Brand architecture is the structure of brands within an organizational entity or under a master brand. It is how the corporate brand and sub-brands relate to and support each other either by the way they are named or designed or both. The sub-brands should reflect or reinforce the core purpose of the company.
Here are the main principles of brand architecture:
From the two previously stated principles, two main models have developed: the House of Brands and the Branded House. Now, with the relatively recent software and technology economy, a hybrid model has sprung forth. Each has its strengths and weaknesses. One model may work for a particular stage of the business and need to migrate to another as it grows and expands. Every case is different and needs to be assessed based on the company’s vision and business strategy.
Just like it sounds, the house of brands model is used primarily for consumer retail companies like GAP brands, P&G and Unilever. When delivering products to the masses, it is necessary to directly address their reasons for purchasing a product with the name and brand. Most of the time, companies that use the house of brands model are very large and have the resources to manage and promote each one of their brands to each particular audience.
There are a few exceptions like software companies that have branded one piece of software to address a particular purpose and the second software idea may be addressing a completely different problem for an entirely different audience or industry. If the second piece of software is complementary to the first, the company can use a hybrid model between House of Brands and Branded House. More on that later.
The branded house model has been the default for many businesses as they grow and expand. As one division or product starts to take on a life of its own, addressing the issue becomes a necessity. Often this is triggered by the mere size of the organization that it takes to run that particular division or product. Once it becomes close to equaling the output of everything else combined, it seems to be obvious that the identity and organizational structure needs attention. A great example is General Electric. GE started with lamps and electric motors; now they have GE Aviation, GE Capital, GE Healthcare, GE Energy, GE Oil & Gas, GE Transportation.