Businesses that have been successful with their initial product offering often look to expand their product line either by adopting a multi-brand strategy or a multi-product branding strategy to gain more market share to grow their business.
MULTI BRAND STRATEGY:
Multi-brand strategy, as defined in the Business Directory is the marketing of two or more similar and competing products by the same firm under different and unrelated brands. While these brands eat into each others' sales, multi-brand strategy does have some advantages as a means of:
1. obtaining greater shelf space and leaving little for competitors' products
2. saturating a market by filling all price and quality gaps
3. catering to brand-switchers who like to experiment with different brands, and
4. keeping the firm's managers on their toes by generating internal competition.
Multi brand strategy advantages, as explained in Finance Maps of the World:
1. generates economies of scale
2. in every market, there are some customers who frequently change brands in order to experiment with products of different brands. By adopting the trick of Multi Brand Strategy, a company can serve effectively to these Brand Switchers.
3. when a company undertakes Multi Brand Strategy, the Managers of the company are bound to operate efficiently as internal competition is generated at a high degree.
4. if the initial brand becomes successful, then through franchising and retailing, a company can develop a second brand without generating much expense. The marketing department of the company can market the different multi brand products just in the way an agency works for multiple clients. All these advantages of Multi Brand Strategy can generate economies of scale.
Multi-branding strategy disadvantages:
1. it can fail because of poor management
2. it can fail due to the wrong choice of business model
MULTI-PRODUCT BRANDING STRATEGY
Multi-product branding involves releasing multiple products with the same brand name - for example Revlon. They have Revlon lipstick ranges, eye shadow ranges, foundation ranges etc. These are different products, but all branded as Revlon.
Luke Arthur from Demand Media explains that when offering products to the public, branding can help enhance customer loyalty and help the company be more profitable overall. While this strategy can be simple to use, it can lead to some problems.
1. Easy adoption of the new product by your already loyal customer base. For example, if Revlon brings out a new lipstick colour, women that already by Revlon lipsticks will buy the new colour without too much decision making or checking the price / colour against other competing brand's offerings.
2. Facilitates the acceptance of new products by the retailer that is already stocking your other product(s).
1. Dilution of brand name: one of the potential problems with using multi-product branding is that it can delete the effectiveness of the brand name (but not in all cases). When consumers see the brand name everywhere on many different types of products, they may not necessarily put the same faith in the brand as they once did. This can lead to lower sales in all of the different product categories a brand encompasses. By sticking to related products in a brand, you often can grab more market share of that particular niche.
2. All products tied together: another potential disadvantage of using this branding strategy is that it ties all of the products together. In some cases, this can be good, but problems can arise. For example, if your brand covers household products such as soap and cleaners but it also covers chainsaws, one chainsaw malfunction could lead to a bad perception associated with the other products in the lineup. You have to make sure all of the products in your line share the same level of quality.
3. Difficulty managing: when you put your brand name on many different types of products, you eventually may have a hard time managing them all. If you restrict your brand name to items that are similar to one other, such as soap, shampoo and conditioner, it is typically easier to manage them. If you start dealing with products that are completely unrelated to one another, such as soap and automobiles, you may have a hard time effectively managing your resources.
4. Expectations on new products: another potential problem you may run into using multi-product branding is expectations on new products. For example, if your brand has a certain standard of excellence in the eyes of the public, every new product is scrutinized. If the new products do not meet the standards of the old ones, it can lead to a negative stigma surrounding the brand. Every new product must have all of the kinks worked out before you release it to the general public.
Photo courtesy of www.global-customer.com
Clara Cassidy, Founder and Marketing Manager of Custom Printed Bags & Boxes, is a marketing professional with years of experience in branding, promotions and events.