Brand Naming Hierarchy – Essential Issues to Consider When Naming Your BrandJun 02, 2021
The name by which customers identify your company, product or service – let’s call it your brand for simplicity - is the first encounter they have with your brand. It is the single most important decision you make for your brand when selecting it because if you think about how you yourself remember brands, you’ll realise that it’s by reference to its name. The name is the primary way buyers will remember your brand so it’s the frame on which all your brand assets and associations will hang. Be sure to get it right, and especially, to consider it holistically, including the legal side. In fact the legal side is really important, and goes beyond simply checking legal availability and registering a trade mark. In a future episode I’ll discuss the name itself but for now I want to focus on what you should consider before you pick a name, because these other considerations might well alter what you think is the name that is right for you.
Naming hierarchy is about the longer-term approach your brand might take as your business grows and develops. It is unlikely that you are naming in a silo. You will probably have related brands to think about if you decide to offer new products or services in the future.
So Let’s Consider How You Might Take a Strategic Approach
When you have a blank slate and are in the early stages of naming your brand understanding the implications of name choices equips you to be strategic so you avoid the need to undo unnecessary complexity that may otherwise arise.
As soon as you have an idea for a new product or service and want to choose a name, think about the long term. Is the name going to be your corporate or product name? Will you use a different name if you introduce a new product or service? Could you just use a single name instead of a new name when you introduce new products? When is it appropriate to use a completely different name and brand?
Businesses often choose a company or trading name and introduce new names for their products or methodologies without r realising the implications of their choices. Naming hierarchy impacts your budgets and financial resources down the line, so make decisions that will work not just today but also down the line.
Professor David Aaker introduced a way of understanding more complex brand structures, identifying four main brand architecture types:
House of brands
The two broad distinctions to be aware of for naming hierarchy is the difference between the ‘branded house’ (or ‘house brand’) and the ‘house of brands’.
What is the House of Brands?
The ‘house of brands’ is where a business with many products gives each one a standalone name. For example, you may or may not know that Procter & Gamble is the corporate entity that has created household-name brands like Tide, Duracell, Pampers, Head & Shoulders, Olay, and more. Each of these brands stands on its own feet. They are branded and marketed individually. This approach has traditionally worked well for consumer companies such as Procter & Gamble and Unilever, although in recent years their approach has shown a shift.
Mars is another example of a house of brands approach. The company founder Forrest Mars named the chocolate product he was creating as Mars. Then as the company introduced new types of confectionary products, they chose new names for them, such as Twix, Snickers, Skittles, Milky Way, M&Ms, Orbit, and so on.
The house of brands approach works well when a company’s portfolio targets different audiences with the same product categories, such as three shampoo brands for three different target groups. Using the house of brands approach, it is easier to build different propositions and new associations for each product. For example, one could be a low-cost shampoo, another might be aimed at solving a hair problem like dandruff, and the third could be a premium hair salon shampoo. An organisation wanting to create products that occupy both the luxury and low-priced end of the market needs to use different brands to preserve the brand equity in luxury products and avoid damaging the brand with low-priced offerings. So, for example, Marriott’s high-end hotels are branded differently to its business class hotel. They use different names: Ritz-Carlton and Courtyard.
This brand architecture requires a substantial marketing budget because building awareness of each individual brand involves promotion of each product under different names. If you do not have the financial resources that it requires to build a separate brand you are likely to dilute your efforts. You would do better to choose the house brand approach described below.
What is The House Brand/Branded House?
The ‘house brand’, on the other hand, is where the company focuses on one main brand, which runs through all its subsequent product names. For example, Virgin uses the same name across numerous different businesses, by adding descriptors such as Virgin Hotels, Virgin Media, Virgin Records, and so on. The focus is on a single, well-known brand name.
It depends on the type of business you have, and the nature of your products and services, as to which approach is most appropriate for you.
For most smaller or newer businesses, it is advisable to use the house brand approach due to the additional resources it takes to promote more than one brand name. The ‘house brand’ is financially more economic because you take one strong brand and plough all your brand meaning into it. You can separate new products or service offerings with descriptors (rather like Virgin does) instead of by choosing separate brand names for them. A house brand approach focuses your resources. Any new product immediately benefits from its association with the main brand. It also simplifies the trademark clearance and registration aspect of your business that can be quite a substantial cost once you start extending the brand internationally.
The danger when using the house brand approach is that the brand might be damaged if one of the products develops a bad reputation.
You May Be Wondering: Which Approach is Right for Me?
For most small businesses, I would suggest the default option should be to use a house brand approach. Despite the shared risk between brands/names/products, this approach overall is easier to manage. Your marketing is dedicated to promoting a single brand, and a single domain name, which simplifies search engine optimisation as it is more affordable when you have a single domain to promote.
Then as you introduce further products, you can decide whether they need a different brand name and why. Remember though: only use a different brand name if you can devote the additional financial and manpower resources to promoting a separate brand.
While it is possible to change your approach later, if you might want to opt for the house brand approach, then make sure you choose an appropriate type of name to make it feasible to just have that name, plus descriptors. Not all names are suitable for this approach.
