The benefits of multiple entries

At the beginning, we looked at the practical reasons why the number of brands had to be reduced, sometimes even to a single brand. They all correspond to a strategy of domination and competitive advantage via low cost. While recognising the market segmentation, it has been decided not to take it into account at brand level, but only in terms of products.

The multi-brand approach, on the contrary, is the logical consequence of a differentiation strategy and as such cannot coexist with a low-cost policy, in view of reduced economies of scale, technical specialisation, specific sales networks and necessary advertising investments. Nevertheless, with the exception of exclusive luxury brands, pressure remains.

In order to take advantage of productivity gains, there is a tendency to fragment the production chain in the cause of differentiation at the last possible moment, thus exploiting the benefits of the learning curve. This is the case in the domestic appliances industry, making industrial regrouping a necessity, as well as in the food processing or automobile industries.

The policy of having general car brands makes the most of all possible production and corporate communication synergism, and breeds the loyalty of the customer who progresses from one model to another within the same make. With all the advantages of a mono-brand policy, what makes it necessary to have several brands on the market at the same time?

To start with, market growth. No single brand can develop a market on its own. Even if it forms the sole presence at the outset, once the brand has created the market, its development requires a multiplication of players, each investing to promote their respective differences. The collective presence of a number of contributors helps to promote a market.

Beyond their differences, their combined advertising accentuates the common advantages of the product category. A multiple presence is necessary to support the market as a whole. It would not be in Philips’ interest to see its competitors in the electric razor market disappear. This would only decrease the number of messages praising the merits of electric razors, which could only benefit Gillette and Wilkinson Sword.

Philips should acquire a brand and maintain it as an active brand in the market. In the pharmaceutical industry, a laboratory discovering a new formula could certainly profit from ‘co-marketing’ it with other laboratories in order to accelerate its impact. An example of this is found in the case of aspartame.

Multiple brands allow for best market coverage. No single brand can cover a market on its own. As a market matures there is a need for differentiation and it becomes necessary to offer a wider range; the market is becoming segmented. A brand cannot be targeted at several different qualities at the same time without running the risk of losing its identity. In any case, consumers and retailers themselves will object to further brand ascendancy. This dual process is illustrated by the case of Rossignol. The company Rossignol followed a dual brand policy:

  • a mono-brand multi-product policy: the hallmark Rossignol covers its skis, ski suits and ski boots (those coming from its acquisition of the Le Trappeur Brand, since then de-baptised);
  • a multi-brand mono-product policy, with the Dynastar brand on skis, Kerma brand on sticks and Lange brand on boots.

With 20 per cent of the world ski market, Rossignol is the leading manufacturer. Its share in the upmarket ski sector is thought to be even greater, of the order of 40 per cent or more. This is an area where the company should not offend people’s susceptibilities by expecting them to dress from head to toe in Rossignol products.

If the world leader wants to grow even bigger, it should be the one increasing the choice, rather than its competitors. In this market, the distribution is still handled by a large number of small independent retailers, who fear the control of a single supplier. This is why each company brand has its own sales force.

In the United States the Rossignol company presence is assured by two separate companies, Dynastar Inc. and Rossignol Inc. In the industrial sector, Facom and Legrand, two dominant leaders, successfully increased their hold on their market by creating apparently separate and autonomous brands. This enabled them to find new distributors, who were only too happy to have at their disposal a near exclusive brand, different from those of other retailers in that zone.

Multiple brands offer a tactical flexibility which also enables one to limit a competitor’s field of extension. In this way Delsey, the leading European luggage manufacturer, cornered Samsonite. They created a new brand, Visa, positioned to undercut Samsonite prices, while at the same time Delsey restrained them from moving into the top-ofthe- range market.

A multi-brand policy can stop any new competitors entering a market. A strong entry barrier to a market can be created by offering a complete range to retailers, with a brand name for each sector of the market. This is why in on-premises in the European market, soft drink companies create barriers to entry by providing the full range of products needed (Coke, Fanta, Sprite and so on).

