What is the difference between house of brands and branded house?

If your business includes more than one brand, there are many considerations when building your sales and marketing strategy. But equally important is understanding the pillars of digital commerce in a multi-brand strategy. The best structure for your company depends on many factors. It is helpful to begin by distinguishing between the two main types of multi-brand strategies: Branded House vs. House of Brands.

What Is a Branded House?

A Branded House is a strategy where more than one company’s products are sold under one name/branding umbrella. This approach is optimal if the master brand/company wants more control over the end product’s production, distribution, and cost. With a branded house, it’s often beneficial to house all the brands within the same customer experience and potentially on one unified ecommerce platform. A great example of a company doing this is BMW. All BMWs are marketed under a single brand regardless of the series.

In the right situation, this approach can be a driver of value creation and increased sales. Specifically, the master brand can create added consumer value by distilling the many brand promises down to one and thus allowing the sun-brands to “draft” off of the parent or master brand.

What is a House of Brands?

A House of Brands is in many ways the opposite of a Branded House. It’s a strategy where each brand has its own brand identity, often representing a separate demographic, need, or occasion. A House of Brands can include numerous brands, where each brand is independent of the others, often with different target audiences. The GAP is one good example where the name is associated with the parent brand, but sub-brands stand on their own such as Old Navy, Banana Republic, and Athleta.

With a house of brands, there is little emphasis on sharing across different products except when it comes to data; because each product has its own image that needs to be maintained.

One main benefit of the house of brands approach is the ability to build distinct brand voices to serve and appeal to diverse audiences and capitalize on economies of scale, cross-selling, and the association with other brands in the portfolio.

The 3 Pillars of Digital Commerce in a Multi-Brand Strategy

Understanding the pillars of digital commerce in a multi-brand strategy informs many downstream decisions.  The three pillars of commerce, content, and community can be challenging to maintain with just one brand, and multiple brands certainly add complexity. On the other hand, there are also synergies to be had if there is the proper alignment.  With the rise of increasingly powerful and agile ecommerce platforms, a multi-brand strategy has become an interesting option.

Let’s break down each of these three pillars individually.

COMMERCE

Align Your Brand Strategy to the Appropriate Commerce Model

Several commerce models are well suited for a multi-brand strategy. Some commerce models work better for multi-brand businesses that are mature or simply in a later stage of development. These companies can leverage the brand equity (value) that has been built over time and introduce new commerce models such as Marketplaces. For example, Epiroc, the leading productivity partner for the mining, infrastructure, and natural resources industries launched a marketplace to sell consumables and used equipment after being in business for almost 150 years.

Other brand models are better for companies who embrace the notion that once their brand reaches a certain point, becoming a part of a bigger portfolio is necessary to compete. In professional services, for example, the branded house strategy is more commonly used. This is partly because brands in this particular vertical tend to have high visibility and a strong reputation. In this case, a simple B2B commerce approach may work best.

To learn more, check out our article: Digital Commerce Business Models: The Current Landscape

Enable Your Brand Strategy With The Appropriate Platform

As an increasing number of multi-brand businesses explore the various commerce models referenced above, they will no doubt be intrigued by marketplaces and perhaps even explore launching one of their own. This commerce model requires a platform solution that can integrate commerce and marketplace capabilities. Not surprisingly, these platforms are among the fastest-growing ecommerce platforms in the world right now.

Vaimo’s partner VTEX enables a B2B2C model where brands can get customer insights, drive brand loyalty, reduce costs, and protect the business against future disruptions such as the pandemic. Leveraging the marketplace model allows for both brand types to drive a direct-to-consumer sales motion while keeping their channel intact and leveraging resellers and partners for fulfillment and inventory, also known as “conflict-free D2C.” VTEX does this by having a fully integrated solution with Commerce, Marketplace, and Order Management System System (OMS) capabilities.

Related Reading: Gain Revenue by Selling on Marketplaces

Create A Customer Experience That Aligns With Your Strategy

Deciding to present one single-branded house or opting for “sibling brands” under that house is an important crossroad for multi-brand commerce. This decision will impact every part of your journey moving forward. And as with most significant business decisions, it is essential to do thorough research before launching:

• Do you need to separate your brands?
• Do some of your brands “play better” in specific markets?
• Do you have similar/different customer types?
• What is the role of the brand/sibling brands in the consumer’s life?
• What are the competitive dynamics?

