Before introducing a new product or service offering, entering a new market or targeting a new segment of existing customers, it’s worth considering the effect it will have on the existing brand.
It’s highly possible that an existing brand will be impacted, possibly adversely, by the introduction of a new offering under the same brand. For example a B2B brand entering a B2C market could be potentially disruptive to existing relationships, especially if existing customers or clients effectively become competitors overnight. Alternatively it may be that the existing brand is well-known and the new activities would confuse, or worse alienate, customers. A common concern for well-established brands is the possibility that a new product or service could fail, with the negative connotations being attributed to the parent brand.
A new brand or a sub-brand could offer a more effective route, providing there is a clear distinction between the new and existing products or services, value propositions and/or target market segments.
There are a lot of opportunities that a new brand creates, such as the ability to enter a particular market with a stronger appeal than the existing brand would achieve, or allowing for a premium offer to be targeted at a specific segment of an existing market.
If a separate brand is seen to be an option, consideration must be given to the new offering’s relationship to, and interaction with, the parent brand. This relationship can be sub-divided into four categories which we’ve outlined below along with examples of each in practice:
Sub-brands require substantial and sustained investment. Despite the link to the existing brand, sub-brands develop their own values, attributes and require separate management. This ongoing investment will normally prove worthwhile if a sub-brand is designed to reach a market or market segment that the parent brand can not reach by itself. Sub-brands often spring from products or services that were first, or leaders in, their field. DoubleClick by Google, is a sub-brand that had sufficient industry recognition and customer investment to be retained as a sub-brand by Google following the acquisition of the company. The more specialised the product or service and the larger the market for that product or service, the easier and more effective it is to build a distinct brand identity.
Most commonly used when products or services share no commonalities to the consumer, customer or client (though their may be economies of scale/efficiencies behind the scenes for the provider). Alternatively, ’Standalone’ brands can be used where the brands will be in conflict in the market place, as often seen in large FMCG organisations. Soap powders for example, Proctor & Gamble own both Ariel and Daz, may seem to be competitor brands to the public. While marketing efforts target different market segments, conveying different brand values, the relationship is never explicitly spelled out to the customer.
A brand extension is effective where in the eyes of the consumer, customer, or clients it leverages the parent brand’s attributes and benefits but has a focused feature set, territorial restriction, or interaction type. Often names will be descriptive for example: Virgin with Virgin Money, Virgin Mobile, Virgin Active. Brand extensions allow new services, new revenue streams or business diversification to be introduced while capitalising on the existing understanding and awareness of parent brand. This is most effective where the existing brand is established and seen in a predominately positive light, with distinctive and differentiated attributes.
Not a brand
If the primary audience for the product or service is aligned with the existing customer base and the product or service fits within the existing company promise, commitment and brand strategy it may be more beneficial to launch with a product or service name. This provides financial and organisational efficiencies and the effectiveness of a single, unified message; avoiding confusion or dilution of the overarching brand. Given the challenges and investment associated with generating new brands this can be a better option, though a brand extension should be considered if the level of focus is such that it compliments, rather than competes with, the parent messaging.
Sub-brand: possesses its own values and attributes and requires separate management
Standalone brand: few commonalities, competition, or target specific markets
Brand extension: leverages parent brand attributes but with a specific focus
Not a brand: new product or service fits within existing brand strategy