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Thursday, August 29, 2013

Umbrella Brands and The Future

Back in 1994, Anglo-Dutch consumer products giant Unilever was about to celebrate its 75th anniversary. Prior to that time, Unilever did not have a huge presence with consumers. Like Procter & Gamble, the giant of consumer goods companies, Unilever let their individual products do the talking.

By 1995, all of that had changed. A Unilever logo was stamped of every package that the company sold. Take a look today. If you have Ben & Jerry’s, Breyers, Dove Soap, Lipton, Skippy, Suave, Vaseline, or Hellman’s in the house, you will find the Unilever logo prominently displayed. One person told me it was a way to lure potential investors to their shares. To me, that, at best, is a minor reason. It may be a way to rally the troops across the giant company who work for assorted brands and have their loyalties there. Unilever also culled their product list from 1600 to 400 at the same time so nervous employees needed some encouragement.

This concept where many products either possess or are easily identified as having the same name is known as an Umbrella brand (a few still call it a family brand). Great examples are Johnson & Johnson in baby care products and Colgate in dental care. Food king Nestle is also using their name on a wide variety of packaging.

Why do it? Well, promotion becomes less expensive and easier for products that fall under the umbrella branding. Also, it helps to launch new products as much of the public has already readily accepted the brand image of other entries with the same name. The seven pillars of Integrated Marketing Communications (IMC) can work more smoothly which is the entire point of an IMC program (pillars are Advertising, Promotion, Public Relations, Personal Selling, Database Marketing, Direct Response Marketing, and Publicity). New products are easy to identify by customers. When traveling, this is very helpful as the packaging and umbrella name helps you make a fast decision regardless of the culture you are in. So, umbrella marketing is much easier for the target market to understand.

Is there a downside? Different brands vary in quality and negative publicity for one entry can pull the whole roster of brands down a bit. You are truly only as strong as the weakest link in a chain to trot out a true but old cliche.

For the most part, this sounds great. Great for companies, for sure, as marketing costs almost have to decline over time and the advertising efficiencies will be significant as well. Where does this leave ad agencies and the legacy media such as TV, Radio and magazines? They have to be hurt by it. Talk to an old hand in TV. Right now, some 50% of package goods money spent is on promotion. Their TV spending, especially in spot TV markets, is way down from 15 years ago in many, many categories. As umbrella brands grow, the situation may get tighter. And, agencies don’t make as much money grinding out coupons for a “family of brands” as they would for producing and placing TV spots.

From a business standpoint, it also means that the big players will likely get bigger. By leveraging their brand via the umbrella approach, they can introduce many new products at a very attractive cost. For an upstart with no name identification, the cost of entry may be too great and the new brand could never launch.

Interesting, as Unilever and others implemented the umbrella, the historical leader in brand building, Procter & Gamble (P&G) did not. They like the independence of their brands and have nearly two dozen with a billion dollars in sales each. How many consumers know that Tide, Gillette, Pampers, Dawn, and Ivory all come from the same Cincinnati based company? A few of us in advertising and marketing do as do their shareholders. Yet, virtually no one refers to P&G brands as they do with Colgate or Johnson & Johnson.

During the recent Olympics, P&G ran some beautiful two minute spots thanking Moms around the world for helping their sons and daughters become Olympians. Some said this was the opening salvo in a campaign to embrace the umbrella concept. Others complained that because the P&G name did not show up until the end of each execution, they failed at branding. Since then, I have seen no evidence that they are abandoning their long term approach of building strong independent brands.

Look for more umbrella branding in the years to come as line extensions among major players accelerate and companies get even more ruthless about cutting marketing expenses. Some, such as P&G, may remain apart from the trend and still thrive.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

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