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Growth through cross-selling between brands

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Growth through cross-selling between brands

Is the brand perspective sometimes detrimental to growth? This provocative question has been raised by Accor Hotels, the number one European hotelier. Even though it had built a portfolio of strong brands, it wondered if, for growth purposes, it was not time to adopt a consumer orientation. With its complete portfolio of zero to four-star brands (Formulae 1, Motel 6, Etap, Ibis, Novotel, Mercure, Sofitel and Suit’hotel), it realized that single-chain loyalty cards were causing its clients to defect to the competition.

This is because a businessperson travelling during the week does so at the company’s expense, and his or her family cannot afford to stay in the same hotel at weekends. Although they were all Accor hotels, a loyalty card for Novotel (the three-star brand) conferred no benefits at Etap (one-star) or Formulae 1 hotels. Seeing things from the client’s point of view led to the planning not of product brands, but of a horizontal brand – Accor Hotels itself – as a loyalty vehicle. This allowed the client to be kept within the whole portfolio of the group’s brands.

Seeing that Nivea enjoyed high levels of loyalty because of its umbrella branding architecture( all is Nivea), l’Oréal Paris decided to become a truly horizontal brand with a greater importance than that of its daughter brands (such as Elsève, Plénitude and Elnett). The aim of this mother brand was to increase cross-loyalty between the daughter brands.

Analysing its client database, Unilever calculated that 78 per cent of the most valuable consumers (MVCs) of Skip were also MVCs for Unilever products in general. This was also true of 76 per cent of MVCs for Sun, 69 per cent for Dove, 66 per cent for Lipton Ice Tea, and 63 per cent for Signal. Ultimately, this posed the question of a horizontal Unilever brand – a tricky issue in an organization founded on a variety of unrelated product brands, in a ‘house of brands’ architecture.

However, in the short term there was an opportunity to be exploited: for example, to tell Skip’s MVCs about the group’s other products. Hence the creation of group CRM, not only for this reason, but also as a way of shouldering fixed costs collectively.

The key questions with regard to CRM are those concerning the single-brand or multibrand approach. Consumer magazines such as Danoe and Living Magazine (Unilever), and their Procter & Gamble equivalents, illustrate the multi-brand approach and customise each mailshot to a great extent, deciding what coupons and new products will be offered to which customers.

These magazines place a strong emphasis on cross-selling. This does not stop each brand from conducting its own relationship- based programme, for example, by organising conferences on issues relevant to customers, either face-to-face or through forums on the brand’s website. Other channels also exist to enable such contact: for example, call centres providing real consumer services.