Published by MBA Skool Team, Last Updated: May 12, 2019
What is Umbrella Brand?
An umbrella brand or a family brand is a brand which is used across a range of product categories i.e. a set of related but distinct products. Umbrella brand products are, by and large, similar to each other in terms of function and features, lack differentiated symbols and are also named under the same brand. Umbrella branding is usually done by brands that are recognizable by the customers and distinct in their own right. There are numerous advantages of using umbrella brand like increasing marketability, giving positioning to a product and reducing the cost of creation of a new brand. Umbrella branding is very common across sectors like FMCG, consumer electronics etc.
Importance of Umbrella Brands
The idea behind the practice of umbrella branding boils down to the belief that when a customer associates a certain standard of quality with a brand, he or she assumes that the same quality is to be expected from other products that are named under the same brand. Hence a single brand might be able to benefit from several similar products, just on the basis of its brand equity. It increases the brand loyalty among customers. Umbrella branding, also known as Family Branding, is a term used for the practice by brands introducing two or three similar products to create more sales volume. It is no secret that in this age and time, the market for any product is enormously competitive. With new products popping up every now and then, with cheaper prices and better features, the brands are always at their toes to come up with new ideas that help them gain market share.
If a brand is known for high quality another product under the same umbrella brand is also perceived in a similar manner. However one big disadvantage of umbrella brand is that the failure of one product may spoil the image of all the other products under the umbrella brand.
Advantages of Umbrella Branding
Some advantages and pros of having umbrella brands are:
1. This practice successfully lessens the advertising cost for newer products because the new products can simply gain momentum due to existing brand recognition.
2. The products are already more favoured by existing customers of the brand due to customer loyalty.
3. The practice also saves money by advertising not fixating on a single product they sell, but by building the brand in general.
4. The success of one product under an umbrella brand usually means a better success rate for other products by the same brand.
Disadvantages of Umbrella Branding
Certain drawbacks are:
1. If a brand does not already enjoy an enviable favour from its customers over other brands, any newer products under its belt might fail, too.
2. Just like the success of one product leads to the success of another, similarly, failure of one product might also generate distrust among customers for the particular brand. This might create negative brand equity.
3. This practice only works when the products under an umbrella brand are related to each other. For example, Apple sells electronics, Levi’s sells clothes, and Frito-Lay sells chips. If these companies were to venture into entirely new markets, they might not benefit from existing brand recognition at all.
4. Introduction of new products might result in competition among the new products and the already existing products, thus reducing sales of either one of them.
Examples of Umbrella Brands
Examples of companies adopting umbrella branding strategies are:
1. Kellogg’s is the world’s most renowned brand when it comes to cereal. It is to be noted that the brand doesn’t just sell one kind of cereal, it sells several as a part of umbrella branding strategy. While its cornflakes might be the most well-known one, it also has under its hood Special K, which is meant to be a healthier option. The brand also sells Chocos, a kind of chocolate flavoured rice crispies, Raisin Bran is wheat flakes with raisins, Krave is rice crispies filled with flavoured cream: all of these products are similar in purpose and function, they are all breakfast food.
2. For Example Apple is an umbrella brand for a set of distinct but related products like the IPhone, IPad, Mac Book & other accessories. In the FMCG sector Nivea acts as another Umbrella brand with a wide array of products like cream, soap, powder, deodorant etc.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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