Umbrella Branding Strategy | Merits | Demerits

Understanding Umbrella Branding

A common name is leveraged across a variety of products. Companies of the East found favor with Umbrella branding. Particularly Japanese and Korean companies favored umbrella branding. LG, the Korean company uses its name for Microwave ovens, Refrigerators, Computer monitors, Television sets, DVD players, air conditioners etc. Hyundai stretched its business interest in areas such as microprocessors, telecommunication satellites, cars, commercial vehicles, subways, construction projects, turnkey engineering etc. Thus, diverse products come under common banner. Hyundai, Philips, GE, Canon, Tata, Bajaj, Bharti etc., follow umbrella branding.

Merits of Umbrella Branding strategy

1. Umbrella branding works out to be an economical strategy. Investing in a single brand is less costly than building a number of brands. The brand distributes its investment over a number of products.

2. Once an umbrella brand becomes popular it bestows the new products brand awareness and instant goodwill. New products inherit all the advantages of the umbrella name.

3. In the days of brand proliferation, umbrella branding makes more sense. Simply by sheltering under the umbrella brand, new products get easy recognition.

Demerits of umbrella branding strategy

1. Umbrella brand may not succeed in a niche market where specialization is needed. Each of fragmented market represents its own unique structure of needs and buyer preference. An umbrella brander finds it difficult to cater to the unique needs. He is a generalist who can satisfy the general needs in the market place.

2. Many products share the common name. So, the failure of one product may affect the others sheltered under the umbrella.

3. Companies following umbrella branding must be cautious. It is said that umbrella brands are difficult to stretch vertically. For example, prestige, brands (like Omega) in the upper segment cannot easily stretch to lower end. Vertical extensions are likely to damage the core brand. However horizontal extensions are less harmful.

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