8/8/2019 Umbrella Brand

1/4

The 1980s witnessed a revolution in the understanding of the working of the brands.Marketers depict brands as a reflection of customers own personalities, so that they canrelate to their products well. In fact the distinguishing aspect of the modern marketing has

been its focus upon the creation of differentiated brands and using them as weapons for launching multi-level attacks on competition. Market research has been used to help

identify and develop bases of brand differentiation. A brand identifies a product and itssources, but it does even more. Along came brand extension. Today brand extensionstrategies are widely employed because of beliefs that they build and communicate strong

brand positioning, enhance awareness and increase profitability.

Brands are often extended beyond their original categories to include new productcategories. Research has proved that the success of brand extension depends on thetransfer of parent brand awareness and associations to the extension. The transfer of thesequality perceptions is the key in umbrella branding. An umbrella brand is a brand thatcovers diverse kinds of products which are more or less related. It applies also to anycompany that is identified only by its brand and history. It is contrasted with individual

branding in which each product in a portfolio is given a unique identity and brand name.

Mr. K.R.Senthilvelkumar, a professor at Jansons School of Business offers the most pragmatic of reasons behind an umbrella brand strategy, with scarce financial resources,firms cannot afford to allocate huge budgets for building and maintaining several

brands.

Nowadays consumers have become quite unpredictable in their newspaper-reading or TV-viewing habits, it is very difficult to assure the reach of messages to the targetaudiences. The advertiser has to use many broadcast and print media with high frequencyto create the desired effect for every brand, which ultimately puts huge burden on the

budget. Hence, companies consider it wise to maintain a minimum number of brands intheir portfolio so that they can do justice to each by effectively distributing their investment for promotion purpose.

Yes, umbrella branding is widely practiced. The Confederation of Indian Industry'ssecond FMCG (fast moving consumer goods) conclave in 2003 almost declared thatumbrella branding was the way to go in a competitive market environment. In aninteresting anecdote, R S Sodhi, GM Marketing (Gujarat Cooperative Milk MarketingFederation l), compared the umbrella brand and individual brands to an Indian family,where in umbrella brands - like the Indian family, the father is the head, looking over thechildren. When they grow up and become independent, they hold the umbrella for thefamily. Individual brands on the other hand are like a western family, who grow up fastand leave the father behind. Amuls strategy of using umbrella branding has really paidoff. Amuls advertising and marketing spend has never exceeded 1% of its revenues.Most other food companies spend 6-7% of revenues on advertising and marketing. They(GCMMF) are not big spenders compared to Britannia or Nestle. Despite a limited

budget, Amuls creativesin the form of billboards or the Taste of India campaign have always managed to evoke a larger-than-life brand feel, consistency and spirit of Indian culture in a contemporary way.

8/8/2019 Umbrella Brand

2/4

Companies phase out the brands which have become redundant and retain one or twoumbrella brands for every category with necessary variations under each. For exampleconsumer goods major Reckitt & Colman India Ltd. chalked out an expansion strategy tointroduce 20 new brands in the year 1999-2000. The strategy also involved repositioningits existing brands and consolidating sub-brands under its main umbrella brands -

Dispirin, Dettol, Harpic and Cherry Blossom. The strategy was designed to vault Reckitt& Colman, in terms of sales, into the big league. With the launch of new brands and therepositioning of its existing brands, the company aimed to achieve expected sales growth.The strategy worked well as Dettol as an antiseptic lotion provided brand support toDettol soap, which was re-launched in a fragrant form called Dettol Fresh to take onHLL's Liril. Cherry Blossom acted as a mother brand for several easy-to-use home

products.

Hindustan Unilever Ltds (HUL) beverage brands have been amalgamated under twoumbrella brands Brooke Bond and Lipton and in the fabric wash category, the companyhas retained only Rin, Surf and Wheel, HUL has withdrawn brands such as Sunlight, 501,

Dalda and Nihar; it plans to withdraw some more brands and group them under a fewumbrella brands. HUL is currently focusing on 35 power brands.

Nivea cosmetics brand has a presence in huge number of product categories andcountries. Once upon a time Nivea's performance prompted a yahoo.com news article toname it the 'Queen of Mega Brands.' This title was appropriate since the brand was

present in over 14 product categories and was available in more than 150 countries. Nivea was reportedly believed to be a brand of local origin - having been present in themfor many decades. This fact went a long way in helping the brand attain the leadershipstatus in many categories and countries. According to analysts, the brand was the singlelargest factor for the 4.4% increase in the company's (Beiersdorf) revenues ( 4.74

billion) and 10.7% increase in after-tax profit ( 290 million) for the year 2002.Beiersdorf never tried to disturb the umbrella branding of Nivea and got fruitful results.

