The flexible umbrella brand

The umbrella brand strategy is characterized by a single brand level: the products are not given a daughter brand. They may possibly be given code names, but only with the aim of identifying them in catalogues or price lists. Philips televisions are known as ‘televisions’ (whereas Sony’s is known as a ‘Trinitron’), Philips razors are known as ‘razors’, and so on.

Unlike the product brand, where a brand relates to a single product and vice versa, the case of Philips underlines that here the umbrella brand covers several product categories, both figuratively and in reality. This is the principal advantage of this strategy, moreover: offering a common umbrella, a common name, to a highly diversified range.

It is important in these analyses to distinguish between two types of umbrella brand, according to the degree of freedom accorded to the products, divisions or branches. This flexible umbrella strategy is currently typical of Japanese, Korean and Chinese brands.

Mitsubishi sells cars, electrical products, lifts and nuclear plants under its name, but also food products under the Three Diamonds brand (the Mitsubishi symbol is made up of three diamonds). Toshiba is only known in Europe for its laptop computers, but you only have to visit the Tokyo department stores to see Toshiba sewing machines and frying pans. There, Toshiba is rather like Philips in Europe.

In fact, the umbrella brand has been typical of Japanese organisations, where sales subsidiaries of these Japanese companies had a high degree of freedom. What was required of them was to establish themselves in the country, not to make waves, and to conquer the markets. Historically, the penetration of the United States and Europe by Japanese equipment products (radio, hi-fi, television, photography, reprographics, telephones, IT, games and so on) was carried out via the exportation of products made in Japan.

The distribution subsidiaries were tasked only with selling them; they were managed by local people, since the Japanese did not like working abroad. Moreover, the emphasis placed locally on sales was convenient for subsidiaries essentially made up of in-country managers. Besides the sales objectives, and respect for corporate ethics, there were few constraints on the managers. There was a point on the brand map, if not the graphic map, but no value platforms.

The Japanese global success was achieved on the basis of the advantages and the low prices of the products themselves, carried by quality commercial organisations, under the umbrella of a brand whose dispersion also contributed to building its recognition. The umbrella brand was a name, not a vision finding embodiment in services and products. This name was generally the corporate name, that of the industrial group.

This is why the subsidiaries had a high degree of freedom: their marketing communications were carried out by country. Within the same country, over several years, the advertising campaigns of Toshiba hi-fi, Toshiba lo-fi, Toshiba televisions, not to mention microcomputing, were not at all coordinated. Each had its own brand slogan and emphasised different values, and even worked with a different advertising agency.

It is known that brand strategies have organisational implications. The supple, flexible umbrella architecture gives the subsidiaries a great deal of autonomy, which can motivate them and make it easier to recruit bosses with entrepreneurial profiles, which is very useful during the phase of conquering market shares. The international unity is through products, imported from Japan.

Another advantage: since the name is more a corporate name than a brand, there is no hesitation in placing it on products that are highly disparate from a Western point of view: sewing machines, saucepans and microcomputers. This is rather like the now-dead Thomson brand. In Asia, however, the more powerful a group, the more it is respected. From this point of view, manufacturing everything helps to increase power.

On the communications level, the emphasis is placed on the specific qualities and advantages of the products. Therefore there is little intangible added value, which would be very useful once the conquest phase is over. When the markets mature and the products become equivalent, it is then necessary to turn to other levers of attraction and attachment.

On the other hand, it does build the country brand. The disadvantages of this approach make themselves felt later in the brand’s life. It is devoid of emotional content: it is not a source of aspiration, of tacit agreement, of affective attachment. Admittedly, it is perceived as a source of quality products, but it is also seen as cold and distant.

As the global director of the Toshiba brand (a post newly created precisely to remedy this state of affairs) told us one evening, the brand could be compared to a highly technically skilled work colleague, whom you might ask for help, but whom you would not invite home for dinner.

In the West, the notion of a brand was forged on the notion of speciality. Procter & Gamble founded a school of thought that was taught for years in business schools the world over, where a brand does only one thing; a single product rigorously produced and varying according to its formats or forms (washing powder, washing liquid, tablets or pearls).

We now know that this vision is restrictive. Of course a brand can only have one value system and make one central promise, but these may be applied to different products. The global success of Bic testifies to this, as does that of Nivea, l’Oréal Paris, Virgin and Amazon, not to mention distributor brands such as the Carrefour brand, which by its construction covers multiple product categories.

The problem with the flexible umbrella brand is that the value system is not perceived; and it is through these values that the tacit agreement and the affective relationship are developed, beyond the satisfaction linked with the product or the excellence of the service. There is therefore a double rupture: no value link expressed between the corporate and the products, or between the products/categories themselves.

By signing its products without explaining why, the brand is diluted. Like an elastic band, it stretches and breaks. The brand may indeed bring together intrinsically different products, on condition that it gives them a common meaning. This is the case with luxury brands, but also Virgin, for example, or Apple. We know that the brand functions as a concept, and therefore has power to integrate objects that are different at first glance.

Signing products from the ballpoint pen to the razor, to cigarette lighters, and to kayak canoes, with the name Bic is to say that there is Bic in each of them. Therefore, the common name presents a group of common values embodied in these different categories. The flexible umbrella structure offers none of this, other than generic propositions such as ‘making quality products’. To achieve this, it is necessary to move to the encompassing umbrella, or masterbrand, strategy.

Strategic Brand Management Related Practice Tests

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