The Hindu Business Line : Umbrella brands or independent brands?

THE cost of launching new brands is so high today that it is more sensible to take the umbrella brand route. But an umbrella brand can be limiting when a company wishes to move up the value chain or diversify into a different category, according to experts at the 2nd National FMCG Conclave.

With increasing product parity, the brand has become the point of difference for the consumer, said Mr R. Suresh, COO, NFO MBL India. "Particularly in developing economies, consumers are substance seekers, and the majority of FMCGs are still in the utilitarian phase, so individual brands can be better processed by consumers," he added.

While umbrella branding worked in the 80s and early 90s, when consumer needs were simpler and options were limited, it is a different environment now, said Mr C.K. Venkataraman, Business Head, Titan Industries.

In Titan's case, it started off with a single product category, but when it decided to enter the budget segment, it created Sonata as a sub-brand and evolved it into an independent brand. Similarly, it created Tanishq for jewellery, FasTrack for contemporary watches, and Nebula for luxurious 18k jewellery designed by Rohit Bal. "In each of these cases, the Titan name would not have worked, because each needed a distinct brand concept," Mr Venkataraman added.

However, the high cost of media and advertising, and greater ad clutter and media fragmentation makes reaching consumers more expensive today, said Mr K.B.S. Anand, Vice President (Sales & Marketing), Asian Paints Ltd. "A consumer has to be exposed to a brand repeatedly before he registers it, so it is more economical to build one strong, single brand than spreading your ad budget across 10 different brands," he added.

With an umbrella brand, the number of interactions the consumer has with the brand increase significantly, thereby reinforcing the brand values, and it helps transfer the goodwill to new products and categories, Mr Anand added. But the umbrella brand needs to be focused: It must stand for the same values across the category or range of products, and have the same emotional link.

Generally, consumer durables and services brands have used umbrella branding, while FMCGs have not, but even they have resorted to brand extensions rather than new launches.

Independent brands only make sense when the product clearly has a different proposition from the company brand; like Lexus from Toyota and Swatch from Omega, Mr Anand said. In the case of Asian Paints, there were so many sub-brands, there was a reduction of media weights for advertising each entity. Then, the company shifted to a brand-centric portfolio, which involved a change of logo, product names, packaging and advertising. But the response from the trade and consumers has been positive, overall brand synergy and shop presence have increased, and the advertising is more effective, he added.

"The media environment will make it impossible to create newer brand names and the conditions at the consumer level, as well as the environment, point to a company brand-centric architecture," Mr Anand said. "So unless the product is clearly different in the mind of the consumer, umbrella branding is the way to go."

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