When the rain comes and you have only 1 umbrella with you and you are 3 people than you try to use that umbrella so as to accommodate all three people so that nobody gets wet in rain. In case of marketing, there is a similar strategy where a single brand name become umbrella and products become people and company uses the single brand name for the sale of 2 or more products and this strategy of using the single brand name for the sale of 2 or more related products is called umbrella branding. In order to understand more about umbrella branding, one should read the advantages and disadvantages of umbrella branding –
Advantages of Umbrella Branding
Economical Strategy
The biggest advantage of umbrella strategy is that as far as company is concerned it is very economical for the company to market its products because when company has one brand but many products under that brand than company has to spend money on marketing of only one brand and not multiple products which is the case when company uses different brand for different products.
Easier Management
Another benefit of umbrella branding is that since many products are marketed under one brand it is very easy for the company to manage. Hence for example, if the company has 10 brands instead of 1 brand than the company will have to spend time, resources and money to manage all the brands and when the company is managing 10 brands chances of mismanagement is more because the attention of company is divided between 10 brands.
New Products Get Instant Recognition
When a company has an established brand than new product launches by the company get instant recognition from the customers because when the company launches a product under new brand than product will take its own time in establishing itself as a brand in the minds of the people. In simple words as far as new product is concerned umbrella branding proves to be more beneficial than another form of marketing.
Disadvantages of Umbrella Branding
Spillover Risk
The biggest disadvantage of umbrella branding is that chances of spillover risk of one product on other products are more in this strategy. Hence for example suppose a company is selling soaps, deodorants, shampoo, and other products under one brand and suppose the company’s soaps are not that good then customers who use company soap will not buy the company’s other products also because it is human nature that once we have a bad experience with one thing than we tend to avoid all things associated with that thing.
All Products get Equal Weight
Another problem with this strategy is that all products get equal weight which in a way is an injustice to those products which are better than other products within the umbrella brand. Hence for example suppose there are 10 students in a class while 3 students score 90 percent in the exam while other students score only 50 percent and if school sees overall percentage of the class then it will be lower which will be injustice to those 3 students who have scored 90 percent in examination, similar is the case with umbrella branding where good as well as bad products get equal weight in branding.
No Diversification
If company has 5 products and company has different brand for different product than company in a way is diversified because if one brand fails than another brand will make sure that company does not suffer loss but in case of umbrella branding since there is only one brand and if that brand fails than the existence of the company will be in jeopardy. In simple words, due to the company selling all products under one brand there is no diversification and hence can prove to be a risky strategy as far as the company is concerned.
As one can see from the above that umbrella branding has advantages as well as disadvantages and that is the reason why any company should carefully read above points and then decide whether to adopt this strategy or not.