Contents
- What is multibranding?
- When is it profitable to create a multibrand?
- Advantages and disadvantages of multibranding
- How to create and promote a multibrand: basic principles
What is multibranding?
Multibranding is a marketing strategy in which a company develops unique brands for each of its products. Unlike an umbrella brand, where subsidiaries use the parent brand's name for their products, multibranding allows the creation of independent and distinctive brands. For example, in the Yandex ecosystem, you can see names of services such as "Yandex.Go," "Yandex.Food," and "Yandex.Market," all of which belong to one brand.
The multibranding strategy is often used in the cosmetics industry. For instance, the L'Oreal group owns many well-known brands, including Garnier, Maybelline, NYX, and La Roche-Posay. However, pure multibrands are quite rare, as most large companies apply hybrid models. For example, Coca-Cola Company manages sub-brands like Coca-Cola Zero and Diet Coke, but also develops other brands like Fanta and Sprite, making it a multibrand.
When is it profitable to create a multibrand?
The multibranding strategy is not always suitable for all companies. Creating subsidiary brands requires significant financial investments, which is why this approach is most often chosen by large organizations looking to avoid associating new products with existing ones. Here are a few situations where creating a multibrand may be justified:
- Mismatched values: If a new product does not align with the core values of the company, as was the case with Toyota when entering the luxury car market with Lexus.
- Different market segments: Companies can create multiple brands to target different audiences, as Melon Fashion Group does with the brands Befree, SELA, Love Republic, and Zarina.
- Internal competition: Some companies use multibranding to reduce a competitor's share by creating the appearance of diversity, as Unilever does with deodorants Dove, Rexona, and Axe.
- Entering a new market: Successfully entering a radically new niche may require creating a subsidiary brand, as Procter & Gamble does with various products.
Advantages and disadvantages of multibranding
Multibranding has both its pros and cons:
Advantages:
- Creates a variety of brands for different target groups, which helps to grow the audience and market share.
- Retains customers who enjoy trying new products and frequently change preferences.
- Diversifies the business and reduces risks: if one brand faces challenges, others may continue to be profitable.
- Stimulates internal competition among brands, which can lead to more effective development.
- Limits the spread of negative reputation from one product to others.
Disadvantages:
- Requires substantial financial resources to create and promote multiple brands simultaneously.
- Complex to manage, as it requires equal attention to each brand and smart allocation of resources.
- Creates risks of "brand cannibalism," where a new brand takes audience away from an old one if their identities are too similar.
How to create and promote a multibrand: basic principles
For successful creation and promotion of a multibrand, several key aspects need to be considered:
- Set specific goals: All brands should serve the common goal of the company, whether it's attracting new customers or entering a new market.
- Develop unique identities: It's important to create clear positioning for each brand, avoiding associations with other company products.
- Conduct cross-promotion: If brands target the same audience, they can be promoted together, which will help reach a larger audience.
- Automate processes: Using ERP systems and business process automation can significantly simplify the management of multiple brands.