Branding: Stay true or relaunch

By Jake Cassar and Matthew Baker

Companies often look to diversify and venture into new markets. These new markets can be similar to the market in which the company already offers its goods or services, or entirely different with the company planning to offer very different products or services.

This raises the topic, should the company use the same branding for all its products (known as the umbrella approach), or, should it introduce a new brand name for each of its product lines (known as the house of brands approach)?

There are pros and cons for both sides of the debate, to name a few…

The Umbrella Approach

  • Using the same branding leads to easier product introductions as the customer already understands and accepts the brand.
  • Generating initial awareness has already been done to some degree when using the same branding.
  • Values and reputations from existing products or services help with strong brand association.
  • Less money needs to be spent on advertising as they already have a trusted reputation.
  • Not as much promotion required.
  • The use existing channels and systems to distribute products.
  • Repeat business from loyal customers.

The House of Brands Approach

  • Problems with the new or existing brand should not influence the other brands.
  • Do not have to follow any particular brand image. This allows for targeting different market segments.

Market research should help determine the best strategy as they shall vary depending on the product, service and industry. However, this topic should generate some interest and form particular opinions none the less.

Advertisements

6 thoughts on “Branding: Stay true or relaunch

  1. New products same brand, sometimes, it helps company make huge profits,but, sometimes it could be influence your star products. For example, mountain light beer. If mountain man wants to develop mountain light, I think the company should provide a new name for mountain light beer, but still follow mountain man company’s initial position.Constantly change but remain the same. While it may sound like a contradictory statement, it makes sense. The key to a successful brand is to give your customers new products, so they keep buying more, while simultaneously keeping your signature look and feel.

    Liked by 1 person

    • Good points thanks Yanli. Yes – it goes without saying that many companies leverage off the successes of there existing products. Interesting point that you raise regarding ‘the key to a successful brand is to give your customers new products’. This is in line with another unit that I am currently studying called ‘managing transition and change’. One of the topics is B2C organisations (Built to Change) is how some companies realise that for ongoing success they need to continually diversify. I guess this subject ties in with this in how best to brand/advertise new products.

      Like

  2. Yes, usually people resort to similar products as a safe approach in context to the company as they are well aware that consumers are loyal to their brand. But innovation on the other side is risky business, and involves lot of hardwork, may it be marketing or the R&D. But do you think, an old similar product can beat the likes of a new innovative product which satisfies more customer needs. Basically there are companies like Cipla, GSK which believe in innovative drugs and novel therapy, while there is Ranbaxy laboratories who work on Reverse Engineering and sells more of generics. In both cases, companies are at a very high level and do earn maximum profit. It totally depends on how you tend to sell your product, each having their pros and cons at different levels.

    Liked by 1 person

  3. Hi @mpbaker,
    Acknowledged. If you specifically ask me about the company list which follow the trend of Umbrella approach, the first which comes to my mind is a Motorcycle manufacturer, “Royal Enfield”. There are quite a few companies which can be added to this specific list, but do they completely follow the same approach, if you ask me, i would rather be a bit confused. I accept to the fact that every company has evolved with time, but that does not give them the leisure to change their product, it is all their choice. Take for example, Nivea. they also follow a kind of Umbrella approach, but to they restrict themselves in using the same products which were used like 20 years ago. Same goes with “Amul”, an Indian Dairy products brand, they sell the same type of butter which they used to sell 30 years ago but they also have new products alongside. Does that stop them from growing? They still reign the dairy industry in India from I don’t know how many decades. Evolution always happens, but it doesn’t have to be always with every product affiliated with the brand, may be that is how the company plays a safe game.

    Liked by 1 person

  4. Note: I am co-author with Matthew Baker on this blog.

    The Umbrella Approach or The House of Brands Approach to branding can be either beneficial or equally detrimental to an organisation. The crucial issue is not which approach is better than the other but which approach is better suited to the organisation and the goals it is trying to achieve. For example my company has a very strong brand that sells its products through big box stores. We are very conscious of the fragility of the relationship that can exist between these corporations and their suppliers so we are very cautious of having all our eggs in one basket. To try and diversify our customer base we designed and released a new premium version of our product range and marketed it to an independent stores customer base we had already established with spare parts. In order to leverage off the exposure of the big box store generated we chose the umbrella approach and kept the brand name on the new range the same. This started well but eventually the product run out of favour with our independent customers due their retail customers comparing the product directly to the range available in the big box stores. The retail customers failed to see the added value of the new range and focussed on the cheaper price on the majority of occasions. To eliminate the direct comparability and encourage the retail customer to judge the premium range on its own merits we have now rebranded the independent stores range and initially we are seeing much greater trade and retail customer satisfaction.
    I would be interested to hear from others that have been in this situation or if anybody has comments on our approach choices.
    – Jake Cassar

    Liked by 1 person

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s