If a company has more than one brand, then it needs to decide how those brands relate to each other. That’s brand architecture.

There are three types of architecture.

Corporate brand (or umbrella brand, or family brand, or branded house). This is where the parent brand is used for all the company’s products. For example, Virgin is the parent brand of Virgin Money, Virgin Wines, Virgin Atlantic and Virgin Trains. All these companies benefit from being associated with the parent’s values and reputation. Although they will develop their own reputation, based on the quality of their service, their values will always be those of Virgin.

Other examples include Heinz and Apple.

Endorsed brand (or sub-brands). This is where the parent company has sub-brands that have their own brand identities and values, but which are all subordinate to the parent brand. For example, Ford owns several sub brands: the Fiesta, the Focus, the Galaxy and so on. Although they all work as brands in their own right, they all benefit from being associated with Ford and its values.

Other examples include Cadbury (which owns Dairy Milk, Flake, Crème Egg and Roses) and Kellogg’s (which owns Rice Crispies, Special K, Crunchy Nut and Coco Pops).

Individual product brand (or House of Brands). This is where a company has a range of brands, all of which have their own branding and values. The parent brand is not associated with these brands. For example, the drinks company Diageo owns Johnnie Walker whisky, Bailey’s, Guinness and Smirnoff.

Other examples include Procter and Gamble (who own Head and Shoulders, Olay, Gillette, Daz and Lenor) and LVMH (which owns Hennessy, Veuve Clicquot, Givenchy and Guerlain)

In practice, it’s sometimes a bit messier than that. Some companies will adopt different branding architectures for different products. For example, Coca Cola is a huge brand (value: $57bn, according to Interbrand) with very strong brand values and recognition. But some of its brands act like individual product brands (Lilt, Schweppes, Costa Coffee) while others are firmly part of the Coca Cola brand (Diet Coke, Zero Sugar).

Which strategy is right for you?

Brand architecture is an important part of your brand strategy.

There are several reasons why you might be thinking about the correct brand architecture for your company.

Perhaps you have recently acquired some new brands. Maybe you are considering branching out into new areas, and need to set up new brands for these areas. Or you might have a range of brands with different identities, and suspect that your marketing might be more efficient if they all shared the same identity.

The correct architecture will depend on your business strategies and goals, and also on your brand situation. Here are some things to consider.

How strong is your brand?

Do lots of people know your company’s brand? Do they like it? (If you’re not sure, it might be worth investing in some brand research. There’s a guide to help you to decide what you need, and how to get it, here.) If your brand is well-known and liked – if it has lots of brand equity, in the jargon – then it could make sense to allow other brands that you might own to benefit from this by being strongly associated with it. So you might consider a corporate brand strategy.

Alternatively, if each of your brands has its own strong identity, and if they are well-known and liked, then an individual product brand strategy might be better.

How transferrable are your brand values?

Your company’s brand might be strong. But if its values are not relevant to your other brands, then they might not benefit from being associated with it. For example, if a prestige watch manufacturer (Rolex, for example) acquired a budget watch manufacturer (Timex), then even though it has a great reputation for making reliable watches, its main values are luxury and exclusivity. So its values wouldn’t transfer to the new brand, and it should keep the brands separate. So it should adopt an individual product brand strategy.

Your values might be relevant to a completely different sector. Caterpillar (the manufacturer of diggers and earthmoving equipment) found that its values of toughness and ruggedness could be applied to shoes and clothing. Here, a corporate brand strategy would be correct.

Future-proofing: are you planning to acquire more brands?

Does your corporate strategy require growth? If it does, where will the growth come from?

If your company plans to buy other companies that operate in the same area and which offer broadly the same services (often called horizontal integration), you will probably want to rebrand these companies into your parent brand, because there is no point in selling the same product to similar people using different brands. You should prepare to implement a corporate brand strategy.

For example, if a bank acquired a competitor bank – if Lloyds bought NatWest, for example – then it would probably adopt a corporate brand strategy. (If, on the other hand, the acquired brand had its own distinctive proposition, then it might retain the brand in an individual brand strategy – which is what Lloyds did, when it acquired Halifax in 2009, and when it set up TSB in 2013.)

If you plan to buy companies that offer different aspects of the same service – for example, you might be a wine producer, and plan to buy a chain of wine retailers or a producer of wine accessories – then an endorsed brand might be appropriate, because their brands will be better-known than yours for the specific services that they provide, but they will benefit from being associated with an authoritative parent brand which is respected in the overall sector.

If growth will come from diversification into completely new areas, then unless your core brand values are appropriate for these areas (like the Caterpillar example, above) then you might decide that an individual brand strategy is appropriate.

If you’d like some expert help to decide on the correct strategy for your company, we’d be happy to help. Please get in touch here.