Tuesday, September 15, 2009

Umbrella Branding : A Marketers Dillema















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Gunasekhar A, IIFT Delhi

Umbrella branding sends a common signal to consumer, conveying credible information about unobservable product quality. Further it saves the firm a lot of money in new brand building. But, the degree to which a brand’s signal is bonded is a function of not only the amount of money at stake (either in terms of sunk costs or future profits), but also the degree to which this money is vulnerable to future consumer sanctions.

Most often Customers are informed imperfectly about product attributes. Bad news travels fast. This lethal combination can pull down the sales and future revenues of all the products under the same brand on a single mishap.

A company that gets into using a single brand across diverse categories aimed at diverse target groups, it may on paper have economies, but it can’t do an efficient selling job. Transferring brand value and emotional appeal of a product for a set of customers to another product for a different set of customers in a different category is a difficult and costly job with low success rate. It has to find the fit and an overlap not only with its products but also with customers.

Moving up a value chain with an umbrella brand is almost impossible. You cannot convince a customer that all of a sudden, this brand on this product alone is more than what it is used to be, while it stands same for all other products. He wouldn’t have convinced but confused.

Independent brands can be better processed, more robust and better positioned. Umbrella brands can be a hindrance, when the firms want to diversify or move-up the value chain.

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Abha Sinha, IIM Shillong

In this era of recession, when companies are worried about their advertisement budget, umbrella marketing offers them a solution. Brands like Videocon, Johnson & Johnson and Kellogg’s use the same name for the entire range of their products. It provides a cost effective and intelligent option to explore. The consumer is exposed to the same brand name repeatedly, so it has a much better brand recall. Asian Paints despite having several diverse sub-brands prefers umbrella marketing. Whenever a company comes up with a new product, a lot of money goes into marketing of the product. But if it comes with a familiar name, it can always lead consumers to trial purchase and has a product acceptance advantage. It is likely that a successful umbrella brand will enable a company to spend only a quarter of advertising budget in their campaigns as compared to others. For instance, after having rolled out Amul Milk in pouch form in Delhi in 2003, GCMMF was able to tap 5,000 retail outlets in just five to seven days without even spending a single penny on advertisement. Now-a-days brands want to have an intense ethical image. Any ethical practice or CSR practice adopted by a brand will have a positive effect on all the products. In case of individual brand marketing, it may be difficult to build ethical image for each brand of a company. In case of brands like Amway and Ayush which prefer direct marketing, companies always prefer to use sole brand name to connect better with the consumers.

Therefore, when a product line stands for the same values and has the same emotional link attached, umbrella marketing is the way to go. It however, poses a collective responsibility among the brands to maintain the quality of standard.

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