brands have a brand of their own, the corporate brand is also mentioned. Examples: Sony Playstation, HP Laserjet.
Creating and maintaining new brands costs a lot of money. And a first thought might be that it is probably cheaper to focus one brand instead of supporting multiple brands. But apart from the cost of the approach, there are other differences.
Individual brands offer an opportunity to make a fresh impression on the consumer. Umbrella branding on the other hand brand gives the consumer a sense of familiarity which might influence purchases in other product categories. A downside to an umbrella brand is that all the products are interconnected, if something goes wrong with one product, it will have an effect on all of them. Plus there might be confusion in the consumer's mind what this umbrella brand exactly stands for, especially if the brand has been stretched across some unrelated product categories brand.
Among FMCGs (companies that produce Fast Moving Consumer Goods such as Unilever or Proctor&Gamble), the branded house is the most popular approach. Also in Brazil. But there are some differences in the execution of this brand architecture compared to Western-Europe
In future posts I will illustrate the different approaches these companies take through a analysis of their advertising, promotion, point of sale materials,etc.