The paper answers the research question, “is Multi-branding a viable business strategy?” by discussing the various advantages and disadvantages of the strategy. Multi-branding is advantageous because it increases a company’s market share, encourages internal competition, promotes the business as an enterprise, and makes products independent of each other. Multi-branding also enables a company to enjoy economies of scale because of unified promotion. The disadvantages of multi-branding are dilution and cannibalization of brand names, and denting of the company’s image. Multi-branding is a viable business strategy but it must be managed well for it to be effective.
Multi-branding is marketing of more than two brands that belong to a similar or related category. In most cases, the brands are usually close substitutes of each other. Multi-branding requires a continuous need of line pruning for efficient management of the multiple brands portfolio (Baroto, Madi and Wan 12). Line pruning assesses the conditions, expenditure, marketing, and profitability of each brand. A good example of a multi-branding strategy is the case of Hindustan Uniliver Ltd. that has a few brands of bathing soap, such as Lux, Hamam, Breeze, Dove, and Lifebuoy. All these brands are under the same category of bathing soap. Other examples of companies that use multi-branding strategy are Volkswagen Inc. and Pfizer Inc. Volkswagen’s most popular brands are Audi, Bentley, Bugati, Lamborghini, Skuda and Volkswagen. Pfizer Inc. is a pharmaceutical company and its brands include Celebrex, Difflucan, Lipitor, Viagra Zolon and many more (Baroto, Wadi and Wan 2).
In order to study the viability of multi-branding strategy, an evaluation of its advantages and disadvantages must be done. Multi-branding can lead to a higher market share for a company because the brands will target different segments of the market. Multi-branding also increases the visibility and popularity of a company because of the numerous retail centers for selling the brands. Multi–branding also creates alternatives for consumers because they can frequently switch from one brand to another. However, multi-branding has its shortcomings in business. For instance, one brand can easily overshadow the other resulting in cannibalization. Excessive multi-branding dilutes brand names making consumers lose their tastes and preferences. Multi-branding can also dent the image of a company by making it look more profit-oriented than customer-oriented.
Multi-Branding and Market Share
Multi-branding involves the differentiation of products to offer independent and unique brands to increase company presence and share in the market. As a market matures, there is diversification of consumer needs, which leads to market segmentation. Each market segment demands a certain niche of products and services (Chang 36). To satisfy the needs of each segment, a company resorts to multi-branding that creates different brands suitable for each the segment. A company that satisfies more market segments than the others obviously clinches the largest market share. A company with numerous brands in the market attracts more consumers because they have a wide range of choices. There are possibilities that consumers acquire the products of one firm thinking that they belong to the different companies (Chang 40).
In the Software Industry, Microsoft Inc. applies a multi-branding strategy to satisfy the needs of its consumers. Microsoft’s new product Office 365 comes in more than ten packages with different features and prices. The subscriptions are Personal, Home, Business Essentials, Business, Business Premium, Pro-plus, Midsize, and Enterprise. Each package has its unique features in terms of applications, phone-supporting capabilities, number of devices, number of users, period of use, privacy, and Internet support (Chang 41). For instance, Personal Subscriptions is cheaper and contain a few applications and programs suitable for personal use. The product satisfies the need for consumers who acquire the product for personal use. The Enterprise subscription is the most sophisticated of all, and has more superior features than the rest. It is suitable for consumers seeking software for use in large businesses and institutions. The enterprise subscription can support numerous users using different devices.
Multi-Branding and Enterprise Promotion
A company with more brands is more popular to a company with just a few brands. A company is likely to capture public attention if it releases brands on a regular basis. Generally, consumers are attracted by new products and always aim to test them (Demicco slides 1&2). Consumers will always be waiting for the launching of new brands if the company always does so. There is always that situation where consumers speculate on the features of the product that will soon be launched. The speculations normally spread across the board in radios, televisions, print media, social media, and billboards. Companies take advantage of the speculation and create more suspense by announcing that it will soon release a new version of certain products. The announcement yields more speculation making the company more and more popular.
