Branding refers to an organization’s use of a name, phrase, design, symbol, or any combination of these elements to identify or distinguish its products. Branding is very important to businesses, in part because it can generate brand equity, which is the added value a brand name gives to a product beyond the functional benefits provided. In other words, greater brand equity can make a particular brand appear more valuable in the eyes of potential customers, even though the brand itself has not actually changed. There are different branding strategies that can be implemented:
When a company utilizes a multiproduct branding strategy, one brand name is used for all products sold within a company’s product class. One benefit of this marketing strategy is that it is simple and cost effective. Advertising expenses are not as great if only one brand name needs to be promoted. Also, if buyers have positive experience with a particular product, they may be motivated to purchase other products carrying the same name. This can be taken advantage of by introducing new products under the same brand. More specifically, line extensions occur when an existing brand name is used to enter a new market segment in its product class. For example, a clothing manufacturer may sell pants in addition to shirts. Brand extensions, on the other hand, refer to the practice of using an existing brand name to market an unrelated product class. A software company selling food would be an example. This can be riskier than line extensions because customers often associate brands with a certain type of product, and consumers may be turned off when a company attempts to introduce a radically different product. While a multiproduct branding strategy can be advantageous, the meaning of the brand name can be diluted. If too many products share the same name, the brand can become less valuable.
A multibranding strategy is essentially the opposite of a multiproduct branding strategy. In this case, the different product lines sold by a company are assigned different brand names. This strategy can be beneficial when the different brands within a company are targeting different market segments. There are different ways of employing multibranding. One method is to differentiate brands based on cost. More expensive brands can target consumers looking for more luxurious products or services, while less expensive brands can be marketed to more price conscious buyers. Developing fighting brands is another multibranding strategy, which is specifically intended to take on competing brands. Such fighting brands are normally sold at a lower price, retaining the brand equity of the others brand or brands within an organization. For example, a business may wish to lower prices on products due to a negative economic climate. But by lowering prices on a brand, that brand may be perceived as less valuable. Unit sales may increase, but overall sales will decline. When the economy picks up again, the business will be left with a less valuable, less profitable brand. Fighting brands can prevent this problem. If a company is looking to sell more product at a lower price, a fighting brand can be developed, without damaging other brands within the business. Fighting brands can be terminated once they are no longer deemed useful. Generally a multibranding approach is advantageous because each brand is considered unique to consumers, and negative feeling toward one brand will not be transferred to another brand within the company. This strategy is normally more expensive to implement than a multiproduct strategy, because each brand must be promoted separately. It can also be complicated to utilize multibranding, because the different brands require individual attention.
Choosing the best branding strategy can be a difficult choice. If your business is unsure which approach to branding is best, we can help. Contact us today, and we will evaluate your company, and help you choose the best strategy.