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Like a Virgin – or a Unilever: Is one brand ever enough?

Wednesday, 23 January 2013 | By Taskmaster

taskmasterWhen you’re planning a business, it’s natural to spend a lot of time thinking about how you’re going to brand your first product. But what about your second product?

 

On the one hand, some companies choose to maintain a single umbrella brand over their entire product line. The classic example here is Richard Branson’s Virgin Group.

 

There’s Virgin Australia, Virgin Media, Virgin Money, Virgin Mobile, Virgin Cola, Virgin Games, Virgin Brides and the list goes on. Many products in many product categories, all run under the same group-wide brand.

 

At the other end of the spectrum is a company like Unilever. You might not have heard of them, but you probably have heard of Dove, Flora, Lipton, Lux, Lynx, Omo, Rexona, Surf, Sunsilk, Becel, Ben & Jerry's, Continental, I Can't Believe It's Not Butter, Streets, Paddle Pops or Marmite.

 

That’s the Reader’s Digest version of their brand list, by the way. There’s literally a whole Wikipedia page filled with all the brands that Unilever own or operate.

 

Both companies sell a diversified range of products across a large number of categories, demographics, market segments, price points and countries. The difference is the brand strategy each company uses to do it.

 

So which one is right for you? Here are some points to consider.

 

Each time Richard Branson launches a new product or service, he doesn’t need to waste money re-educating the market on what the ‘Virgin’ brand represents; instead he just needs to let the market know that Virgin now sells garden gnomes (or whatever other business he’s tackling this week). People who are already satisfied Virgin customers can be tempted to try the new products without Branson needing to build brand awareness for a new brand from scratch.

 

There is a downside to this. Your Virgin Mobile is playing up. How does that make you feel about flying with Virgin?

 

On the other hand, if you’re a Unilever customer who can believe it’s not butter, unless you go to the extent of printing off Unilever’s entire product catalogue, you are just as likely to buy the rest of their product line the next time you're in the supermarket. Separate brands can quarantine brand damage.

 

The other risk you face with a single brand is brand dilution. If you have a high-end brand, launching a low-cost product line can pull your entire brand downmarket. Look no further than Billabong’s attempts to sell products through discount variety stores to see where that strategy can lead to.

 

Another thing to consider is what would happen if you decided to sell part of your business. The price you receive is probably going to depend on being able to sell your existing brand. If each product line has its own brand, this is no big issue.

 

On the other hand, when Dick Smith decided to sell Dick Smith Electronics to Woolworths during the 1980s, it meant licencing the rights to his brand to the retail giant as part of the deal. Down the road, Dick Smith tried to position his brand as the patriotic all-Australian purveyor of Australian made foods, while Smith himself made a political argument for large cuts to immigration.

 

And at the same time Dick Smith Foods was hanging a flag in its window, Dick Smith Electronics (under Woolworths) was busy outsourcing its product lines to China. Whoops!

 

So is your company going to be like a Virgin? Or is a multi-brand strategy more your style? It’s worth taking some time to think about.

 

Get it done – today!