In today’s knowledge-based economies, the global competition has become fiercer. In order to respond to competition and gain a competitive advantage or, in some cases, survive, company takes a variety of means to improve its competitiveness. Companies that do not acknowledge the effective ways to innovate its brands fail to gain more market share and there is also a risk of losing their occupied market share. It is important for companies to innovate its brand effectively.   The purpose of this thesis is to identify the challenges related to brand innovation in the context of two different types of brand portfolios (i.e. “the house of brands”, and “the branded house”).   In this thesis, I use a case study to analyze three cases in one company so as to realize the importance of brand innovation and its challenges. In order to gather the important information, I interview respondents of Haier which is a big home appliance company in China.   This study demonstrates that the companies need to know the challenges of brand innovation a company face depending on its brand portfolio strategy. In addition, it is better for companies to make the right strategies when they innovate their brands, and to learn how to overcome the challenges of brand innovation.