The Hindu Business Line : Reinventing umbrella branding

Amid the proliferation of many competitor brands, a few strong umbrella brands with a good value delivery at reasonable prices will help the manufacturers’ brands stand out from the clutter.

Umbrella brands may reign soon

K. R. Senthilvelkumar

The primary use of branding for business firms has seen many changes over the years. It was at first used only for naming products for recognition and subsequently for providing a distinct identity among competitors. The role of branding has moved be yond all this in the recent decades.

Marketers depict brands as a reflection of customers’ own personalities, so that they can relate to their products well. This means branding is no longer for triggering a rational motive in customers to buy quality products, but to arouse emotional associations with products.

However, there are some trends in markets worldwide which demystify the emotional bonding used by large firms for locking in customers with their brands. These also reflect the need for a change in the way brands are built and managed by businesses. Businesses have always enjoyed developing several brands and using them as weapons for launching multi-level attacks on competition. This may even cannibalise their own brands sometimes, but some large business firms have always felt a need for an array of brands with several variants.

Of late, these firms have started questioning the rationale of such practices, with increasing pressure on financial resources. There are also some external trends which force them to rethink their conventional branding practices. These influences are from organised retailing, proliferation of brands and direct selling practices.

Resource constraints

With scarce financial resources, firms cannot afford to allocate huge budgets for building and maintaining several brands. Since 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 target audiences.

The advertiser has to use many broadcast and print vehicle options, with a high level of frequency to create the intended effect for every brand, which ultimately puts a strain on the budget. Hence, companies consider it wise to maintain a minimum number of brands in their portfolio so that they can do justice to each by effectively rationing their investment in promotions.

Companies phase out the brands which have become redundant and retain one or two umbrella brands for every category with necessary variations under each. For instance, Hindustan Unilever Ltd’s (HUL) beverage brands have been grouped under two umbrella brands – Brooke Bond and Lipton; in the fabric wash category, the company has retained only Rin, Surf and Wheel, HUL has relinquished brands such as Sunlight, 501, Dalda and Nihar; it plans to withdraw some more brands and group them under some umbrella brands. HUL’s emphasis is currently on 35 power brands.

Companies have understood the limited scope of several individual brands. In the technology products category, the company name is used as the umbrella brand name for several product variants, differentiated by numerical codes.

This practice is commonly found in categories such as mobile phones, colour televisions, computers, where there are umpteen items in each product line. The company does not have to build a brand each time and the promotion is more cost-effective, as there is a positive rub-off of one promotion over the other.

Emergence of organised retailing

Modern organised retail outlets are fast gaining prominence and huge customer patronage. They provide customers with huge variety, ease of purchase and additional entertainment options, backed up with good service, all under one roof.

Private labels owned by retailers — which were initially introduced in the staple food and ready-to-eat categories — have now entered the space of durables and technology products. This means not only a change in the number of options for customers, but also the way they have seen brands being built and managed. Retailers do not feel the need to develop many brands for various categories because it is the loyalty towards their store name which draws and retains the customers.

Hence it is the umbrella retail store name which will be the brand for 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 needs well. This becomes possible for the retailers as they study and understand their customers’ needs and preferences better than manufacturers, by virtue of their roles. The retailers also enjoy high margins for private labels. One of the primary reasons is that their costs related to promotion are minimal, since it is mostly limited to on-the-spot prominent displays and sales promotion offers. The best promotion for them is by word of mouth. The use of mass media messages, if any, is only for the parent retail brand. To stay ahead of private labels in value delivery, the manufacturers’ brands need to sport competitive prices. The use of some umbrella brands will in a way help them control their promotion costs better. It is also becoming increasingly difficult to find shelf space and prominent displays in modern retail outlets if the company has several brands. Amid the proliferation of many competitor brands, a few strong umbrella brands with a good value delivery at reasonable prices will help the manufacturers’ brands stand out from the clutter and overcome this challenge effectively.

Direct Selling

Marketers have many advantages reaching consumers directly. Besides an opportunity to interact with customers personally and customise the products /services accordingly, the companies also have some flexibility in pricing as middlemen are avoided. What began with industrial products is now being adopted for personal care and household products too. The direct selling industry is growing at a fast pace. Direct selling is achieved through various modes of reach — online, exclusive showrooms and sales force. There are well-known companies such as Dell, the HUL Network and Eureka Forbes which use this route to sell their products. The crucial factor for success here is the ability to establish a large network of sales consultants who can provide good counselling to customers and win them over by practising professional salesmanship.

The success becomes sustainable when the loyal customers become good brand advocates. The role of individual brands has a limited role to play in this as the conventional ways of promotion are not followed for directly marketed brands and they bank on umbrella brands.

Hence the companies that adopt direct marketing will only focus on building umbrella brands which may be based either on the company’s name or each broad product category. The HUL network uses only a couple of umbrella brands for each category in direct selling, such as Ayush and Aviance, whereas companies such as Amway bank on a single umbrella brand for their various products.

Marketers have realised the merits of keeping one or a few umbrella names for their brands, as seen from the examples of some successful companies such as L’Oreal, Godrej and Tata. With the proliferation of brands in the market, a brand with an intense ethical image is more likely to influence a stronger preference among consumers, because a brand’s success is mostly dependant on the credibility factor.

It may be difficult to build this image for each brand of a company, but when a company known for ethical practices and social orientation uses its name as an umbrella brand name for its products, it will derive an instant advantage. Companies that rationalise their brand portfolio with select brand names can build strong brands and also achieve synergies in promotion. The day is not far off when companies have just a few brand names for their various products and services. It may be the reign of umbrella brands soon!

(The writer is Assistant Professor, Jansons School of Business, Coimbatore.)