Brand Strategy as a Growth Tool. Opportunities and Challenges
In economic turbulent times that we’ve become used to over the last few years, the pressure on marketing departments to justify their investments and results has increased. More and more people are talking about the Culture of Effectiveness and those in charge of marketing are referred to as Growth Marketing Managers. Now more than ever, companies need results and, in my opinion, one of the main challenges today is to ensure consistency between what the company wants to be and what it does in its search for results.
In parallel, with everything we know about current consumer behaviour (less faithful, better connected, more savvy, more powerful, with higher expectations than the “here and now”, etc.), brand and business go hand-in-hand now more than ever before. If we define the business from the problem (pain) that the company solves, we also define brands from their engagement with the customer’s perceptions. Along these lines, having two or more brands (A, B and C, for
example) for the same product category may be a good measure to implement in order to gain more market share and thus continue to grow.
This option, based on my experience, offers opportunities and challenges for the company and for the marketing teams in particular. Below, we’re going to discuss some of these opportunities and challenges, although there are undoubtedly many others, all of which must be put into context according to the culture, structure and industry the company is in.
Opportunities
Launching a second or third brand is an organic growth strategy that allows the company to sell to new customers (new customers from the current target segment or new segments) through different formulas (sell new experiences, sell in a new way, sell new product properties, etc.). In addition to generating additional business volume, it can also help to change the perception the market has of the company itself (for example, more dynamic, more modern, more
customer-oriented, etc.).
In addition, the presence of several well-known brands on the market that the consumer identifies with the company facilitates and reinforces the acknowledgement of the company as an expert in that field.
On the other hand, in many cases, especially if the company has a winning, strong and highly recognised brand, its bargaining power with the channel not only allows it to gain a greater presence at the point of sale, but also allows it to introduce those secondary brands that, due to their low visibility and volume, would have otherwise been left out. This way, the company manages to offer a large selection of products at the point of sale that it would not have reached without its portfolio of brands, thus expelling the competition.
In some cases, a certain brand with a good, consolidated and trustworthy reputation evolves into an umbrella brand. This enables the new products of the sub-brands to be easily accepted by consumers, reducing the risk of failure and also reducing the costs of launching and introducing them onto the market. The use of an umbrella brand makes sense in many cases, for example, in order to attack a new segment within the same product category or to access a new product category with the same brand. It should be noted, however, that a bad user experience in one of the sub-brands may damage the perceived value of the others and/or the umbrella brand.
On the other hand, in terms of opportunities for company management, methods can be found to improve profitability through the generation of synergies in internal processes and the use of shared resources and capacities (productive, human, economic).
And on the contrary, if resources are available, the existence of differentiated teams by brand can generate healthy internal competition that takes employees out of their comfort zone and challenges and mobilises them to win.
Challenges
One of the main challenges that arises in this scenario is clearly cannibalisation between brands. It is essential for each brand to offers its own and differentiating positioning as well as a well-defined valuable user experience.
Especially in sectors or companies that are very product-oriented, it may so happen that the consumer doesn’t perceive a differentiating value between the products of brand A and B from the same company, apart from the price or packaging that is more or less attractive, for example. The mere fact of having extra productive capacity or high penetration in the channel does not guarantee the success of a second or third brand per se.
In parallel, it is clear that developing, launching and implementing any new brand requires a certain level of investment. In periods of strong pressure in this search for effectiveness and profitability, some companies choose not to implement or to postpone this step.
In the same way that opportunities arise at business management level, there are also challenges that managers must be able to manage. In the marketing department, for example, different brands may share resources, such as Product Managers who are experts in product specifications or communication resources. This scenario can generate major challenges such as ensuring the development of differentiated and profitable products for all brands, as well as confidentiality during development, the need to avoid “cronyism” or internal conflicts of interest. Furthermore, the professionals who work for different brands must be mature
enough in order to guarantee a coherent and differentiating strategy. In my experience, an important challenge for the Head of Marketing is to maintain a coherent brand strategy at a global level and to ensure that all professionals are able to engage with all brands and teams to an equal extent in order to achieve their objectives.
Along these lines, what usually happens internally is that collaborators identify one of the brands as “the good brand”, “the spoiled one”, “the one that’s invested in” versus others that in people’s minds are seen as “the little sister”, “the ugly duckling”, “the one that no one knows what to do with”, … Assuming that the existence of different brands makes sense strategically, it may be a good idea to encourage a certain amount of internal competition and communicate the indicators for decision-making to the team, in order to prevent demotivation or victimisation.
And finally, beyond marketing, we must remember the need to maintain incentive policies for the sales team that are consistent with the company’s brand strategy.
September 2019