Can a company have too many brands?

img-house

In my previous job as Marketing Specialist for a mid-sized company, which I will call Company X, I encountered a situation that was rather odd to me – the number of brands within one company. The brand portfolio was enormous, which was not only confusing to our customers, our employees as well.

A typical scenario for Company X was as follows – there was the name of the actual company (Company X) which was a brand, several divisions within Company X that all had brands, then within the divisions there were the actual customer facing product units that all had their own brands. These customer facing units within the divisions were often added to the portfolio through an acquisition, so they come with their original branding that would then get updated by Company X, and the new branding would often hold elements of the old branding (and updating the old to new branding would take years – so there was effectively 2 brands during this long transition).

At times, an acquisition would produce the exact same product as a current Company X unit, so instead of merging the two together, Company X would create a third brand that the two similar brands would fall under. In total, with all the creation of brands, there were over 40 various brands floating around, some that actually produced products and employed people, and others that served as umbrella brands to link similar divisions together. I found myself asking which logo we should use on various marketing pieces almost every day. The Marketing Manager may want the Company X logo, the division logo, the umbrella brand logo, or the logo of the actual product unit, and sometimes she wanted all 4 on the marketing piece.

To go a step further, there was also a desire to cross sell when the audience for a product was the same for another, so she would want to put another product unit’s logo on the marketing piece as well, which created confusion amongst customers. Consequently, cross selling efforts often failed and there was a lack of brand loyalty. The branding often seemed out of control, and here’s why: there was no strategy behind branding decisions.

BrandArchitecture_Models

According to Mark Ritson, an industry expert on branding, when brand architecture is a mess, it leads to sales force conflicts, cannibalization, and the marketing consequently appears weak because it is spread too thin (2015). He also points out that profitability will suffer and an organization will hurt from the confusion internally and contradictions, which I witnessed at Company X firsthand. When employees lose sight of the corporate brand and what it is about, then they also forget the larger vision of what the company is striving to achieve (Gulsvig, 2014). Additionally, brands are expensive to maintain and need their own marketing and communications plan and strategy to be successful (Gulsvig, 2014). With a large brand portfolio comes the cost to maintain it, which many companies can’t afford, and as a result the sub-brands will suffer from a lack of support (Gulsvig, 2014). Another negative to having multiple brands is that customer may become loyal to a sub-brand, not the overall line of products the company offers, and they miss out on cross selling opportunities.

Company X’s solution to brand confusion and cross selling was to come up with a new umbrella brand, which means new business cards, a new website to create and maintain, updating existing flyers to include the new logo, the list was endless. In a case study at Procter & Gamble and Unilever, they went from a combined 2,000 brands to a combination of 30 brands where they make the majority of their profits (Ritson). Marketing can be more impactful and strategically focused when it is narrowed down, which in turn will increase profits. So the answer to the question – Can a company have too many brands? – is a resounding YES!

naming_archit

References

Gulsvig, K. (2014, March 5). Bolstering the master brand: streamline brand architecture is key. BrandingBusiness. Retrieved from: http://www.brandingbusiness.com/blogs/bolstering-the-master-brand-streamlined-brand-architecture-is-key

Ritson, M. (2015, Feb. 4). Why too many brands threaten the strategy. Branding Strategy Insider. Retrieved from: http://www.brandingstrategyinsider.com/2015/02/why-too-many-brands-threaten-the-strategy.html#.VaLSak2h1ow

This entry was posted in Uncategorized. Bookmark the permalink.

3 Responses to Can a company have too many brands?

  1. Lisa says:

    Hi. I really appreciate your post as I have been part of enforcing the brand architecture at the company where I work in my role as marketing communications manager. Many times the marketing team do not want to follow the architecture guidelines. It is sometimes hard to have them understand the issues you just explained. In addition, through acquisitions I have had to be involved in reconciling product sales to determine which product is maintained. In particular, we have struggled with manufacturing capacity and so this has driven a focus on eliminating competing products that are made on the same lines. Thanks.
    Lisa

  2. Jennifer says:

    Hi,

    Thank you so much for posting this! My organization (a B2B) prides itself on not requiring any information from customers in order to create accounts. Fortunately and unfortunately, I just happen to work in the department that gets to do all the research to determine not only whether we’ll give new companies that buy from us an account, but also what type of account we’re going to give them. We are a very conservative company, so most customers are assigned as “inconsequential” and require very little research. But we tend to do huge business with aerospace, research, and manufacturing/distribution; in fact, many of the brands you listed above are our best “national” accounts. These are the companies that give us the most trouble.

    When we receive a new order, we have only the company name and address where we’re shipping an order (we don’t even require billing info!), and the buyer’s email address. From there, we do some slick web sleuthing to piece together the line of business. If we find an existing account on file at the same address or with a similar company name, we then have to figure out of the company name changed, if there was a change of ownership, if it’s a sister company, if it’s a product line, etc. etc. etc. And if it’s any of these, then we have to figure out whether we need to create a whole new account or if we can just update the existing one. There are times we have to break protocol and call the customer to have them explain it to us because it’s too messy.

    Sometimes we get it wrong and then we end up having to reconcile the invoices. Sometimes the buyer gets it wrong and then we really have trouble. We have one company that split off into three separate brands recently and all of the buyers give us just the old company name. Meanwhile the customer thinks we’re dropping the ball. It’s just a bad situation, and a constant source of frustration for my department. I can see why customers segment themselves into seemingly countless brands (many of which come through acquisitions), but based on my experience I wholeheartedly agree that a company can have too many brands.

    Thanks for the insightful post!

    Jen

  3. Valerie says:

    Hi Renna,

    I had a similar experience with a company that I worked for! It was very confusing to explain to people that yes, we are the same company that sells X, Y and Z. On the whole concept of cross-selling we had many brands that had the same customers. When we would try to cross-sell it would often come up in contract negotiations for the other service and how we should just include it for free. It seems like there needs to be product differentiation that clearly outlines the boundaries of each product but also ties that build on the overall brand equity. The balance is somewhere!!