Best Brand Strategy: Branded House or House of Brands?
The goal of any brand strategy is to build a strong brand. That is because a strong brand—and an effective brand strategy—results in a higher return on investment for your marketing dollar. It is as true for professional services brands as it is for consumer products.
Our focus into professional services has informed a clear understanding of what makes a strong brand.
Brand Strength = Reputation x Visibility.
Whether developed intentionally or not, every professional services firm has a brand that stands for something. Our research indicates that high-growth professional services brands are three times more likely to have a strong differentiator – an easy-to-prove and relevant characteristic – as part of their brand strategy. That is because differentiation (or specialization) helps the firm generate leads and improve closing percentages.
As firms grow and mature, the management of their brand strategy can become a challenge. Why?
Because, as collective expertise grows, there is a tendency to diversify the firm’s service offering. To nurture and grow the profitability of those new services, firms often opt to brand each service. But, that might not be the best approach.
When it comes to brand strategy for a growing professional services firm, it may be better to go in the direction of a branded house rather than a house of brands. Let me explain.
Types of brand strategies
1. Branded house: In this model, the firm is the brand. Services and market sectors (or practice areas) are subsets of that primary brand and are not formally branded. Apple or Google are globally known for this model. Under Apple’s primary brand comes many subset brands: Mac, iTunes, iPhone.
Certainly, even smaller firms can successfully pull off this model. In all instances, the subset brands are recognized, but not to the extent that they overshadow or detract from the primary brand.
In professional services, the branded house approach is also known as a one-firm brand strategy. The firm has a single brand: logo mark, marketplace positioning and messaging. The subordinate service offerings share these brand elements but contain their own unique messaging points.
2. House of brands: In the second brand strategy model, the branding is focused on the subset brands. The primary brand gets little or no attention. Ever hear of a company called Newell? How about Rubbermaid, Sharpie or Irwin Tools? Newell is a good example of the house of brands strategy—Newell is the little known primary brand, under which come the well known subordinate brands listed above.
A house of brands approach requires significant investment in dedicated resources because each brand operates as its own company in terms of brand elements and messaging.
Benefits of the branded house strategy
In professional services, the branded house strategy is more commonly used. Let’s look at the reasons why.
A strong brand—one with both high visibility and strong reputation—requires careful nurturing. Our research shows that many professional services firms overlook brand visibility, and their brands are weaker for it.
In today’s marketplace, brands must be visible both online and offline.
Our research on this topic bears out the reputation-visibility imbalance. About 57% of surveyed buyers rated the sellers of professional services highly for having a strong reputation, but only about 23% thought the same sellers had very good visibility.
If your goal is to enhance both visibility and reputation it is easier to focus on a single brand—the branded house strategy.
It’s no surprise that brand strength is more easily attainable under the guise of a branded house. That is because the firm channels its financial and labor resources toward strengthening a single brand, rather than diluting resources that compete in the building of multiple brands.
When a house of brands makes sense
Simply put, a strong professional services brand isn’t built overnight. Lacking the understanding of what makes an effective branding strategy, firms can easily fall prey to building a house of brands to support the diversification of services.
When that happens, the professional services firm must make accommodations for funding and staffing of multiple brands, which lead to a division of marketing budgets across all of the offerings.
Under the house of brands, the firm operates like a holding company for the various brands; managing each brand as though it were a separate company and dealing with all of the necessary legal requirements of this strategy certainly carries greater complexity.
Does that mean that a house of brands in professional services is never a good idea? Not necessarily.
In some specific cases, such as state licensure requirements, funding or liability structures make it more reasonable to pursue a house of brands approach. For example: an environmental engineering firm engaged in Superfund land reclamation services may consider a house of brands to limit liabilities.
Sometimes the matrix of brand promise and audience profile is the driver of the decision. When brands create sub brands that have unrelated brand promises (i.e. what they deliver), which in turn have a very different buyer or audience profiles, it can also make sense to create a house of brands.
The key to determining what brand strategy is most appropriate for your firm depends on strategic goals, audience, resources, and commitment. Developing a house of brands can potentially compound the challenge of building your firm’s overall brand strength. And measuring the return on investment for a single brand is not nearly as challenging as measuring that same return on many parallel brands.
- Download Hinge Marketing’s Brand Building Guide for Professional Services Firms for more insight into how to build a professional service brand.
- Watch our webinar, Digital Branding: Doing it Right, which offers advice on how to build an extraordinary online brand.
- Uncover your firm’s true differentiators with Hinge University’s course, Differentiation, Positioning & Messaging
How Hinge Can Help
Hinge’s Branding Program equips your firm to stand out in a crowded marketplace and build a distinguished brand that drives sustained growth. From strategy to implementation, we take your firm through the rebranding process — painlessly and with exceptional results.
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