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.