Multibranding: Strategic Genius or Ethical Conundrum?
Choice of products and brands are great for customers. Competition breeds innovation and stabilizes the prices. Moreover, competition stops a particular brand/ business from being a monopoly, which would be detrimental to customers. That said, are you aware that lots of brands that you fiercely defend over ‘competing’ brands are actually owned by the same business/corporation?
Multibranding
Multibranding is a business strategy that is often employed by big businesses to sell the same or similar products under different brand names. For example, are you aware that Thumbs Up is actually owned by Coca Cola? While a die-hard Thumbs Up will often complain and criticize Coca Cola, the sale ultimately benefits the same company the client does not like. Similarly, in Nepal too, there are some businesses like Surya Tobacco that own what on surface looks like competing brands i.e. in this case Shikhar tobacco. While this might look like the businesses are cheating their customers, which is true to an extent, there are varied and justified reasons why brands engage in this particular strategy.
To avoid diluting a brand position
Business survival, by its very nature owing to the capitalist mode of economy, is contingent upon constant growth and expansion. Under our current global economic system, a business won’t be able to survive if it is not constantly pushing new market segments and sales. Therefore, from a purely business perspective, it makes total sense for them to continue growing and expanding to their non-core markets. For example, Toyota is synonymous with mid-range and affordable automobile brands in the US. In fact, the brand is so popular there that Toyota enjoys more than 15 percent of the market share in America. However, the company also wanted to grasp the luxury automobile market share. Therefore, it launched a new brand called Nexus that produces premium luxury cars. The company did this because it wanted to retain the loyalty of its Toyota customers and its brand position as a good mid-range automobile producer brand.
Diversity in product offerings
Whenever one hears the name of Coca Cola, one automatically creates a mental map of a red colored carbonated drink. Imagine if Fanta was named Coca Cola as well. While there are many who love Fanta over Coca Cola, the psychological mapping of both of these brands are different. Coca Cola evokes a sense of family and happiness, while Fanta evokes a sense of summer-time fruity exuberance. Therefore, launching alternate brands helps the business reach out to demographics that are not necessarily swayed by its original product/ brand story.
That said, the strategy of selling similar products under different brands creates confusion and a sense of distrust amongst its, at least well-informed, customers. Also, by saturating the market with one company’s products, small businesses who want to grow with niche products often get disrupted. So, while it makes sense for a business to engage in multibranding strategy especially when a business offers diverse product offerings, it is a bit dishonest when a business sells the same product under different brand names in order to create an illusion of choice for customers. While there is nothing illegal about this, consumers need to be aware of what and who they are buying their products/ services from.
