Brand extensions often come in the forms of different product category introductions using a common name but emanating from a common expertise pool. This strategy is particularly true in Japanese countries.
Many brands achieve distinction in the form of a unique brand attribute, benefit or feature, which gets uniquely associated with the brand. In such situations the company can work backwards to launch different products, which essentially cash in on this distinction. For example, Parachute may have the expertise of coconut nourishment in customers mind over time. This would give the company Marico the opportunity to launch a variety of products exploiting this distinction.
Brand Image or Prestige:
A brand extension may involve a foray in to unrelated product categories based on a brand’s exclusive image or prestige. Brand exclusivity or prestige bestows great extension opportunities. This is particularly true of designers and artist brands.
This again is of the type ‘One brand all products’. An umbrella brand is a parent brand that appears on a number of products that may each have separate brand images. Firms have a short-run incentive to reduce quality and save costs, as consumers can only observe quality ex post.
Videocon’s range of home appliances – air conditioners, refrigerators, televisions, washing machines, etc. Phillips also has a whole range of home appliances under the brand name Phillips-the mixers, irons, televisions, etc.
Umbrella branding scored well on the dimension of economics. Investing in a single brand is less costly than trying to build a number of brands. By leveraging a common name across a variety of products, the brand distributes its investment. Hence umbrella branding works out to be an economical strategy. Using an umbrella brand to enter into new markets (Tata making a foray into the automobile car market) allows considerable savings. The brand bestows the new product advantages of brand awareness, associations and instant goodwill.
One first explanation for brand extensions is that umbrella branding is a form of economies of scope, as it economizes on the costs of creating a new brand. Brands have an intrinsic value (status or otherwise) and are therefore like a “public good” in the sense that the more products are sold under the same brand the greater the total value created. A different perspective on brand extensions is that, in a world where consumers are uncertain about product characteristics (due to horizontal or vertical differentiation), brands may play an informational role. Umbrella branding may reduce uncertainty about a new product’s attributes, a fact that increases value if consumers are risk averse. Considering these factors it can be said that umbrella branding is a superior strategy when there is a significant overlap between the set of buyers of each of the firm’s products. This result extends the well-known notion that brand extensions and umbrella branding are only successful if there is a good fit between the different products under the same umbrella.
The main danger associated with umbrella branding is that since many products share the common name, a debacle in one product category may influence the products because of shared identity.
Endorsement branding strategy is a modified version of double branding. It makes the product brand name more significant and corporate brand name is relegated to a lesser status. The umbrella brand is made to play an indirect role of passing on certain common generic associations. It is only mentioned as an endorsement to the product brand. By and large, the brand seeks to stand on its own.
The brand gets the endorsement that it belongs to specified company.
Kit Kat gives the signal that it belongs to Nestle and Dairy Milk conveys that it belongs to Cadburys. Cinthol’s communication stresses that it is a Godrej product.
Though these brands enjoy their unique image, somewhere in the image the makers association is also a part. Endorsement branding strikes a balance between umbrella and product branding.
In case of Cadbury’s and Nestle, the brands mentioned above have their own unique position and image. Cadbury’s or Nestle support the brands to the extent that they transfer certain qualities or associations, which enhance customer’s trust. Brands are identified by their own name.