Name brands strategically

It is critical that when you name brands you do so with your marketing strategy in mind.

You have to balance an emphasis on creating a distinctive market offering with the weight you place on the origin of your products and services.

Between these two options lies a range of brand name strategies:

  • A Corporate Brand:  This is where you create a unified approach across all products and services.  An example would be Heinz where the corporate brand dominates above a descriptive product name.  Linking products together like this creates a strong corporate image.  This approach allows economies of scale by linking product reputation and having a single marketing budget.  The reputation of one product can have a halo effect to other products in the range.  If you buy Heinz Baked Beans and see them as the premium product in that segment, you become more likely to buy Heinz Tomato Soup or Heinz Ketchup.  However, this halo effect works both ways and if a product is seen as a poor offering, that bad reputation can infect other products in the brand range.
  • Multi-branding:  This is a strategy used by conglomerates like Proctor and Gamble.  Each product or line has its own identity and brands are wholly separate.  This strategy fits with a diversified strategy where the company competes in a wide range of markets. So P&G have a cosmetics brand, a shampoo brand, several food brands, several soap and washing products brands, etc.
  • Endorsed Approach:  This is where both the company brand and the product brand are used. The product brand usually dominates.  Unilever has begun to use this approach where the Unilever logo appears on the back of packs.  Probably the longest use of this strategy is Kellogg’s,  Where the Kellogg’s name sits above well known brands such as Fruit and Fibre, Frosties, Coco Pops and Rice Krispies.  This approach allows products under a descriptive brand to create a strong and linked identity whilst there is a reassurance created by the reputation of the corporate brand.  This can be very useful for new product development.  However, unlike the corporate brand used by Heinz the corporate brand is a secondary mark.  It is possible for the use of the corporate brand to vary in prominence using this approach e.g. Kellogg’s is more prominent on Corn Flakes (a ‘bland’ brand) than on Coco Pops (a youthful and vibrant brand). You buy Corn Flakes because they are made by Kellogg’s, you buy Frosties because the kids focus on Tony the Tiger.
  • Range Branding:  Here you have different brands for different product ranges.  You create a family of brands.  So Volkswagen/Audi Group have a range of brands aimed at different markets e.g. Volkswagen Saloons and family cars, Audi executive saloons, Seat, mid-market cars, Skoda for the value car market and Bugati for the luxury sports car market.  Toyota adopted such an approach when it was felt that the corporate brand did not sit well in the Executive and Premium segments of the automotive market.  Toyota therefore created the Lexus brand.
  • Private Branding:  This is a strategy used by buying groups and distribution chains.  The most prominent example in the UK is probably Spar.  Here independent businesses share a brand that represents their buying group.  Spar is such an example where independent traders combine to use a single brand and create economies of scale.
  • Generic Branding:  This is where there is no brand name and goods are sold solely on the basis of a product descriptor.  This is the North Korean communist approach to branding.  It is the strategy for dog products or commodities where the only mix factor is price. It is not a strategy commonly seen in mature markets.

Each of these strategies has strengths and weaknesses:

  • A corporate brand creates strength across product ranges and creates a unified identity.  It allows economies of scale as marketing costs can be spread across product groups.  However product failure can infect other products and damage the corporate brand (e.g. New Recipe Coca Cola).
  • Multi-branding allows for individual differentiation across brands and allows for the development of specific brands for separate market segments.  This allows brands to build a firewall against the spread of reputational damage if another brand fails.  However, this approach is expensive and separate promotional budgets are required for each range.  Each market segment must be able to support its own brand.  It is hard to reposition products from declining markets.
  • An endorsed brand approach allows products to be supported by the corporate reputation.  It also allows different products to create their own identity.  However, new product failure can impact your corporate brand (e.g. Sinclair computers and the C5 electric vehicle) and the corporate brand can limit the image (and price) of a product brand).
  • A range brand can allow a strength to be conveyed across products or services.  Promotional costs can be spread across a product range whilst creating separate range identities. But product failure can impact a range of products and the positioning of ranges in the market can create quality and price ceilings (and floors).  No one would pay £1000 for a Squier electric guitar and you wouldn’t see a Fender electric guitar for £200.  The £1000 Squier would bite into Fender’s  market position and if you could get a Fender for £200, the Squier brand would be unnecessary.
  • Private brands often mean little promotional spend by the retailer and this can limit the ability of the retailer to create an identity different to that of the private brand. Sellers are constrained by the rules of the buying group.  Marketing decisions are controlled by the distributor.  However it can create cost efficiency as marketing costs are shared.
  • Generic brands have little or no marketing spend and packaging costs are minimal.  However, it is a perfect competition model where price is all.