Many companies are rejecting the 'one brand, one USP' rule of marketing theory in favour of umbrella branding. Though it's cheaper, says Alan Mitchell, it's not always easy.
In January last year US manufacturer 3M embarked upon a multi-million dollar global advertising campaign. It didn't have a particular new product to tout. It wasn't trying to impress investors. It wasn't even trying to make people feel warm towards it. It simply wanted to raise awareness of its name and its record as an innovator.
Its problem? While individual products, which range from industrial chemicals to healthcare, were well-known to their purchasers, few knew that they were buying from 3M. Alan Herbert, UK marketing communications manager, explains: 'Though we have thousands of products, people tend to think of us for just two. If they know we exist and that we're a good quality company, they're more likely to buy more of our range.' 3M is just one of a horde of companies that have recently ditched traditional marketing theory - or, more precisely, that part of it which states that one brand should offer each market segment one unique selling proposition - in favour of 'umbrella' branding. Though some of the most highly regarded names in branding still stick to its logic, Procter & Gamble and Mars included, the harsh economics of grabbing and keeping a share of consumers' crowded minds is forcing many to think again.
It is estimated that building a new brand in Europe, Asia and North America costs around $1 billion in marketing communications. It also takes at least a couple of years.
By taking branding to a new level - whether to that of the 'stretched' stand-alone brand, the subsidiary, the company or even the country - marketers hope to find a more cost-effective approach. After all, if giants such as Sony and Sainsbury can give instant recognition and credibility to everything they do by simply attaching their name to it, what is the point of building a brand from scratch?
That logic explains why umbrella branding has increasingly crossed over from its traditional home in airlines, banks, retailers and car companies and is now being applied to packaged goods. The fact that Nescafe, 104e for example, embraces a number of variants - Gold Blend, Espresso, Cappuccino - has helped to give it an edge over rivals with a plethora of stand-alone brands. 'It's prohibitive for the competition to support them all,' claims Nescafe marketing manager Tony Aves. Aside from Nestle, Kellogg, Heinz, McVities and Cadbury all endorse their products with the company name.
But isn't umbrella branding a high-risk ploy? If, for example, consumers take exception to one product line, won't they stop buying others that carry the same name? Unless a company follows the example of British Leyland and makes a mess of its marketing year after year, there's little evidence that such concerns are justified. Sure, many umbrella-branded products fail, but consumers rarely blame the parent brand itself. As Pam Robertson, managing director of new product development agency Redwood Associates, observes: 'They don't knock people for trying.' That doesn't necessarily make umbrella branding easy. Brand managers still have to explain the selling points of each product. They also have to make delicate decisions about where the emphasis should be placed (is it a Ford or a Mondeo, a Cadbury's or a Wispa?) and align internal structures accordingly. Marketers also need to be clear about what the brand 'stands for'. It was crazy, for example, for Cadbury - best known for its 'excellent chocolate' - to add its name to Smash, the instant mashed potato. When the umbrella was taken away, sales instantly soared. Equally, while Kleenex has been able to extend its tissue brand from faces to bottoms, Andrex has found moving in the opposite direction an uphill struggle.
Umbrella branding isn't a universal panacea, either. New brands may be needed when a company wishes to differentiate its products or emphasise their novelty.
First Direct and Direct Line were notably branded separately from their parent banks. Similarly, Toyota chose Lexus to distinguish its new upmarket car from the rest of its fleet.
There is another reason, however, to explain the recent popularity of umbrella brands. As the many faces of Richard Branson's diverse empire have shown, if a brand has the 'right' values it can be applied to almost anything. Indeed, the British consumers' apparent acceptance of the Japanese attitude - that there's something rather dubious about a product if its maker is not prepared to stake its reputation on it - is making it gradually more difficult for companies to hide behind their brand 'veil'.
Take Persil Power. While consumers appear to have forgiven the brand, the reputation of the parent company, Unilever, has suffered tremendously. 'Until last year, most companies thought that their brands were separate, because that's the way they've always presented them,' says Chris Macrae of the World Branding Network. 'Nowadays, there's a dotted line between the brand and the company in the minds of analysts, retailers and journalists. Unilever's experience shows that things have really moved on'.