Do you have a “too many brands” problem?

The lure to keep launching new brands is strong for many businesses. But this could prove to be counter productive. Some of the best known and most valuable brands have put in the effort and investment to build one core brand. Instead of spreading themselves thin across many.

Brands have come a long way from the time when branding was a ranch’s identifying mark burned on the rump of a cow. Today the same word has myriad levels of meaning. These are backed by sophisticated models to delineate them. They have a value that often runs into billions. And they increasingly have a sophisticated personality to match. Some believe that brands are owned by those who buy them — their customers. Some believe that they are beacons for people to follow, identify with or to signal status.

Whatever their role there’s one thing that marketers agree on — brands need meaning. Yet this is the one fact that many miss when they set about branding their products or services. Thus each new product or service gets its own name or set of letters. Then new versions or extensions get their own names or special sets of letters. These in turn give birth to even more names and/or letters. So much so that every new marketing initiative has to have its own set of letters and/or names. Automobile brands have a number of brands and sub-brands. But are they really? Or are they merely descriptors for their offering in the category? Consumer durable brands fall into the same trap. One even used the meaninglessness of its cluster of letters in its advertising!

The branding bug then begins to infect the organisation’s internal activities too. Smart and swanky names proliferate. Soon there are “brand” names all over the place and in this fog, what each means gets lost. The greater danger is that the seriousness of brands and branding gets lost. And then the main brands begin to get treated with the same cavalier attitude. The value of branding begins to diminish.

When starting a business the first and most important brand is the name of your company. That is what evolves to become a key storehouse of value. Its triumphs, initiatives, customer engagement, performance, etc., enrich and are encapsulated by its brand. Hence Citibank is not just a place to do transactions. It has, through innovation, become a brand that enables people to realise dreams. Helps them buy gifts on impulse. Helps them buy their aspired for car. Helps them feel secure that their hard earned investments are earning a decent return. Google helps to answer anything. Omega is only brand to actually land on the moon. Fabindia is the lifeline for artisanal India.

Over time people, your customers, investors or potential employees, assign value to your brand. And this value is expressed by preferring it to others. By investing in it. By choosing to stay loyal to it. And through advocacy, contributing to its further enrichment. This is especially so with luxury brands. How is a Rolex different (functionally) from any other premium brand? Yet there are those who will be willing to spend a huge premium for one. Inherent in it is the feeling of ultimate excellence and success. For the owner it means that they believe in going beyond nominal success. They believe in outperforming all those around them and in setting new benchmarks. The Omega Speedmaster has all the excitement and adventure of being the first watch to be worn on the moon. Each owner “owns” a part of that amazing endeavour by owning one.

Consider that many of the world’s most valuable brands choose to focus on their core brand. They rarely clutter their customers’ minds with a plethora of names. And even when they do have a portfolio of sub-brands, they ensure that they all enrich the core brand. So its TAG Heuer, Hugo Boss, Land Rover, Tmberland, etc., that you choose first. For Apple, each sub-brand in its portfolio has its own place. And each is backed by significant investment. Yet each is clearly recognisable as an Apple product. Each contributes to the core Apple brand. Packaging, identity and design philosophy converge.

Think about the brands you can vision clearly in your mind — do you remember every sub-brand? And do they really have any value for you? Many companies put in significant investments in their sub-brand names. Yet often all you remember is the main brand. Or it’s all a blur. That investment has gone to waste. The opportunity cost of losing “mind-space” and not enriching the parent brand, has longterm implications.

To prevent this sort of diffusion and wastage, here are some simple questions to ask before you create a new brand. These are by no means comprehensive but are a useful starting point.

1. What role will this proposed brand play in your portfolio, for your business? Why do you want to launch this brand? How distinctive is the positioning of the proposed brand?
2. How much can you invest in this brand and what will its share of impact be versus its competition?
3. What will the relationship be between this brand and the parent brand?
4. How many brands do you already have in your portfolio — how distinct are they from each other?
5. Will it help build the core parent brand or could it vampire it?

Role of the brand

There are many possibilities. For example it could be a new product or service that marks a significant departure for your company. This could be either in terms of addressing a completely new audience. Toyota launched Lexus to compete against brands like Audi, Mercedes Benz and BMW. It could mark an upgrade opportunity for existing customers. Or act as a recruiter for those who cannot afford the main brand. It could also mark a distinct target audience or mindset (e.g. Mini speaks to an audience with a mindset different from BMW).

