Be careful – shelter can also be shadow

Umbrella branding is increasingly used by companies as a way of boosting consumer confidence and reducing advertising spend. But housing all brands under one roof can alienate customers too. By Caroline Parry

There is no such as thing as a free holiday when it comes to branding. Companies may flock to erect a respected umbrella brand over their lesser products and sub-brands in the hope that they will bask in the rays of positive associations but, just as the weather is changeable, so are attitudes to brands, and companies adopting such a strategy could find the storm clouds are gathering.

Nestlé has long been an exponent of umbrella branding, applying it to its key categories of chocolate, milk and nutrition for the past 12 years.

And it now plans to lend its name to products developed through a joint venture with oral care giant Colgate-Palmolive (MW last week). The Nestlé name will appear alongside that of Colgate on products such as chewing gum, automatically giving credibility within the impulse confectionery market. The joint venture will also benefit from Nestlé’s confectionery distribution.

The first product that will come out of the partnership, due to start next year, is Colgate Dental Gum, which has already been launched in the UK, Ireland and Canada and will be repackaged with dual branding. But neither Nestlé nor Colgate have an established reputation in the mainstream confectionery chewing gum market. They will be going head-on against Wrigley, the best-selling chewing gum brand, and Cadbury, which launched Trebor 24/7 last year (MW November 28, 2002). Consumers may see this use of the Nestlé brand as a step too far.

Abbey National customer propositions director Angus Porter, who has overseen umbrella branding at BT and Masterfoods, says that the act of uniting brands under an umbrella is a difficult strategy. “A good umbrella brand relies on there being a relationship between the sub-brands,” he says. “It is a risk, and if you stretch things too far consumers will tell you.”

Not only that, but consumers can turn away from brands due to negative associations. Baby Milk Action’s protest against the way Nestlé markets its breast milk substitutes in Africa has shown how vulnerable umbrella branding can make the rest of a portfolio.

Even Nestlé brand Perrier, which does not carry the brand name, suffered when comedians at the Edinburgh Fringe boycotted the Perrier Award to support Baby Milk Action’s cause.

Yet the downside of umbrella branding has not put off white goods manufacturer Electrolux. It is planning to build stronger relationships between its key ranges, such as Flymo and Zanussi, by bringing them under the Electrolux umbrella brand, using the strapline “by Electrolux”.

Unilever is also understood to be considering branding its major products with an umbrella corporate logo. The company, which is cutting its product portfolio from 1,600 to 400 during a five-year period ending in 2004, is thought to believe that it can increase customer loyalty to its range of products by promoting the Unilever name as a trustworthy brand.

The ability to leverage the positive associations of one brand on from another is the key benefit of bringing a portfolio under an umbrella brand. But Charles Wright, managing director of branding agency Wolff Olins, points out that a brand has to be meaningful to consumers for umbrella branding to work. He says: “Consumers have to think that a brand stands for something for it to work, and that it means something to their lives.”

Creating a mother brand also helps companies to streamline their marketing. Cadbury is reorganising its chocolate bar range to bring all its chocolate brands under the Dairy Milk umbrella. The move will be supported by a change in recipe so that all the bars use Dairy Milk chocolate (MW May 8). But this also allows Cadbury to focus its marketing budget on the umbrella brand of Dairy Milk solely instead of splitting its spend across numerous bars.

Tom Blackett, group deputy managing chairman at branding consultancy Interbrand, says: “Umbrella branding frees up more money and allows a company to be more flexible while securing its core business.”

Using the name of a trusted mother brand can also give a boost to a sub-brand that has suffered problems. GM Daewoo is a new company set-up by General Motors and Daewoo’s creditors to save the car brand after its former owner went into receivership. General Motors lent its initials to the company, in which it owns a 42 per cent share, in a bid to inspire confidence in the Daewoo brand and reassure customers that it is no longer under threat.

Ian Louden, senior consultant at branding consultancy FutureBrand, agrees that umbrella branding can be used to overcome a brand’s negative associations, but warns that it has to be communicated carefully, otherwise it will only serve to weaken the overall brand.

A company that invests in umbrella branding has to ensure that a negative performance by either the umbrella brand or a sub-brand will not cause a ripple effect throughout the rest of the product portfolio. “Part of the responsibility of being an umbrella brand is that a company has to put its hand up and admit problems very quickly,” says Interbrand’s Blackett. “It needs to be able to act quickly to stop a domino effect.”

For instance, Unilever would not be considering using its name as an umbrella brand if it thought it was still dealing with the fallout from Persil Power, the washing powder that was found to rot clothes.

The communication of umbrella branding can also alert consumers to the fact that a number of their most trusted brands come from one corporation, which could in turn alienate consumers who see the branding exercise as a cynical marketing ploy. FutureBrand’s Louden says: “The problem with umbrella branding, it could be argued, is that it exposes the similarities of some products.”

However if umbrella branding is adopted as a strategy, then Neil Henderson, joint managing director at advertising agency St Luke’s, advises that a brand’s characteristics should be defined and followed to the letter: “People are on the hunt for meaning and brands can fulfil that.”

If companies want to go down the route of putting up an umbrella brand, they will have to keep an eye out for possible storms.

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