The illusion of choice: 'multi-brands'
by Richard Broadbent
The most valuable attribute of a good brand is its ability to influence consumer choice. In a capitalist free market, the consumer enjoys the luxury of exercising his or her own free will over the vast variety of goods on offer. This power has grown exponentially in recent years as increased access to the internet has armed consumers with more information about products and cheaper prices from competing sources in a virtual market place that extends far further than a person’s local high street or shopping mall. Given such wide choice, brands fight for recognition for fear of being ignored.
Many brands therefore try to influence choice by creating emotional links with consumers to expand their ‘brand experience’. For example, automobile companies tend to create a brand image based on a car’s power, performance and mechanical prowess, whereas banks may persuade potential clients that they are helpful, approachable and user-friendly. The careful fostering of these brand images is the bread and butter business of advertising agencies the world over and can be incredible effective.
There is, however, another riskier, yet potentially far greater yielding strategy to limit consumer choice and increase a company’s collective wealth: multibrands. Multibranding is a concept whereby a company introduces new brands into the market to compete with its own main brand name. Whilst this may seem suicidal, the philosophy is that by controlling the competition one can prevent ‘actual’ competitors from moving into the market place. This prevents potential openings in the market for other businesses to take a share. The classic example of the success of this strategy is Procter & Gamble’s control of the US detergent business. Procter & Gamble own the detergent brands Tide, Gain, Cheer, Bold, Ultra Tide and Tide Free, which together amount to almost two thirds of the $2 billion US detergent market. Procter & Gamble specifically market these brands in a hierarchy, promoting some as premium cleaners and others as cheaper, less powerful alternatives. By doing this they can cater to the needs of all consumers within the detergent market.
There are arguments against the use of a multibrand strategy, not least from those who see it as an abuse of market dominance. The primary disadvantage is that by creating new brands to compete with your own main brand one runs the risk of it losing loyal customers and stripping it of its hard-earned value. This act of ‘cannibalism’ can be extremely harmful to the company in the long run. Furthermore, by creating competing brands, a company must divert valuable resources, (such as research and development, advertising, production and staff). The dilemma is that insufficient investment in the new brands may lead to a portfolio of failures; however a successful brand could risk exhausting resources that could be spent on the already established main brand name.
Clearly this strategy is mostly the preserve of large firms, such as Procter & Gamble, with extensive resources and experience. Getting it wrong could prove disastrous. Yet getting it right may mean the ability to control the market and guide how it develops in the future. Therefore, it is important to weigh up the pros and cons of multibrands in relation to your own brand image and your own market. If your company grows overall, despite some attrition between the brands you own, the strategy may be beneficial. If, however, your brand relies heavily on reliability and exclusivity, the introduction of cheaper alternatives may be too confusing for consumers. Whatever your conclusions, the ability to multibrand remains a powerful tool, not only in the promotion of an existing brand leader and control of a market, but also in the endless search for future successful brands and market share.
