Business development · 12 September 2019

Three benefits of shifting to a ‘branded house’ strategy

 

Brand architecture is becoming increasingly recognised as an important business strategy to implement. Its been linked to major corporations such as Apple, strengthening there all ready unshakable success.

Branded houses are characterised by a strong master brand with sub-brands marketed and operated under the umbrella of that master brand.

Research at VIM Group suggests that adopting a ‘branded house’ is the best strategy for business growth over the next five to ten years. Believing this move will accelerate growth in key sectors and will lead to many more businesses to assess the viability of a strategic shift.

As more organisations shift to a branded house strategy, what are the key benefits on offer?

Financial benefits

A branded house strategy could give you the opportunity to create efficiencies of scale and save costs

The top reward of a shift to a branded house is not necessarily about brand positioning.  Instead, boardrooms are being motivated by the financial benefits on offer – the opportunity to create efficiencies of scale, cost-savings through inter-departmental synergies and better brand organisation. All of these will have a positive impact on a company’s bottom line in the long-term.

Any change in strategy will also impact the business internally, for example how various teams create budgets, the operating structure of internal teams and the processes they use to communicate internally and externally. In that sense, it is a business decision as much as a brand or marketing decision, and it can be a good opportunity to implement or update best practice in a range of important business functions.

Cost savings are always tempting. However, before considering this shift, organisations must first ensure that it’s the right approach for their brand through extensive research and a detailed understanding of the brand’s current position, offering and strategy. Knowing how the brand interacts with consumers is the key to determining an appropriate brand architecture.

Reducing reputational risk

Incorporating a branded house strategy can offer security regarding your reputation

Reputation risk is a key consideration for any brand activity. Branded house is best used when that risk low, as one wrong move could impact the wider company. This varies greatly between industries, for example, pharmaceutical companies will face greater risk than FMCG brands. That hazard will need to be managed, but a shift to a branded house can still yield the same benefits if carefully considered.

A branded house works best when a company targets a similar audience demographic with a variety of different products, so it can build the same proposition and the same associations for different offerings. For example, a product’s value is enhanced when it is linked to a master brand that is already associated with high quality, a high cost-benefit ratio, a sustainable attitude towards the environment, good customer service, and so on.

This all creates a virtuous circle whereby the corporate brand confers equity to its product portfolio, while also benefiting from positive feedback and consumer satisfaction at the lower end of the brand hierarchy.

Future-proofing your brand

Switching to a branded house strategy can help future proof your business

In our rapid growth, digital-first economy, it’s important that brand owners are vigilant to change. Updating your approach to brand portfolio management should be part of the ongoing process of future-proofing the skills, processes and tools that underpin your business.

This is particularly important in an exciting new era – often referred to as the Fourth Industrial Revolution – where emergent technologies like 5G, AI, virtual and augmented realities are already changing the nature of brand marketing.

By implementing a branded house strategy and streamlining the processes that underpin your brand management, the organisation will be on a surer footing for the more dynamic future of brand marketing and better placed to respond as new technology emerges.

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ABOUT THE EXPERT

Roz Bacon is Group Project Director for VIM Group, a leading global brand management, and brand implementation company. It helps manage brand change and enhances performance across local and international markets – both on the ground and digitally.

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