How Do You Develop an Umbrella Brand?

Published in LaZOOZ - Strategy, Marketing and Innovation Newsletter, Issue 67, By Ari Manor, CEO, ZOOZ

If you are currently managing or considering managing more than one brand in the near future, it is important that you effectively and wisely plan your umbrella brand. Here are several key points that you should take into consideration in order to advance your business goals:: 

• How many brands is your organization capable of supporting?
• For example: If your marketing budget is 200,000 NIS per year, and your competitors spend an annual average of 100,000 NIS per brand, you will probably be able to seriously support only two brands.

 

• What are you supposed to do with brands that are not backed by a budget?
• You can consolidate some of them (under one brand). The weaker brands - the ones that customers are less familiar with - will be consolidated under a stronger, more renowned brand with a better image.
• Some can be milked - meaning, continue offering these brands as part of your product mix, but do not spend any money on marketing and advertising them.
• Others can be cancelled - according to the 80-20 rule (Pareto principle) - many brands are not profitable and you should consider discontinuing selling them.
• Even huge corporations consolidate and optimize their brand umbrella. And if they do it, then you should also focus and concentrate your marketing efforts.

 

• How do you effectively manage your remaining brands - the ones you have a budget to support?
• If the brands belong to the same category (such as snacks or suits), they should ideally "cover" more market segments, meaning address the needs of various customers with differing preferences. This way, the brands combined will attract more customers, instead of "biting" into each other.
• For example - the High-Low (Pincer) Strategy proposes an expensive and high-end brand alongside a cheaper and more basic brand. This way, you attract customers away from the other market competitors.
• Another example - When Pelephone wanted to add a younger customer base to its repertoire, it developed a new brand, Escape, which spoke in a younger, hipper language that appealed to the younger generation.
• A final example - The General Motors' (GM) Diversification Strategy, which at its heyday offered six product lines (and brands) of cars in differentiated price categories. The price of each product line was planned so that it would be at the upper margin of quality and price compared to the competitors' cars in the same category. For example - the cheap line (Chevrolet) was slightly more expensive and of better quality than the cheapest model on the market (Ford's), and therefore attracted customers that wanted to upgrade their cars. Concurrently, the Chevrolet line was cheaper than cars in the next price category, and attracted customers that wanted to buy a somewhat cheaper car, but of a similar quality to the cars in that category.

 

• Should our organization be presented as a "super-brand", which contains the other brands that we market?
• There are pros and cons in turning the organization's name into a brand in itself.
• The main advantage is that the super-brand "radiates" its advantages to the brands it contains. For example - Toyota, as a super-brand, radiates reliability to all the secondary brands (the various car models) that it sells.
• Another advantage is that the super-brand gets stronger each time it is mentioned in advertisements for the secondary brands. In other words, this is very effective marketing that "rides" on marketing the secondary brands.
• The main disadvantage is that if the super-brand's reputation is damaged, all the secondary brands beneath it may also subsequently be damaged.
• An additional disadvantage is that there may be an incompatibility between the super-brand and some of the brands it contains. For example - if the super-brand is geared to conservative customers, it cannot contain a "bold and mischievous" secondary brand.

 

• So when should you develop a super-brand and secondary brands under it?
• Only when the super-brand (your organization) offers important and unique benefits and values, and on the condition that these values and benefits fortify the values and benefits of the secondary brands (and do not conflict with them).
• For example: Unilever, which is a global brand, branded itself around the value of "vitality". This value is compatible with and supports all the various food and cleaning brands that Unilever markets. In this case, Unilever's various secondary brands (Lipton tea, Blue Band margarine, Knorr soups, Dove soap, Axe deodorant, etc.) are independent and separate. The Unilever symbol only appears on the packages but is not a part of the secondary product's name.
• Another example: Virgin, a super-brand, offers a clear benefit - Breaking the rules for you (our client). Behind this super-brand is a group of companies, all called Virgin, but belonging to different industries: a chain of record stores, an airline, a direct insurance company, a soft drink company, and more. In this case, the benefit that all the companies in the group offer is identical to that which the super-brand offers. They all "break the rules for the customer". Therefore, they all have the same name (Virgin Airlines, Virgin Records, etc.).

 

• And what do you do when you have a budget to support only one brand, and the company has several?
• You need to choose two options - promoting a brand that is the company itself, and promoting the company's leading product line (which is a major part of the company's business).
• The choice should be based on what we mentioned here before.
• If the company as a brand is less well known than its leading product line, which generates the bulk of its revenues - the budget should be spent on supporting this product line.
• In other cases (for example - when customers are not familiar with the company and its product lines), an assessment must be made about what will lead to more desirable business results - supporting the entire organization as a brand, or supporting a specific brand that belongs to the organization.
• This requires an in-depth examination, and depends on many factors: the business strategy, the values and benefits that can be attributed to the organization and those that can be attributed to the secondary brand, the planning range (five years forward, or maybe the upcoming year - because quick results are a must?), the competing brands, the prevalent perceptions among the customers, and more.

 

• What is the most important thing to remember?
• Branding in general and planning an umbrella brand in particular - is something you must plan in the long term. Investing in a brand requires patience.
• If your business is in trouble, and therefore the goals that you set are for the short term, do not invest in new branding. First undergo internal optimization and move towards becoming profitable. Get back on your feet before you try running forward.
• Developing an umbrella brand must be focused - according to the industry, the competitors, customer behavior, and the reputation of your brands. There are no magic tricks. Invest in market research and in-depth discussion before you make any decisions.

 

Good luck building a strong and productive umbrella brand!