The Dilemma of Brand Consolidation: Ralph Lauren vs. Unilever Approach

When it comes to brand management, one must consider whether to consolidate all existing brands under a single corporate identity or to maintain individual brand identities for each product. This decision is not merely a matter of aesthetics or market preference; it involves deep strategic and operational implications. To understand this dilemma, one must first comprehend the concept of a 'brand.'

What is a Brand?

A brand is more than just a logo or a name; it is a promise, a behavior, and an experience. Ralph Lauren's brand, for example, is synonymous with luxury, style, and tradition. This is why I strongly advise against consolidating all existing brands under one corporate identity. The Ralph Lauren Home brand, for instance, retains the Ralph Lauren identity but caters to a different market segment, preserving the brand's inherent values and positioning.

Strategic Considerations: Branded House vs. House of Brands

Branded House: This strategy involves consolidating multiple products under a single brand identity. This approach is highly cost-efficient and resilient against market disruptions, as it simplifies marketing efforts and corporate management. A classic example is BMW, which markets all its automotive products under one strong brand identity. This uniform branding strategy ensures consistency and reinforces the brand's image across the entire product range.
House of Brands: In contrast, this strategy involves creating distinct brands for each product. This approach is particularly effective in competitive and dynamic markets, offering greater flexibility and the ability to quickly adapt to market changes. Unilever, for instance, operates under a plethora of distinct brands, each serving a unique market segment and product line. This strategy allows for independent product launches and elimination without affecting the overall brand portfolio. However, managing and growing multiple brands requires significant resources and a robust marketing system.

Modern Trends in Brand Management

In the era of digital communication and social media, more companies are opting for the branded house approach. This trend simplifies brand management in a fragmented market, making it easier to maintain a consistent brand image and manage brand relationships. The branded house approach reduces complexity and enhances brand coherence across different products and channels.

The PG/Unilever Approach: Multi-Brand Strategy

For companies seeking to optimize brand positioning, the PG/Unilever approach is highly recommended. This strategy, also known as the 'house of brands' approach, ensures that each product has its own distinct brand identity. This approach is particularly effective as it allows for precise brand messaging and positioning, as each brand can represent a specific product or idea without diluting the overall brand image.

Disadvantages of the Unilever Approach

One of the main disadvantages of the PG/Unilever approach is the complexity of the marketing system. Each brand requires its own branding program and marketing efforts, which can increase overall costs. Additionally, while a single brand can be stretched across multiple product lines, this can lead to reduced effectiveness and consumer confusion. However, it is crucial to note that this approach is not necessarily more expensive in terms of media spending. Even within a consolidated brand strategy, each product still requires specific investments, and the effectiveness of such investments is often lower compared to the distinct brand approach.

In conclusion, the choice between a branded house and a house of brands depends on the specific business model and market dynamics. While the branded house approach offers cost efficiencies and resilience, the house of brands approach provides greater flexibility and adaptability. Companies must carefully consider their strategic goals and resource allocations to determine the optimal approach for their brand portfolio.