Umbrella brand: advantages and disadvantages
Let's understand in terms – what is an umbrella brand and why does the company need it? What advantages and disadvantages it hides, as well as ways to create it.
An umbrella brand is a marketing technique for selling several products or even different product categories under a single name. The popularity of the umbrella brand strategy is due to its simplicity and speed. It is much easier and faster to bring a new position to the market under the name of an already popular and in-demand than to promote a completely new brand.
Two ways to create an umbrella brand
1. Expansion of the assortment.
The client likes when he has a choice. And the wider the choice, the better. In this case, the umbrella brand is additional colors, shapes, tastes, sizes. Firms that give the buyer the opportunity to choose are always competitive. In addition to increasing competitiveness, this approach will help expand the reach of the target audience. So, for example, did Pepsi. In addition to the usual sweet soda, she began to produce PepsiLight – for those who follow the figure but do not want to give up goodies, Pepsi MAX with ginseng extract – for those who live a drive, just as the slogan of the product line says.
2. Creating a new product category.
If the brand has proven itself well, is popular, and is recognizable, you can develop a strategy to reach new niches. Even if the product category is fundamentally different from the previous one, there is a high probability of success.
Advantages and disadvantages of an umbrella brand
An umbrella brand allows you to save the marketing budget by 40%, compared with the costs of bringing a brand unknown to the audience to the market. A well-known brand, like an umbrella, covers a new product with its reputation and the trust of customers. Sometimes a well-known company produces an uncharacteristic product, not for its direct popularization, but to support the main product. For example, a beer company is starting to produce chips under its own name. And advertises them as a great beer snack. Of course, along with the demand for a new product, the popularity of the old one is growing.
A significant drawback of the umbrella brand lies in its very concept. The main brand and the umbrella product are closely related. If consumers do not appreciate the umbrella product, then this will also hit the main product line. There is a possibility of a loss of customer confidence, and as a result, a decline in sales and profits is expected. The second disadvantage of an umbrella brand is the risk of brand erosion. If a marketing strategy was built for a long time, detuning from competitors, and at some point, the company began to create many diverse umbrella brands, there is a risk of losing positioning in the eyes of the client. And this leads to serious losses and even the collapse of the company.
Is it worth creating an umbrella brand or not? It is necessary to understand that such a decision can lead to both success and complete failure. Therefore, you should turn to market research. If experts decide that the potential profit is higher than the potential risk, then you should seriously think about creating an umbrella brand.