Apple, Microsoft, and Volkswagen have largely benefited from multi-branding. For instance, after releasing the famous iPhone in 2007, Apple announced two years later that would launch the iPhone 2. The consumers anticipated for the features of the new brand fueling speculations that its internal memory capacity would be 64 GB. Apple deliberately delayed the launch of the iPhone 6 to give room for more speculation, which in turn popularized the company. The automobile world has never gone crazy like it did when Volkswagen announced the release date of the Bentley. After its release, celebrities and other high-income personalities acquired the vehicle making the company very popular. Microsoft Inc has always attracted attention from its consumers when launching any windows version. The company started with Windows 1998, Windows 2003, Windows Vista, Windows Ultimate 7 and currently the Windows 8. The company usually reaches its highest popularity level each time it releases a new Windows version. Recently, Microsoft announced that Microsoft 10 would be the operating system to be numbered. The announcement brought about speculations that Microsoft 10 would be released.
Multi-branding Increases Internal Competition
Multi-branding requires a firm to be divided into departments with each dealing with a specific brand. Multi-branding fuels competition among the departments with each aiming to outdo the other in terms of sales and profitability (Felix, 470). The competition gives rise to innovative marketing methods that managers use to attract more consumers to their brands. The competition also keeps the different managers at their toes making them more committed to the company objectives. A manager, who loses in battle to increase the sales of brands, is challenged to perform better (Felix 470).
In some cases, managers that performs wells in marketing and increasing the sales their products are called to improve the sales of another brand. For instance, if Brand A now sells well, the manager is recalled and instructed to do the same for Brand C, which records poor sales. At the end of the brand competition, the overall beneficiary is the company because it owns all the brands. The managers that performed well in their brands are also rewarded financially with the profits they created. Multi-brand loyalty therefore provides criteria from ranking the performance of managers in the different departments. Most companies embrace the idea of evaluating the performance and productivity of their managers.
Multi-Branding Yields Economies of Scale
In Multi-branding, the success of the first brand determines the fate of the other. If the first brand succeeds in the market, the second brand will not require much resources for advertising and retailing because it will depend on the image of the other (Giannoulakis and Apostolopouluo 73). The company can promote the different brands using the same adverts without having to spend on each of them separately. The marketing department of a firm can market all the company’s brandsh similar to the way and an advertising agency does for its customers. During advertising, like those on media, the company can design an advertisement that promotes all the brands it sells.
In many instances, Samsung Electronic promotes more than five brands of its smartphones on the same advertisement whether on social media, print media or billboards. The same usually applies when Samsung is promoting other products such TV sets, Fridges and Microwaves. Apple uses the same trick to advertise it software and phone brands. Microsoft Inc has always depended on the success of its products mutually. For instance, the current Office 365 advert on social media, Microsoft Inc promotes all the Office 365 subscriptions on the same advert.
Multi Branding Promotes Distancing of Individual Company Products
With multi-brands, the failure of one brand does not mean that the other brand will also fail except if it was the first brand. A company that sells five brands of a product in the market will offset the losses of one using the profits of the other. If a company introduces a certain brand to the market, the company will not suffer that much when it fails because it will hold itself using the other brands. Multi-branding breathes the confidence of trial and error into a company because other brands are usually performing well in the market. The profit earned from other brands is used to fund the try and error (Ryans et al 255). In summary, a company that offers many brands to the market will not be afraid of taking risks. In fact, a business is usually about taking risks and enjoying profits or suffering losses.
Disadvantages of Multi–Branding
Dilute Brand Name
Multi-branding employs a strategy where products are differentiated and given brand names. A company can have up to ten brands each spread over the market. Multi-branding creates scenarios where consumers in every retail center see the brand. The brand is sold in local shops, kiosks, supermarkets, and many other retail centers. When the brand name is seen everywhere the customers lose its test, and no longer put the same faith they had on it (Khoury 32). As result, the customers will cease buying the brands resulting in low volumes of sales hence reduced profits.
Dilution of brand names is made worse when counterfeit products with almost similar names start entering the market. In most cases, counterfeit products are usually below standard and spoil the image of the company. Though counterfeit names are different from the name of original products, the little similarity confuses consumers. For instance, Nokia and Nokia may appear as similar names if consumers do not look at them careful. The more the name appears in the eyes of the consumer, the more their taste disappears. Several companies in India and China have suffered the same fate because of the overuse of brand names and counterfeit problem (Mapsoworld.com par.4).
