Did you know that PepsiCo owns Quaker Oats? Maybe, maybe not. Now, did you know that PepsiCo bought Quaker Oats for $13.8 billion largely because they wanted the Gatorade brand? Even less likely…unless you are a close follower of mergers and acquisitions.
If you look at many major brands, you would scratch your head at the range of brand categories under their umbrella. It often seems strange to most people that companies like P&G, PepsiCo and Quaker Oats own such diverse-brand portfolios; however, it is in fact a hallmark of a well-executed multi-brand strategy when companies merge or one acquires the other and maintains the individual brand identities.
The cost to acquire, and fear of not being able to pull it off well, may even be the reason many companies decide not to pursue this type of approach. But what powerhouses like PepsiCo, P&G and General Mills know is that diversifying your brand portfolio offers numerous benefits:
1. Growing Your Customer Base
By offering a range of brands, a company covers more of the market by meeting a variety of consumer needs. This creates an opportunity for different tiers of brands—from budget to premium—appealing to various price points. Plus, want to know a little industry secret? Multi-brand strategies allow businesses to cater to brand switchers, those who switch brands, but probably don’t even realize they’re owned by the same company.
2. Diversifying Risk
Managing multiple brands spreads risk across different brands and market segments, protecting the overall business if one brand suffers damaging hits to their reputation.
3. Increasing Innovation and Flexibility
Companies can use different brands to experiment with new ideas, products and a new marketing strategy without risking the reputation of their core brands. In addition, they can quickly respond to market trends, introducing new products or services amid emerging trends. It’s also much faster to go-to-market with an acquired brand than to build it out from scratch.
4. Finding Success with Strategy and Focus
With benefits like these, it’s easy to see why Fortune 500 companies are turning to brand diversification. But it’s absolutely crucial the marketing is handled strategically in order to succeed, or they risk brand cannibalization or dilution.
Here’s a look at the top five tips to power your multi-brand marketing strategy:
1. Clearly Define Your Brand Marketing Strategy
It’s imperative you establish your overall goals and how individual brands play into them. Then, you can ensure your marketing and digital strategy align to them. Defining target markets within the portfolio is a great place to start.
2. Maintain Clear Brand Distinction
Considering different brands target different audiences, your strategy for each one needs to be different as well. What could work for one brand may not work for the next. With individual goals as the basis, you can create a brand identity system for each brand for how you express your brand visually and verbally across different touchpoints and channels. This includes logo, color, typography, imagery, tone of voice and personality.
Maintaining differentiation is key to avoiding cannibalization when brands compete with—rather than complement—one another.
3. Align Your Brand Values and Vision
Even with multiple brands, you still need to have a clear and consistent brand purpose, vision and values that tie everything together. Your brand values and vision should be aligned across your umbrella brand and those underneath it.
You need to ensure proper communication to all internal and external stakeholders. This cohesive approach not only guides your top-down decision-making, but also creates a strong culture, fosters loyalty and differentiates yourself from your competitors.
4. Establish KPIs
Make sure objectives are clear and achievable with relevant KPIs for each brand. KPIs should be aligned with the overall business goals. KPIs give you a way to objectively measure and compare the performance of different brands within your portfolio, allocating resources as necessary and making data-driven decisions about investments. Regularly reviewing and adjusting KPIs as business needs evolve not only allows business to share best practices across the portfolio, but also adapt to market changes.
5. Cross-promote Your Brands
Effective cross-promotion between brands through integrated marketing helps maximize reach, driving growth across the portfolio. Identify opportunities with similar brands. Leverage shared marketing channels, such as featuring products on each brand’s social media. Create joint campaigns where able like running a social media giveaway with various products, or hosting joint events. Cross-promotion is so successful because it uses existing brand loyalty to get in front of a new demographic.
Real-life Example: Integrated Marketing Lessons from Nestlé
Nestlé has successfully maintained a multi-brand strategy for what’s now over 2,000 brands from coffee to seasonings to pet foods. They maintain a diversified portfolio, in both geography and category, offering solutions for people of all life stages, and this has contributed to their sustainable growth. Here’s a look at just some of the ways in which Nestlé has been able to build such a large portfolio:
- Diversify to lower risk: When a harmful ingredient was detected in one product of their sub-brand Maggi, it was banned in India. Nestlé revamped Maggi adding several more products to its portfolio. This horizontal product diversification strategy is an extremely useful tool whenever trouble arises.
- Cross-promote to increase awareness: Nestlé regularly employs a product mix strategy with buy-one-get-one price promotions, special offers, and giveaways. This is a great way to increase the visibility of their low-growth products and make the premium items appear affordable.
- Maintain a consistent purpose: For the past 150+ years, Nestlé has stuck to their original mission – Good Food, Food Life. Dating all the way to the 19th century when there was a rise in infant deaths, Henri Nestlé, a pharmacist, introduced nutrition-boosting baby formula. Fast forward to today, and you can still find these words on their website: “We want to contribute to people’s health through nutrition and aim to help people of all ages live better.”
What we can learn from the Nestlés and PepsiCos of the world is that a dynamic multi-brand strategy can have powerful effects on the future of the company. What sets companies apart is their ability to carefully plan and execute. With proper marketing, a multi-brand strategy can help companies maximize market share, meet diverse customer needs and drive overall growth without diluting their brands’ value or competing with each other.
To build a custom integrated marketing plan for your business, speak to one of our experts today.