Multiple brands or stand-alone ones?

Monday 07th, March 2016

The masterbrand versus individual brand approach has been debated and argued about since the dawn of marketing evolution.

Has the dust settled? I think not.

Is it likely to, any time soon? Seems probably but unlikely.

A recent piece of news that Coca-Cola has reverted to a masterbrand approach once again triggered some thinking on the subject. Doing a little bit of research turned up the additional information that a few other MNC brands such as Hershey’s chocolates seem to be contemplating just such an approach or have just begun to implement it.

Corporate ambitions driving the agenda

Another phenomenon that has also become evident over the years is that of multiple brands. Large CPG companies such as P&G and Unilever are constantly evaluating opportunities to pursue top-line and bottom-line growth.

For any big multinational, the greatest fear is that they do not see an opportunity arising in a new segment or a new demographic. This fear of being left behind often prompts them to pour billions into buying up potential competitors. Equally, many brands tend to get divested if market conditions change or turn unfavourable.

Building individual brands

For decades, P&G followed an individual brand strategy in which resources were poured into building strong brand franchises. Brands such as Ariel, Head & Shoulders, Pantene and others are each a classic case of strong brands built on an offering of a strong product with strong differentiation and branding elements.

P&G did make some changes to their branding strategy a few years ago by increasingly emphasising the corporate connect. This was a mega-change for a company that had historically avoided corporate branding.

Likewise, Unilever was another votary of building strong individual brands. Each of its key brands such as Dove, Sunsilk, Surf and so on are the results of decades of patient brand-building efforts.

Coke which has recently triggered off the debate about a return to a single brand has also followed an individual brand approach. While Coca-Cola was the mother brand, each of the line extensions spun off over the years such as Diet Coke, Coke Zero etc have each had their own distinct identities. And Coke has spared no effort in trying to grow them and ensure they’re successful with distinct niches.

Does the masterbrand approach work better outside CPG?

While it may be tempting to pose this question, the fact is probably that brands in other categories have simply chosen to go with a single brand. Take the examples of the Japanese consumer electronics brands such as Sony, Panasonic, Toshiba etc.

Some may argue that Sony has indeed hedged its bets with say, a PlayStation or earlier Bravia TVs. This is a possible line of argument, but I would posit that what matters is ultimately the residual perception that the customer realises. It is a PlayStation from Sony that swings the deal, not so much a PlayStation itself.

Likewise, the tech industry is filled with individual brands that are well-established in customer perception. Apple is an all-time classic with its brand oozing great design, user-friendliness and a host of premium associations. The iPhone, iPod and the iPad are all successful brands in their own right but there is no doubt whatsoever in the customer’s mind that what she is buying is an Apple product.

The times they’re a-changin

In the age of digital marketing and social media, brand management has become a huge challenge. Media budgets seem to constantly be on an upward trajectory. Media choices are numerous too and audience fragmentation is an accepted reality.

Brand managers constantly face the challenge of allocating their budgets wisely enough so as to extract optimum results. Within the organisation, there is pressure on marketing to deliver results better and quicker than ever before.

For worldwide businesses, managing a portfolio of brands is a difficult, complicated exercise. Sometimes, local considerations or other reasons creep in. P&G’s ‘Always’ brand of feminine hygiene products are sold under the ‘Whisper’ brand in Asia. Likewise the Axe brand of deodorants from Unilever is sold as Lynx in the UK and elsewhere.

Are CFOs taking control of the marketing agenda?

There are enough studies done which show the financial implications of managing an unwieldy brand portfolio. For example, Unilever has over 400 brands in its portfolio but focuses on just 14 of them each of which brings in over a billion euro revenue each year.

P&G was last reported as cutting the flab by shedding about a hundred plus brands which brought in between $500-1000 million in annual revenue. The focus is now on building a small portfolio of about 70-80 brands. Even that would seem like a very large number for many smaller organisations!

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