Contents
Definition of a Subbrand
A subbrand is a subsidiary company that releases products under the main brand’s name with the addition of a unique title. It is part of brand architecture, which defines the structure and hierarchy of companies owned by a single owner. A subbrand can be seen as a type of umbrella brand, where different product groups are promoted under one well-known name. For instance, "Magnit Cosmetic" is a subbrand of the retail chain "Magnit," offering cosmetics, perfumes, and household goods.
The name of a subbrand typically starts with the name of the parent company, followed by a unique name, as seen in cases with Sony and its division Sony Pictures. Sometimes the name consists of a single word, where the first part comes from the parent brand, as in the example with Nestle and Nescafe. Unlike subbrands, multi-brands create subsidiary brands with completely unique names.
When to Create a Subbrand
The subbranding strategy can be especially useful in the following situations:
- Launching a New Product: Subbranding is relevant when a company wants to introduce a new product that significantly differs from the main assortment. For example, Mercedes-Maybach is a more luxurious and premium version of Mercedes-Benz cars, offering innovative solutions and exclusive design.
- Creating a Clear Brand Architecture: Subbrands help organize the product range according to specific criteria, such as price and product group, making it easier for customers to make choices.
- Increasing Market Share: Subbrands can help a company expand its market presence and enhance competitiveness, as seen with the "Yandex" ecosystem with its numerous services and products.
Advantages of Subbrands
Subbrands offer many advantages, including:
- Building a Positive Image: A subbrand inherits the reputation of the parent company, which helps establish trust with customers.
- Simplifying Promotion: Advertising a subbrand requires fewer resources since customers are already familiar with the main brand.
- Facilitating Distribution: Subbrand products are more attractive to distributors.
- Strengthening the Main Brand's Position: A subbrand supports the reputation of the parent company.
- Expanding the Audience: Subbrands can attract new market segments, as seen with PlayStation games.
Disadvantages of Subbrands
Despite the advantages, subbrands also have disadvantages:
- Financial Costs: Creating a subbrand requires significant investment, which may not be profitable for companies.
- Reputational Risks: Negative experiences with a subbrand can harm the image of the parent company.
- Brand Dilution: An excess of subbrands can confuse customers and weaken the overall positioning of the company.
Tips for Creating a Subbrand
When implementing subbranding, it is useful to consider several aspects:
- Necessity: Assess whether creating a subbrand is justified for your business, or if it is better to use a multi-brand approach.
- Financial Condition: Ensure that you have enough resources to create and maintain a subbrand.
- Reputation of the Main Brand: Check how positively the parent company is perceived before launching a new subbrand.