Today as organized retailing is gaining popularity, we can see that popularity of privatelabels owned by retailers. Retailers do not feel the need to develop many brands for various categories because it is the loyalty towards their store name which draws andretains the customers. Hence it is the umbrella retail store name which will be the brandfor various product categories and not individual names for each. Customers prefer these

brands over that of manufacturers, due to the fact that they address their functional needswell. The retailers also enjoy high margins for private labels. Today a retail chain likeShoppers Stops 20% apparel section is driven by private labels. There are others likeTrent from the TATAs which has developed its business model purely on private labels.

From Asian Paints in 2003 to Electrolux, Onida and Airtel in 2004, they have all made amove from individual product branding to umbrella branding. Just a few year ago BhartiTeleventures had brand Airtel for mobile services, Touchtel for land line and India Onefor long distance calls. But with Airtel dominating the group's ad spends, the companyfigured that the other brands were hardly making their presence felt. The unified licensingregime in December 2003 - which means that only one license is required to offer fixed,

8/8/2019 Umbrella Brand

3/4

mobile and other services - acted as a catalyst (new Airtel logo/ Airtel outlets). So comeSeptember 2004 and the company started selling all its services under one brand name -Airtel. It claims that the move not only upped brand visibility but also charged up itsdistribution network.

No doubt, umbrella branding has a number of advantages over individual brands in termsof low promotional costs and easy acceptance in trade but umbrella branding imposes onthe brand owner a greater burden to maintain consistent quality and brand equity. If thequality of one product in the brand family is compromised, it could reduce sales of all theothers. Single umbrella branding works relatively better for services like telecom; it maynot be feasible in cases where there is a lesser degree of cohesion between categories,

product values and target customers. So, maintaining a few umbrella brands is better option. For instance, suppose LG, a tech brand as far as Indian consumer is concerned,wants to sell you talc or toothpaste or detergent under that name. Consumers would findit very difficult to say what is transferred value from LG TV sets which theyre nowgoing to put on their skin.

Nokia, a moralist for single umbrella branding dropped their single umbrella brandstrategy in 2006 in naming its products. The company believed it needed to have a look at its competitors book. After the roaring success of the Moto RAZR, PEBL, SLVR andROKR series, the Finnish mobile handset manufacturer felt that consumers found nameseasy to remember compared to the usual mundane numbers. Even LG launched its

popular Chocolate range of phones under the Black Label series. For Nokia, barring fewexceptions, numbers have been the only way its phones have been branded so far -remember 1100, 2600, 3310, 6020?

In 2006 they launched Nokia 8800 Sirocco Edition (a mixture of names and numbers).

Nokia introduced this approach to make it easier for customers to navigate across their range of phones. They also launched E-series phones (which serve business users) and N-series (which have multimedia features).

While some players say that the naming trend will be restricted to the high-end, feature-led phones(for example- LG is also banking on the name game but in that case it isconfined to the high-end range of designer phones), others like Motorola are banking onnames irrespective of price slabs. Motorola believes that consumers don't look at thesenames in an abstract manner and therefore names convey a message to consumers.

A few umbrella brands or individual brands? According to experts, independent brandsonly make sense when the product clearly has a different proposition from the company

brand; like Lexus from Toyota and Swatch from Omega. In the case of Asian Paints,there were so many sub-brands, there was a reduction of media weights for advertisingeach entity. Then, the company shifted to a brand-centric portfolio, which involved achange of logo, product names, packaging and advertising. But the response from thetrade and consumers has been positive, overall brand synergy and shop presence haveincreased, and the advertising is more effective.

8/8/2019 Umbrella Brand

4/4

Most probably in near future the media environment will make it impossible to createnewer brand names and the conditions at the consumer level, as well as the environment.So unless the product is clearly different in the mind of the consumer, umbrella brandingis the way to go. Umbrella brands are going to rule!

References:

1. http://infotech.indiatimes.com/articleshow/1988281.cms2. http://www.moneycontrol.com/mccode/news/article/news_article.php?autono=1595413. http://www.carsonified.com/misc/umbrella-brand4. http://www.icmr.icfai.org/casestudies/catalogue/Marketing/MKTG087.htm5. http://www.whisperbrand.com/blog/category/umbrella-branding/6. http://www.domain-b.com/companies/companies_r/reckitt_colman_india/19990420reckitt_colman_India.html7. Reinventing umbrella branding, Business Line, Sep 27, 20078. http://www.livemint.com/2007/08/25032256/India8217s-top-brands.html

9. Luis M B Cabral(2001), Optimal Brand Umbrella Size, New York University10. Sappington, David, and Birger Wernerfelt (1985), \To Brand or Not to Brand? ATheoreticaland Empirical Question," Journal of Business11. http://www.rediff.com/money/2003/nov/20branding.htm12. The power of private labels, Business Line, Sep 27, 200713. Umbrella brands or independent brands, Business Line, Nov 21, 2003

Contributed by:

Parag Bhattacharya is an engineer and he has worked in the production division of a

biochemical process industry. Currently he is pursuing MBA from ICFAI BusinessSchool