All Products Tied together
Though not in all cases, products with multi-brand names are tied together which means that in case one product fails in the market, the other may too follow the trends. There are some instances when consumers become aware that the products they acquire belong to the same company. There are several instances when the failure of one product can lead to the demise of the other products.
When a certain brand fails to meet the expectation of the customers, the customers may develop an assumption that the other products from the same company will not satisfy them. Consumers prefer acquiring their products from companies that consistently satisfy their needs (Mapsoworld.com par.4). To avoid mishaps in future, consumers will choose to completely avoid all the products of the company that failed. This behavior is common in private and government bodies where the quality of products is highly valued.
Another instance is when a company increases the prices of one brand and leaves the prices of others constant. The move creates a notion among the customers that the other products are of low quality hence avoided buying them. According to the customers, it is not possible for a company to reduce the price of one of its products without compromising its quality.
Difficulty in Management
Managing products with different brand names is difficult because of the numerous formalities that must be one on each brand. For effective management of different brands of the same product, each brand is departmentalized. Departmentalization of brands requires each brand to have a manager and a group of employees attached to it. Each brand must have a unique marketing strategy brand while at the same time protect its mother brand. At the end of the financial year, when the company is recording the volume of sales, each brand must be accounted for in the calculations (Leszczyc, Popkowski & Gonul 45). Though the production process may be similar to some level, many resources are required to differentiate the products. For instance, Volkswagen Company is known for assembling cars of different brands such as Audi and Bentley. A quick look at the design of the vehicles shows that the company requires a unique production process to assemble the brands. Each brand also requires unique expertise to assemble it. The two brands have different body structures, speed and other features. At the moment, the two brands, Audi and Bentley have different websites used for marketing and communicating to consumers.
Expectations of New Products
In most cases, companies than have products with different brand names attract public attention. There is always anxiety and expectations from the consumers to release high quality products. Once the brand is released, the consumers give it a close scrutiny and the probability of finding shortcomings in the product is high. If the products fail to meet the standards set by previous brands, the public develops a negative attitude towards then thus affecting the volumes of sales. In some cases, the consumers my even disregard other brands that belong to the same company (Ryans et al 265). The high expectations put on the product’s disadvantages the company because it us remove all the kinks in them before releasing them. To impress the consumers, the company is forced to employ resources to ensure that its quality matches with the expectations of the customers.
Cannibalization means brands outdoing each other in the market to the point where one brand is permanently diminished. When a company introduces multi-brands it fails to consider that customers will have different tastes and preferences for the brands. Other brands will satisfy customer needs sufficiently and hence have better tastes and preferences towards them (Demico slide 6). Customers will also develop poor tastes and preferences towards other brands because of reasons such as quality. The brands that customers prefer will be sold in big volumes hence profiting the company. At the end, popular brands will outdo the less popular brands. This means that the company products are competing and outdoing each other the market.
Denting the Company’s Image
When the company keeps introducing new brands of the same product to the market, the consumers are likely to see the company more profit oriented than customer-oriented. Some companies introduce to the market new brands that have little difference with the initial brands. In some other cases, companies introduce new brands with higher than the previous brands to the market. After thorough scrutiny, the customers conclude that the brand has little difference with old ones and that the company is just trying to get more profits by charging more for it. According to customers, name change does not guarantee that the product will satisfy their needs (Khoury 34). In fact, customers may shift to products of the company’s rival or other brands.
Many firms opt for a multi-branding strategy to enjoy economies of scale by utilizing the merits of the strategy. Multi-branding is a good idea but can backfire if good management and models are not taken into account. Multi-branding is a strategy where one product of a company is given different names in the market. The products usually compete against one another but have different brand names. Multi-branding enables a company to increase its market share by satisfying the different segments using differentiated brands. The strategy allows a company to market the same product using different names. This allows the company to fill the quality and price gasps of its market. In the end, the market becomes saturated with products of the same firm. Multi-branding brings some internal competition among the different brand managers hence improving the quality of service. Hitherto, the success of multi-branding largely depends on the performance of the first brand, if it performed well, other products fare well too. The company can also market the different products at the same time hence generating more economies of scale. In summary, Multi-branding is a viable business strategy if managed using the required knowledge and skills. Any form of mismanagement can render the strategy ineffective. If not managed well multi branding can result to dilute brand names, cannibalization, and difficulties in management.
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