Launching a new product or perhaps a whole line of products under an established brand name is known as umbrella branding. This approach seeks to boost the market share of a company. It is also referred to as family branding. It is a digital marketing company used to increase sales of a variety of associated goods and services to a larger portion of the target market by leveraging the brand equity of a master brand.
Simply said, the idea of umbrella branding is based on an easy and effective marketing technique that comprises umbrella marketing or selling a variety of products under a single, well-known brand name or in other words, master brand.
How Does Umbrella Branding Strategy Work?
The value of umbrella branding is significant. The strengthened reputation of the master brand, or more specifically, the master brand's brand equity, enables the sub- brand to enter the market with an already attached reputation, which helps the promotion and sale of those sub-brands without considerable effort.
Therefore, umbrella branding strategy is essentially a process whereby these sub brands use the brand equity of these master brands to enter the market and, furthermore gain a competitive advantage over other brands by getting support in easy adoption by the market. In this way, a master brand’s umbrella strategy is also promoted.
Even though the master brand is leveraged by each of the sub brands, they are still free to choose their own messaging, positioning, or brand identity because the emphasis is mostly on the correlation between the sub-brands and the master brand. However, it is undoubtedly one benefit of having the umbrella strategy and providing these sub brands the freedom to act independently and appeal to the target group with some more specific details.
Merits Of Umbrella Branding
According to marketers, customers connect brands with a definite standard of products. Due to their prior positive experiences, buyers will view every new offer from a brand as a high-quality product if they have come to trust and believe in it. Let's analyze the advantages that umbrella branding approach can offer in particular.
1. Economical Strategy
The biggest benefit of an umbrella strategy is that, from the perspective of the company, it is very cost-effective for the organization to market its goods because, when the business uses a single brand but many items under the same brand, it only needs to invest in the advertising of that one brand, therefore not on multiple products compared to the scenario when the company makes use of different brands for various products.
When compared to a cold prospect, you have a greater chance of making money from loyal customers who purchase other products of your brand. Additionally, consumer acquisition costs will be incurred. You can heavily rely on word-of-mouth marketing if you advertise your offer under an umbrella because customers would undoubtedly read product reviews before making a purchase.
2. Easier Management
Since multiple products are offered by one brand, umbrella branding also has the advantage of making management of the business much simpler. As a result, for instance, if a firm manages 10 brands rather than 1, it must invest resources, time and money in managing each brand, which increases the risk of mismanagement because the company's focus is split across 10 brands.
3. Instant Recognition of New Products
New products launched by an established brand get instant customer recognition. This is because when a company introduces a product under a new brand, the product will take some time to become recognized as a brand by consumers. Simply stated, umbrella branding outperforms other forms of marketing in terms of its advantages for new products.
Demerits Of Umbrella Branding
You should keep in mind that a single error could upset the balance of your brand. Due of the potentially disastrous results, take great note of the potential problems listed below.
1. Spillover Risk
Umbrella branding's major drawback is the increased likelihood of product spillover risk onto other products. Say, for instance, if a company sells soaps, shampoo, deodorants and other products under a single brand and if the it's soaps aren't that great, customers who have used the company's soap will refrain from buying the company's other products as well. Since human nature tends to avoid anything that they have bad experience with, and with the same brand name it wreaks havoc for the company, be it any product.
2. Equal Weight is Given to All Products
The fact that all items in the umbrella brand are given equal weight raises another issue with this strategy because it unfairly treats those that are superior to the others. For example, if a class comprises 10 students and 3 of them obtain 90 percent on an exam while the other students receive only 50 percent, the overall percentage for the class will be lower, which will be unfair to the 3 students who received 90 percent on the exam. A similar situation occurs with umbrella branding, where both good and bad products receive equal weight when it comes to product branding.
3. No Diversification
If a company sells five different products and uses a different brand for each product, it is considered to be diversified since if one of the brands fails, another will ensure that the company doesn't suffer a loss. However, in the case of umbrella branding, there is only one brand, and if that brand fails, the company's continued existence will be in jeopardy. Simply stated, there is no diversity because the company sells all of its products under a single brand, which might be a perilous business strategy. One failure spoils your entire reputation.
As one can see from the information above, umbrella branding has some significant benefits as well as some drawbacks as well. For this reason, any company considering using digital marketing strategy from traditional marketing should carefully examine the information above before making a decision. To ensure that none of the sub brands are impacted, there must be meticulous management and stringent quality control of all the sub brands.
The proverb "All for one and one for all" is where this concept is most obviously found. Hopefully, this post will help you make the right decision for your company.