Brand Relationship Spectrum

Over the last couple of days, I've been reading about the brand relationship spectrum and how it seeks to differentiate brands on the basis of driver roles. Basically, there are four main categories of brands:

House of brands. Consists of two master brands. Ex - Pantene and Head & Shoulders.
Endorsed brands. Consists of an endorsed brand and the endorser. Ex - "The Lion King" from Disney.
Subbrands. Consists of a master brand and a subbrand. Ex - Honda Civic.
Branded house. Consists of a master brand and a descriptor. Ex - GE Appliances.

The house of brands and branded house strategies are at each end of the brand portfolio strategy spectrum. A house of brands is a strategy based on two independent brands assuming their own driver roles. On the other hand, a branded house uses a single master brand to drive several offerings. In the middle of the spectrum, there are endorsed brands and subbrands. Endorsed brands are driven to a limited degree by the master brand and subbrands leverage the master brand more so.

What are some of the advantages and disadvantages of each strategy?

House of brands. Lets think of P&G. They manufacture Head & Shoulders, Pert Plus, Herbal Essences and Vidal Sassoon. Obviously, they give up economies of scale by having multiple unconnected brands. However, P&G's house of brands strategy lets them market to distinct niches by providing each niche its own value proposition - dandruff control, combined shampoo and conditioner, etc. Additionally, the house of brands strategy lets you avoid incompatible brand associations (Budweiser beer is incompatible with a Budweiser cola), distinguish new offerings (like Toyota did with Lexus), minimize channel conflict (like L'Oreal sold through drugstores and Lancome sold through high end department stores) and minimize conflicting product lines (Nestle and Purina shouldn't be related).

Endorsed brands. There are several endorsed brands strategies. For instance, the typical endorsed brand strategy is based on lending the endorser's credibility to the endorsed brand.

There is also the shadow endorser strategy which is a variant of the house of brands in that there are two master brands. The difference lies in the fact that many people know that there is a relationship between the two brands. The key to this strategy is that the endorsed brand yields the benefit derived from the endorser but at the same time there is a degree of separation that allows the endorsed brand to develop its own personality.

Additionally, there is the token endorser strategy that features, albeit less prominently, the endorsement. The token endorser might simply lend a logo to provide the endorsement benefit. But the reason the token endorser takes a less prominent role is to allow the endorsed enough distance to develop on its own.

Next, there is the linked name strategy where the endorser uses naming to create the endorsement. For instance, think about McDonald's and the BigMac, McNuggets, McSwiss, McMuffins, McRib, etc. McDonald's lends the Mac or Mc to their naming system to establish an endorsed relationship.

Subbrands. Subbrands can allow companies with too broad of an appeal to target niche markets. They also can stretch the master brand into new areas of emphasis and signal a new offering. A downside to this strategy can come from the close proximity to the master brand and the inherent risk of associations. Additionally, such close proximity can also restrain the subbrand's development.

Branded house. A branded house moves the master brand from the primary driver role to the dominant driver role. The branded house strategy leverages an established brand and minimizes the investment required for each product. There are economies of scale. While this strategy can provide synergy and maximize clarity, it can also limit niche opportunities and adversely effect the whole staple of products when the brand falters.

How do you choose what strategy to employ. Aaker's suggests that these three questions are answered:

1. Will the existing brand enhance the offering?
2. Will the offering enhance the brands that define the offering?
3. Is there a compelling reason to generate a new brand (whether stand-alone, endorsed or a subbrand?

If the answers to the first two questions are "yes" and the third question is "no", then you should lean toward the branded house side of the spectrum. If the answers to the first two questions are "no" and the the third question is "yes", then you should lean toward the house of brands side of the spectrum.