Hedge Your Happiness: The Risk of Putting Every Brand Under One Name

I think L’Oréal would be worse off if it replaced its portfolio of distinct brands with a single umbrella brand.

Although a Branded House can strengthen one corporate brand and create marketing efficiencies, I don’t think it would give L’Oréal a stronger competitive advantage. Its success comes from understanding that different groups of consumers want different things. Using segmentation, targeting and positioning (STP), L’Oréal has built brands that speak to very different audiences. Someone buying Lancôme is looking for something completely different from someone choosing CeraVe or Maybelline, even though all three are within the same company.

Aaker (1996) argues that a well-managed brand portfolio allows a business to compete across multiple segments without weakening individual brand identities. That is exactly the strength I see in L’Oréal’s approach. Each brand has its own personality, positioning and customer base, while the company can still benefit from shared research, innovation and distribution behind the scenes. I did not initially know that Kiehl’s and CeraVe belonged to the same parent. My feelings about the two products were very different: I was not a fan of one, but I was a fan of the other. Discovering the connection made me realise how effectively the individual brands had established their own identities.

Keller’s (2013) Customer-Based Brand Equity model also helps explain why this works. Consumers build trust, memories and expectations around individual brands over time. Those associations are part of what people are paying for. If everything became simply L’Oréal, some of the exclusivity and specialist credibility that brands like Lancôme or CeraVe have built could easily be lost.

I can see the appeal of concentrating brand equity into one corporate name. From a marketing perspective, though, I think L’Oréal creates more value by protecting the identity of each brand while using the scale of the parent company where consumers never really need to see it.

A branded house could make marketing more efficient and strengthen the L’Oréal name across every product. Those are real advantages, but they are only part of the calculation.

Where I see the challenge is that beauty products are often bought because of what a particular brand represents. People do not just buy a moisturiser or lipstick. They buy into the expertise, image and identity attached to that brand. I think L’Oréal would risk losing some of that differentiation if every product sat under one umbrella, especially in its luxury and dermatological ranges. Fashion offers a useful analogy: different labels and product ranges give people different ways into a brand’s world. You might not be able to afford the Ferrari, but you can buy the hat.