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Exploring The Value Of Sub Brands

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Exploring The Value Of Sub Brands

Regular readers of Branding Strategy Insider know we welcome and answer marketing questions of all types. Today, Christine, a VP of Marketing in Detroit writes…

“I was wondering if sub-brands are typically valuable for a company or if their value is dubious?”

Interesting brand architecture question, Christine. If a sub-brand is designed to reach a market or market segment that the parent brand could not reach by itself, it is worth it. That is the primary reason for sub-brands from my perspective, to make the parent brand more relevant to a new or different market or market segment.  Having said that, if the parent brand itself could enter that market or market segment with credibility and no negative repercussions, it should do so without the aid of a sub-brand, primarily because it is simpler and more cost-effective to use one brand instead of two. There is another reason companies have sub-brands — they have grown through mergers or acquisitions. The sub-brands are often previously acquired brands. In that instance, it is important to retain the sub-brand if it has high awareness and positive associations in the product/service categories in which it operates. If it has neither high awareness nor positive associations, it is a candidate for rationalization. That is, it could cease to exist as a separate entity.

There is another reason companies have separate sub-brands — because there is a culture of creating new brands and sub-brands associated with organizational or legal entities within the enterprise regardless of the market need for such brands and sub-brands. This is an all too common occurrence but one that should be avoided not only for cost reasons but also for the sake of marketplace understanding. Finally, some organizations deliberately create different sub-brands for different customer segments or customer need-segments. Automobile companies often do this. The trick with that is to make sure the sub-brands are very focused and not overlapping. If they are overlapping in the needs that they meet or the customers to which they appeal, it becomes less clear what each sub-brand stands for and how that is different than what the other sub-brands stand for, creating significant customer confusion.

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