brand

Brand naming strategy: branded house or house of brands?


At Red Hat, I often get questions about how we name stuff. It is usually not just idle curiosity, mind you, in most cases someone has a new program or product and would like to call it something like Supersexyshinyfoo. Our team has to play the bad guy role and explain that we don’t usually create new brands like that at Red Hat.

Cow sez: Dude. Do I really need another brand?

Cow sez: Dude. Do I really need another brand?

The response is typically something like “Let me get this straight… You guys think long, boring names like Red Hat Enterprise Linux, Red Hat Enterprise Virtualization, and JBoss Enterprise Application Platform are better than Supersexyshinyfoo?”

My answer? We already have a Supersexyshiny… it’s the Red Hat brand.

We’ve spent years building the Red Hat brand into something that people associate with (according to our surveys) value, trust, openness, choice, collaboration, and a bunch of other neat things. Studies have shown that Red Hat brand karma is pretty positive. And the logo looks great on a t-shirt. Our brand is one of our most valuable assets.

This is why most Red Hat products have very descriptive (some would say boring…) names. The equation probably looks something like this:

(Supersexyshiny + Foo) = (Red Hat + descriptive name)

This brand strategy is often referred to as a “branded house” strategy.  Take one strong brand, plow all of your brand meaning into it, while differentiating each product with descriptors instead of brand names.

These days, many automobile manufacturers do things this way. Remember when Acura used to have the Acura Integra and the Acura Legend? Honda simplified the branding strategy by moving to RL, TL, TSX, etc. as descriptors for their cars, pointing all of the brand energy back at the Acura brand. Many other auto manufacturers follow similar principles.

The polar opposite strategy from a branded house is called a “house of brands.” Staying with automobile manufacturers, a good example of a house of brands is General Motors, which makes cars under a variety of brands, including Cadillac, Buick, Chevrolet, Saturn, and more. Underneath each of of these brands, GM creates still more brands. Take Chevrolet for example. Underneath the Chevy brand, each of the cars also has its own brand: Corvette, Aveo, Cobalt, Silverado, Malibu, Camaro, Impala among others.

So where does Red Hat fit? On a scale of “branded house” to “house of brands” we fall here:

brandhousehousebrandWhy aren’t we all the way to the left? Red Hat actually doesn’t just have one major brand in it’s “house”– we actually have three: Red Hat, JBoss, and Fedora, and each of these brands is essentially its own branded house. When we are at our best, we consciously avoid creating new brand names and instead focus much of our energy on building these three brands.

So why do we do this when we could be building all of these sexy new brands like GM does? It is so much fun to design all those new logos after all…

Simple. Building a brand is expensive.

When making a decision on whether a branded house or house of brands strategy is right for your company consider:

1) Do you have enough brand-building money to afford multiple brands?

Having multiple brands is a luxury. Building a brand takes time, patience, and money. Would you be hurting your umbrella brand by siphoning resources away from it to start a new brand? You should consider this carefully. Sometimes pooling your money and achieving the brand equivalent of an economy of scale is the best option.

2) Do your brands have significantly different target markets?

It is sometimes hard for brands to make the leap from one market to another. We’ve talked about this previously in a post about brand permission. You might consider a different brand if you are concerned that your existing brand won’t have permission to enter a market.

3) Are there significant brand risks that could badly damage your business?

The classic case of this is the 1982 Tylenol scare where seven people died from taking Tylenol capsules that had been laced with cyanide. Sales of Tylenol immediately plummeted, but Johnson & Johnson was able to avoid significant damage to revenues of their other products because these products had no brand association with Tylenol (Johnson & Johnson is another classic house of brands). If risk is one of your primary concerns, sometimes creating a house of brands is a good (but expensive) mitigation strategy.

For most small business without gazillion dollar marketing budgets like GM, Johnson & Johnson, and Proctor & Gamble, something close to a branded house strategy is probably the safest bet. Keep your brand-building dollars working hard by centralizing them. Don’t expend your energy creating tons of brands that will only confuse your customers and that you will have a hard time growing. Instead call your products what they are and focus on growing the power of your main brand.

You certainly don’t need to be a pure branded house (we aren’t). But consider all your options very carefully before taking on the expense of creating a new brand, and only create one if you can clearly articulate the reasons why you need it.

And no, wanting your new Foo to be Supersexyshiny is not a good reason.

About Chris Grams

Chris Grams is Head of Marketing at Tidelift. He is also the author of The Ad-Free Brand: Secrets to Successful Brand Positioning in a Digital World.

Discussion

3 thoughts on “Brand naming strategy: branded house or house of brands?

  1. SUPERSEXYSHINYFOO.COM is available!

    I’m sorry but I couldn’t resist. Just in case you think about it some more and change your mind, the domain is available and no, I didn’t register it in case that fact changes.

    My company produces products with dual brands and neither of them are the company name. It gets very confusing and I hope we evolve into something easier to explain to customers.

    Posted by Ed Tennant | September 21, 2009, 2:11 pm
  2. I wish I read this article a couple years ago. You crystallize the benefits and costs of the branded house vs. house of brands. Thanks for the article.

    Posted by Marc Perry | January 12, 2011, 10:40 pm

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  1. Pingback: Brand tip: Call a duck a duck « Dark Matter Matters - October 7, 2009

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