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The Challenges of Multi-Brand Marketing

Consumers are loyal to brands, and the trust they have in brands allows customers to shop with fewer anxieties and make decisions quicker. To take advantage of brand loyalty, companies can release multiple products under the same brand name. That way, a single product with brand recognition can lead to easier product launches for new ones.

Multi-brand marketing is when a company has several products under the same brand. Companies may do this for various reasons, including:

Catering to New Segments of the Market

If a company recognizes an untapped market, it can leverage its brand to fill the new market’s demand. For example, a bread maker can use its brand to launch buns.

To Eat Into Competitors’ Market Share

The product doesn’t have to be profitable necessarily; its objective would be to keep the competition on the defensive. Retailers use this tactic often.

Although there are synergy benefits to multi-brand marketing, it also comes with some headwinds, such as:

  1. Customer Distrust 

If a company markets multiple brands too similarly, customers might feel a sense of distrust toward it. Messaging is important, so it waters the brand down if there is no distinction between the products. 

For example, if the company’s primary product targets luxury consumers and attempts to enter the cost-conscious market under the same brand, both segments can face a backlash. Old customers will feel the luxury appeal wane, while the new target market will hesitate to embrace what they know as a luxury brand.

Tying all a company’s products to a single brand also increases risk contagion. If one product suffers a mishap, it can affect the other products. For example, if a canned goods supplier says its canned tomatoes are on recall for health risks, customers will look at other canned products with suspicion. 

  1. Segmented Audience

The primary purpose of multi-brand marketing is to cater to different market segments. A market segment is a group of customers with similar characteristics like demographics, income, or location. 

Serving each segment audience will require a different message, communication channels, and team. The duplication of services will raise marketing costs for the company and reduce margins. If the company chooses to centralize marketing efforts, it may struggle to create an authentic, tailored message for each segment. 

  1. Cannibalization 

Sometimes when you introduce a new brand into the market, it may do so well that it results in lower sales for your older, more established brands or cannibalization. 

Market cannibalization is when the sales increase in a new product results in the sales decrease of your other products. Cannibalization can easily occur if the two products are similar and share the same customer base. 

This is an undesirable situation because your business is not increasing market share, sales or profits. Instead, the company will have increased its production costs of manufacturing and managing multiple products without increasing revenue, which will drag its profitability.

Successful Multi-Branding

Although multi-brand marketing has its challenges, a company can use it effectively. Using branding best practices, a company can build a successful marketing strategy by:

  1. Segment the Market Into Target Bases

Knowing your target market will make the marketing message clearer and help you choose the most effective communication channels.

  1. Have a Complete Understanding of Your Target Base

Knowing the wants and needs of each brand’s audience will give you insights into the motivations which you can leverage to make sales.

  1. Marketing Messages Starts a Relationship

That’s why you should create impactful and memorable marketing campaigns that will stand the test of time. Not only will they stick with the customer, but a great campaign is easier to share or even make viral. Great campaigns also have replay value, which means lower customer acquisition costs in the future. 

  1. Get a Helping Hand

Rather than try to do everything yourself, hire an ad agency. You can focus more on delivering the product by outsourcing the marketing and letting a qualified, dedicated, well-resourced team handle it for you.

Manage Your Multiple Brands Effectively 

Every company wants to dominate its market through multiple products. If there is no clear strategy, the company can end up losing ground or incurring high costs. If you have multiple brands, invest in your marketing efforts to avoid pitfalls and dominate the market. 

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