Answering these questions will allow you to align the commerce strategy to the customer experience and consider capabilities such as Linear commerce, Social commerce, Livestream commerce, and Mobile Commerce, to name a few.

Related Reading: What is Social Commerce? 13 Tactics to Get Started

Want more advice on this topic?

CONTENT

Yes, Content Is Still King!

Whether you are building a multi-brand store or a branded house storefront, one of the most important factors is content. A well-designed content strategy will help you establish and maintain a relationship with your audience.

What your content strategy looks like will differ based on the brand strategy you choose. A company that markets as a Branded House is expressing its value proposition in a single, unified voice. In most cases, the corporate name and brand identity is one and the same. While a house of brands content strategy requires that each brand have its own identity and “backstory.”  Each sub-brand or sibling brand must anchor a place in the portfolio and in the minds of the customer.

Content is a critical component in ecommerce, where your customers interact with your brand via multiple touchpoints. A solid content strategy requires consistent messaging in all channels for an optimized customer journey that reinforces brand values. Maintaining this consistency throughout the entire digital customer experience is essential.

Strengthen Your Content Strategy With The Right Platform

Traditional content management systems (CMS) were designed to create web pages. Today, it is important to search out those that are built from the ground up – specifically designed to create omnichannel digital experiences and drive multiple commerce business models in parallel. These agile approaches and more modern tech stacks allow your digital teams to innovate, iterate, and go to market faster. Vaimo’s partner Contentful does this by:

• Unifying content so you can edit from a single hub
• Structuring it so you can use it in any digital channel
• Integrating with hundreds of leading-edge tools for translation, segmentation, and ecommerce, amongst other things

Hone Your Messaging and Leverage Strong Storytelling

Storytelling and ultra-targeted, clear messaging are critical when you’re building a multi-brand strategy. A house of brands should work as a “front door” of sorts for the sub-brands. Producing custom content to support new product launches and accentuate the differentiators of each brand is vital.

COMMUNITY

Multi-Brand Loyalty Programs Can Be Challenging to Create

Don’t underestimate the challenge of juggling multiple brands, multiple customer experiences, and portfolio management. Some years ago, Virgin Group attempted to develop an umbrella program for its various brand properties. But the attempt was abandoned because of the complexity of figuring out what the value would be for customers across its multiple airlines, holiday packages, and cruise lines. Their latest attempt, introduced in 2020, is called Virgin Red a unified loyalty program extending across all Virgin businesses.

Enable Customer Loyalty with the Appropriate Platform

Many loyalty platforms can help you run loyalty programs. But when it comes to an experience platform, you should look for one that has both excellent loyalty program management capabilities and powerful engagement modules to allow you seamlessly connect, engage and grow your customer relationships at scale. Vaimo’s partner Annex Cloud is one such platform. Well beyond a simple points program, this platform has the capability of increasing customer engagement at every touchpoint, helping drive loyalty across any commerce model you have chosen.

Understand Your Audience to Drive Growth

All marketing and sales programs begin by understanding your target audience, including your ideal customer persona, their pains, aspirations, and how you can add value to their lives. For a Branded House, understanding each of your audiences is crucial to driving the uniqueness of each brand. This is also important for spotting opportunities for cross-selling. In a House of Brands, this issue of knowing your audience is even more important. You can have many different brands in the portfolio, but if they fail to deliver on their intended targets’ needs, you will not realize the value of this strategy.

Final Thoughts

There are many factors that drive the decision between a Branded House or House of Brands strategy. Yet, regardless of which is chosen, understanding the trifecta of Commerce, Content, and Community are critical to a successful multi-brand business. At Vaimo, we’re presently helping more than 65 multi-brand, multi-currency, multi-language clients optimize their operations. Get in touch with our team of experts to learn how we can help you take your ecommerce business to the next level.

At Vaimo we help brands, retailers, and manufacturers all over the world to drive success in digital commerce. Reach out to us if you want to hear more about how we can improve your customer experience strategy, go to market plan or explore how technology can enable success.

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