A multi-brand policy is necessary to protect the main brand image. This partly explains why the Disney Corporation uses a number of brands in film production, for example Buena Vista and Touchstone. This enables them to produce films of every type without endangering the revered Disney name.

Similarly, when the success of an innovation is not certain, it would be foolish to risk associating it with a successful brand. This is why Procter & Gamble launched their first liquid detergent under the brand name Vizir and not under the name of the leading market brand, Ariel. The inverse policy was adopted by the Cadbury Schweppes group when it decided to launch its new fizzy drinks not under the brand Wipps but as Dry de Schweppes.

This was not only because Schweppes’ name helped the sales but because it was thought that the new brand Wipps would reinforce the slightly old and stuck-up image of Schweppes, and would have, in the long term, threatened the value of the brand. In order to avoid having to lower the prices of its leading products, 3M created the sub-brand Tartan which only covers the products where 3M is the dominant leader.

This minimises the risk of unwanted cannibalisation. Where 3M is not dominant but a challenger, retailers might be tempted to move directly to the lowest priced alternative from 3M.

Strategic Brand Management Related Practice Tests

Strategic Management Practice Tests
Brand Equity In Question What Is A Brand? Differentiating Between Brandassets, Strength And Value Tracking Brand Equity Goodwill: The Convergence Of Finance And Marketing How Brands Create Value For The Customer How Brands Create Value For The Company Corporate Reputation And The Corporate Brand Strategic Implications Of Branding What Does Branding Really Mean? Permanently Nurturing The Difference Brands Act As A Genetic Programme Respect The Brand ‘contract’ The Product And The Brand Each Brand Needs A Flagship Product Advertising Products Through The Brand Prism Brands And Other Signs Of Quality Obstacles To The Implications Of Branding Brand And Business Building Are Brands For All Companies? Building A Market Leader Without Advertising Brand Building: From Product To Values, And Vice Versa Are Leading Brands The Best Products Or The Best Value? Understanding The Value Curve Of The Target Breaking The Rule And Acting Fast Comparing Brand And Business Models: Cola Drinks From Private Labels To Store Brands Evolution Of The Distributor’s Brand Are They Brands Like The Others? Why Have Distributor's Brands? The Financial Equation Of The Distributor’s Brand The Three Stages Of The Distributor’s Brand The Case Of Decathlon Factors In The Success Of Distributor's Brands Optimising The Dob Marketing Mix The Real Brand Issue For Distributors Competing Against Distributor's Brands Facing The Low-cost Revolution Should Manufacturers Produce Goods For Dob's? Brand Diversity: The Types Of Brands Luxury, Brand And Griffe Service Brands Brand And Nature: Fresh Produce Pharmaceutical Brands The Business-to-business Brand The Internet Brand Country Brands Thinking Of Towns As Brands Universities And Business Schools Are Brands Thinking Of Celebrities As Brands The New Rules Of Brand Management The Limits Of A Certain Type Of Marketing About Brand Equity The New Brand Realities We Have Entered The B To B To C Phase Brand Or Business Model Power? Building The Brand In Reverse? The Power Of Passions Beginning With The Strong 360° Experience Beginning With The Shop The Company Must Be More Human, More Open Experimenting For More Efficiency The Enlarged Scope Of Brand Management Licensing: A Strategic Lever How Co-branding Grows The Business Brand Identity And Positioning Brand Identity: A Necessary Concept Identity And Positioning Why Brands Need Identity And Positioning The Six Facets Of Brand Identity Sources Of Identity: Brand Dna Brand Essence Launching The Brand Launching A Brand And Launching A Product Are Not The Same Defining The Brand’s Platform The Process Of Brand Positioning Determining The Flagship Product Brand Campaign Or Product Campaign? Brand Language And Territory Of Communication Choosing A Name For A Strong Brand Making Creative 360° Communications Work For The Brand Building Brand Foundations Through Opinion Leaders And Communities The Challenge Of Growth In Mature Markets Growth Through Existing Customers