Whatever the assigned role might be, it is important to decide that role before launching a new brand. Given the clutter faced by brands today, creating a new brand is very expensive. And the rate of brand extinction is increasing. It is far better to use that investment in building a strong core brand. Rather than allow scarce capital to be consumed by brand proliferation.

How much can you invest?

Investment here does not only refer to money. Creating, developing and managing a brand takes up a lot of resources. Often the best human resources of a company are assigned to the new brand. This may take away that resource from existing brands. It could thereby potentially make them more susceptible to competitive threats. Alternately, because it is a new brand, you might not be willing to invest too much time, people and money on it. That would hobble it in what could be a competitive environment. Extensions of core brands in successful companies or new brands in struggling companies often suffer from this. This lack of investment gets reflected in the brand’s distribution, publicity and other activities. Investment in a new brand is more than just financial. It is all the resources devoted to it — time, people, enterprise bandwidth, etc. All the aspects of investment must be factored in.

Relationship between brand and parent

What is the desired brand architecture? How will the proposed brand “fit in” with the portfolio is a crucial question. If the brand is seeking to attract a new audience how will that affect the core brand’s value? If the brand is opening up a new market, how will the parent brand help or hinder it? Should the parent brand be visible or not? How well are current trade channels equipped to handle it? If it needs new channels, how well is the company equipped to manage them? All these and many other factors need to be considered. Often just how close or far from the main brand a new brand needs to be, and the resultant impact on the main brand is not debated enough. Once the brand is launched it is often too late to consider these issues. Sometimes the impact on the parent could be dangerous. For example when a value option of a brand is launched, it could wean some clients away from the main brand. Especially if the downgrading does not carry a significant image cost for the customer. The proposed brand’s role in and impact on the portfolio must be decided before launching it.

How many brands are already in your portfolio?

An audit of the brands in your portfolio and how much incremental value they add can be illuminating. This shows you whether you have a portfolio of brands or just a collection of “names.” Multinationals like Unilever have gone in for drastic culling after evaluating their brand portfolio.

It is important to evaluate your brand portfolio in the context of the category in which you operate. In many categories customers are not involved enough to differentiate between a plethora of brands. In such categories it is difficult enough for single brands to impact recall and consumer behaviour. Multiple brands often do not bring multiple business success. Using simple product descriptors and focusing on building the core brand’s competitive strength could be more effective and profitable.

Will it vampire the parent brand?

This is critical. The danger is that a new brand could divert attention from the parent brand. This could be because its appeal is not very different from the parent’s. Or it could offer a better value package. Or be technically superior. The impact of a new brand on the existing portfolio is important. It may hog more of the company’s attention. In some categories this procession of new “brands” see older ones dying out. Or continuing as zombies. Each new brand creates a flurry of excitement. Customers flock to it. Until they flock somewhere else to the next “new kid on the block”. This is wasteful. Worse, customers get used to seeking the “latest, latest”. In trying to meet this evanescent demand, the core brand’s values get neglected.

Sometimes when a brand is perceived to be “outdated” by its owners, or considered not “smart” enough, or is facing significant competitive headwinds, you get advised to “change the name”. With the high level of advertising “noise” across a wide range of media, people edit messages. Brands play an important role by encapsulating the core brand proposition — a hot button. Changing a brand name is like changing the address of your home. Changing your mobile number. The link between the company and its customers gets endangered. And they may well prefer another brand more familiar and easily recalled. One has to be careful to not fall between the chasm between the previous brand and the new one. The original brand is likely to be rich with meaning. Transferring this meaning is extremely difficult. Evaluating what’s gained and what will be lost, is crucial when trying to migrate. “Change the name” is often recommended or ordered without evaluating the consequences. The real cost of doing so is often underestimated.

In the words of a guru of brands and branding, Stephen King. “A product is something that is made in a factory; a brand is something that is bought by a consumer. A product can be copied by a competitor; a brand is unique. A product can be quickly outdated; a successful brand is timeless.” Brands today command far more value than the factories that make them. And much more than the sum of products sold using them. To acquire that piece of mind “real estate” takes a lot. Without thought and careful management, a great deal of value can get lost. A lot of precious resources can be wasted. Brands demand investment. Creating names is just an expense.