Sub-brands and Endorsed Brands
Sub-brands and endorsed brands are similar concepts, with one key difference: in a sub-brand, the main corporate brand is included in the name. On the other hand, an endorsed brand uses a completely different name and branding but attaches the name of the corporate brand as an endorsement. Sub-brands often use a unique name, but they are associated with a parent brand, which is the key driver. Examples of sub-brands are Samsung Galaxy, McDonald’s Big Mac, Microsoft Xbox, Apple iPhone, Amazon Alexa, and DoubleTree by Hilton. While in some cases it is possible for the main brand and sub-brands to jointly drive the brand (such as Sony PlayStation), the sub-brand is never stronger than the master brand.
The reason to use a sub-brand is to give a product an identity. For example, McDonald’s could refer to its flagship product as a ‘McDonald’s double-decker hamburger’. By calling it a Big Mac instead, the product gets a personality of its own, a shorthand description to refer to it, and a way to distinguish itself from competitors that might also offer double-decker hamburgers. The name is the way to separate the McDonald’s double-decker hamburger from competitors’ burgers and make it distinct. Or a name can be used to forge new paths. Sony used the PlayStation sub-brand to go into the gaming market: sub-brands can have a brand personality that connects with the target market better than the corporate brand does.
The endorsed brand approach is closer to the house of brands architecture. The products or offerings have an entirely separate brand with their own distinct name, logo, brand promise, personality, and brand identity. However, they are supported by the master brand. The endorsed brand is used to promote the product or service offering, but it uses the master brand’s endorsement as a quality stamp. The endorsement increases buyer confidence in product brands by borrowing trust from the existing brand reputation and helps the endorsed brand build awareness and trust.
In branding, it is important for a product to have a specific connotation that is related to the brand, to establish a foothold within the market.
The naming structure of an endorsed brand will put the endorsed name and branding first, followed by the master brand. The logo and branding of the endorsed brand is more prominent than that of the master brand.
I opted for a separate brand for this podcast: Brand Tuned. This was partly to distance it from legal services, and partly because my intention is to ultimately hive it out of the Azrights business so it becomes a standalone business and brand. As an endorsed brand in the meantime, it benefits from the name recognition that Azrights enjoys.
To illustrate how endorsed brands look, take a look at Brand Tuned’s podcast imagery. You will note that Brand Tuned has its own branding and that it uses the Azrights logo as an endorsement
New Trends in Brand Hierarchy Approach
Coca-Cola is an example of how brands are moving towards a ‘one brand’ strategy, with the various product offerings only proffering choice to target consumers. Coca Cola decided to unite four distinct brands under the umbrella of the Coca-Cola name.
For many years Coke managed each of its drinks as separate brands – Coca-Cola, Diet Coke, Coca-Cola Zero, and Coca-Cola Life – each had its own communication campaign, brand idea, slogan, and tonality. This move towards a more coherent and consistent brand identity using a single brand with different variants, all of which share the same values and visual iconography, saves resources and likely increases the impact of its marketing.
If the Coca-Colas of this world realise that it is more effective to focus on building just one strong brand, then it would be a costly mistake for small companies with small marketing budgets to launch new, separate brands whenever they have a new product or service to offer! The house of brands hierarchy can only be done well with a substantial budget
Similarly, an endorsed brand approach may not be warranted for a small portfolio of brands, because every new endorsed brand needs its own branding and promotion, as well as trademark clearance and registration. Achieving sufficient brand awareness takes a great deal of time and a lot of money. If you have 10 brands in your portfolio, to reach sufficient exposure for each of your brands, you will essentially need a marketing budget 10 times higher than for one brand only. Bear in mind that you will need to factor in the cost of search engine optimisation and social media marketing, as well as devoting advertising budgets for each brand.
When is it Appropriate to Use a New Brand Name?
If you want to target different audiences, such as when you create a new product sub-category, or a different proposition, the endorsed brand architecture is a good choice. In this way, you can use a new name to help your business break new ground, and still use the power of the master brand to help build awareness of it. As we have seen, the endorsed brand approach does require a substantial marketing budget – but the presence of the master brand does make the job a bit quicker and cheaper than having a completely separate brand in an attempt to build a house of brands.
Also when there is a reputation risk related to different products you own, and you do not want other brands in your portfolio to be affected, the endorsed brand approach is more appropriate.
Assess Your Situation Before Choosing a Name
In my experience, businesses are not sufficiently aware of these considerations when choosing names for their business. They choose far too many names.
Being aware of different naming hierarchies, and the strategies, risks, and opportunities associated with them, means that if you still want to go ahead and choose new names for different products, at least you go into it with your eyes open. It may be a better use of your resources, though, to build a single brand in a similar approach to that taken by Virgin. Consider whether this could be effective for your brand when you are choosing your brand name and remember that it is always possible to make changes if you have already embarked on an approach that you now decide is the wrong one for you. However, this needs to be done by someone with strong credentials and expertise in naming, especially someone who understands both the legal and creative side of naming