For a marketer with a multi-brand portfolio, keep your brands separate from one another.
Follow the Proctor & Gamble approach; keep your brand separate from one another. In just the laundry category alone, P&G markets six brands of laundry detergent in the U.S.: Bold, Cheer, Dreft, Era, Gain, and – the category leader -- Tide. Each of these brands has its own unique positioning and is not tied to the parent company. This allows P&G to create different values for different segments of the market.
A classic example of ignoring this guide is the old General Motors. Among the many problems that the old GM created for itself, its “badge engineering” diminished the difference between their brands. Why should someone buy a Buick when they can get the same car with minor trim differences at a lower price from their Chevrolet dealer? Badge engineering at GM reached levels of absurdity in the early 1980’s when all five divisions of GM attempted to market their J body car. The same basic car was marketed as the:
Chevrolet Cavalier
Pontiac Sunbird
Oldsmobile Firenza
Buick Skylark
Cadillac Cimarron
In addition to products that were mostly the same from brand to brand, the old GM loved corporate advertising in which the lumped together their brands with tag – Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac. Is it any surprise that the old GM brands ended up with not much to distinguish one brand from another? One brand cannibalized another because they were appealing to the same kind of customer. This led to the demise of the Pontiac and Oldsmobile brands. Hopefully, the new GM will do a better job of keeping their remaining brands separate from one another.
In product categories where consumers can’t tell the difference in brands by looking at the physical product, it’s vitally important to keep the brands separate. If customers can’t tell the quality difference in brands by looking at the physical product (which is the case in many, if not most, product categories), they will default to the low-priced brand thinking that all of the brands are the same. Most package goods categories (fast moving consumer goods, for the Brits) are examples of product categories where consumers can’t tell the quality difference in brands by looking at the physical product. I’ve made my living in brand marketing; I believe that brands deliver value to their target customers; and I usually buy brands (especially clients’ brands). However, in some product categories I can’t tell the difference between branded products and private label products, and the price difference is so great that I default to the private label product. Club soda is an example. The branded products, Canada Dry and Schweppes, retail for over $1 for a one liter bottle; the store’s private brand usually retail for one, two, or three bottles for something over the same $1. Do the branded club sodas have value for me? Yes. Is there sufficient value for me to justify paying a price 100% or 200% or 300% higher than the store brand? No.
Most marketers offer their various brands at different price points even if the costs associated with making and marketing each brand are roughly the same. Some customers in some market segments are willing to pay more to obtain the value of the brand. Those brands for which consumers are paying more generally create a higher profit margin for the marketer. If customers became aware that a lower priced brand was made by the same company that made their preferred, higher-priced brand, they would look at the lower-priced brand, look at higher-priced brand, and probably buy the lower-priced alternative because the physical products look about the same to them. The marketer would end up trading high margin business for low margin business.
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