Line Extensions: Necessity And Limits Growth Through Innovation Disrupting Markets Through Value Innovation Managing Fragmented Markets Growth Through Cross-selling Between Brands Growth Through Internationalisation Sustaining A Brand Long Term Is There A Brand Life Cycle? Nurturing A Perceived Difference Investing In Communication No One Is Free From Price Comparisons Branding Is An Art At Retail Creating Entry Barriers Defending Against Brand Counterfeiting Brand Equity Versus Customer Equity: One Needs The Other Sustaining Proximity With Influencers Should All Brands Follow Their Customers? Reinventing The Brand: Salomon Adapting To The Market: Identity And Change Bigger Or Better Brands? From Reassurance To Stimulation Consistency Is Not Mere Repetition Brand And Products: Integration And Differentiation Specialist Brands And Generalist Brands Building The Brand Through Coherence Defining The Core Identity Of The Brand Confirming The Presence Of Brand Core Facets In Each Product Identifying The Role Of Each Product Line In The Construction Of The Brand Graphically Representing The Overall System Of The Brand Checking The Coherence Worldwide The Three Layers Of A Brand: Kernel, Codes And Promises Respecting The Brand Dna Managing Two Levels Of Branding Growth Through Brand Extensions What Is New About Brand Extensions? Brand Or Line Extensions? The Limits Of The Classical Conception Of A Brand Why Are Brand Extensions Necessary? Building The Brand Through Systematic Extensions: Nivea Extending The Brand To Internationalize It Identifying Potential Extensions The Economics Of Brand Extension What Research Tells Us About Brand Extensions Avoiding The Risk Of Dilution Balancing Identity And Adaptation To The Extension Market Segments Assessing What Should Not Change: The Brand Kernel Preparing The Brand For Remote Extensions Keys To Successful Brand Extensions Is The Market Really Attractive? An Extension-based Business Model: Virgin How Execution Kills A Good Idea: Easycar Brand Architecture The Key Questions Of Brand Architecture Type And Role Of Brands The Main Types Of Brand Architecture The Flexible Umbrella Brand The Aligning Umbrella Brand (masterbrand) Choosing The Appropriate Branding Strategy New Trends In Branding Strategies Internationalising The Architecture Of The Brand Some Classic Dysfunctions What Name For New Products? Group And Corporate Brands Corporate Brands And Product Brands Multi-brand Portfolios Inherited Complex Portfolios From Single To Multiple Brands: Michelin The benefits of multiple entries Linking The Portfolio To Segmentation Global Portfolio Strategy The Case Of Industrial Brand Portfolios Linking The Brand Portfolio To The Corporate Strategy Key Rules To Manage A Multibrand Portfolio The Growing Role Of Design In Portfolio Management Does The Corporate Organization Match The Brand Portfolio? Auditing The Portfolio Strategically A Local And Global Portfolio – Nestlé Handling Name Changes And Brand Transfers Brand Transfers Are More Than A Name Change Reasons For Brand Transfers The Challenge Of Brand Transfers When One Should Not Switch Analysing Best Practices Transferring A Service Brand How Soon After An Acquisition Should Transfer Take Place? Managing Resistance To Change Factors Of Successful Brand Transfers Brand Turnaround And Rejuvenation The Decay Of Brand Equity The Factors Of Decline Distribution Factors When The Brand Becomes Generic Preventing The Brand From Ageing Rejuvenating A Brand Growing Older But Not Ageing Managing Global Brands The Latest On Globalisation Patterns Of Brand Globalisation Why Globalise? The Benefits Of A Global Image Conditions Favouring Global Brands The Excess Of Globalisation Barriers To Globalisation Coping With Local Diversity Building The Brand In Emerging Countries Naming Problems Achieving The Delicate Local–global Balance Being Perceived As Local: The New Ideal Of Global Brands? Local Brands Can Strike Back The Process Of Brand Globalisation Globalising Communications: Processes And Problems Making Local Brands Converge Financial Valuation And Accounting For Brands Accounting For Brands: The Debate What Is Financial Brand Equity? Evaluating Brand Valuation Methods Brand Valuation In Practice The Evaluation Of Complex Cases What About The Brand Values Published Annually In The Press? Strategic Brand Management Interview Questions