Multi Brand Strategy To Help You Systematically Expand Your Brand Reach

If you think a multi brand strategy is exclusive to industry behemoths, think again. Irrespective of your category or company size, you need to strategize your presence in a way that adds maximum value to your brand. And that’s what helps you thrive in a hyper-competitive market.

Maintaining a singular brand identity can be inadequate while delivering to a wider audience. Here, a multi brand strategy can be a perfect solution. But there might come challenges such as brand cannibalization, which may hinder you from gaining a competitive edge.

It is widely adopted by industry giants such as Coca-Cola, P&G, and Nestle, but only when you implement it correctly can it yield results.

In this article, we will take a look at what is multi branding strategy, why this strategy can help you acquire the market, the advantages and disadvantages of a multi brand strategy, how to create a multi brand strategy, and understand the best market trends.

Ready to make diversity your strong suit? Let’s take a look at how a multi brand strategy can lead you to sustainable growth.

What is multi brand strategy?

A multi brand strategy is an advanced business approach where a company operates as a parent brand promotes several sub-brands and operates together as a larger business unit. It serves a bigger goal of capturing different layers of a single market.

For example, within the home and personal care category, Procter & Gamble (P&G) fosters several hair care brands such as Head & Shoulders, Herbal Essence, Panteen and more.

The aim is to diversify the product offerings in a way that appeals to a variety of consumer requirements. As a result, it maximizes market coverage and minimizes competitive vulnerabilities.

While a singular brand strategy fails to take care of the all-encompassing market requirements due to legitimate limitations, a multi brand strategy can help you create several brands with different personas that can effectively tap into different affordability levels, product offerings, and USPs. So when one brand via various sub brands can cater to several market needs and excel in their offerings, you can potentially increase your market share.

What is an example of a multi-brand approach?

We know L’Oréal as a super successful international (French-origin) cosmetic company. They cater to a massive segment of consumers with different preferences, including drugstore cosmetics, professional cosmetics, luxury cosmetics, and dermatology.

This may come to you as a surprise, but 36 global brands, including Maybelline New York, L’Oréal Paris, Garnier, NYX, Kiehl’s, Lancôme, Giorgio Armani Beauty, Yves Saint Laurent Beauté, and Redken, all come under the same umbrella of the parent brand — L’Oréal.

L’Oréal is one of the best multi brand strategy examples in the beauty and personal care industry. Why? Let us explain.

While Redken is known as a classic salon-quality haircare brand, Garnier offers affordable hair care products to the masses.

Adding to the same contrast, we know of Giorgio Armani Beauty, Lancôme, and Yves Saint Laurent Beauté as eminent luxury cosmetics brands, being a sub-brand of the same L’Oréal parent brand, Maybelline New York offers one of the most affordable cosmetics products worldwide.

NYX Cosmetics is recognized as a leading professional makeup brand, on the contrary, L’Oréal Paris markets itself as a mass-market option— both belonging to the same parent brand.

While Garnier offers the most affordable skincare products with a price range starting as low as $10 for an ‘anti-wrinkle cream’, Kiehl’s, belonging to the same parent brand, offers premium quality anti-aging cream for $76.

In conclusion, the same contrast that makes the sub-brands so diverse is the same reason that enables the parent brand L’Oréal to cater to such a massive audience, solidifying its position as the largest cosmetic and personal care brand globally.

Key features of a multi brand strategy

Let’s take a look at the top features of the multi brand strategy.

1. Audience segmentation

A multi-brand approach is designed to tap into the variety of needs a broader market segment might have via various brands and their differing personas, products, and price points.

For example,

A high school student new to makeup may go for Maybelline. On the other hand, another high school student with a knack for theatrical makeup may reach out to NYX for HD makeup products that give a professional camera-ready output.

The same category of audience has different goals and a preference for different brands, but ultimately, the customers of a single parent brand— L’Oréal.

2. Cannibalization management

Brand cannibalization is a serious issue that an ambitious multi brand strategy may face. The sub-brands aim at a single category, yet different sub-categories may come up with similar products, which ultimately affects the sales of the parent brand. Minimal overlapping is, however, expected, but it should not stir up internal competition.

3. Operations and shared resources

Although the sub-brands act as separate customer-facing identities, backend resources such as manufacturing units, storage, supply chain distribution, etc., are the resources shared among them to manage and minimize production costs. You cannot overlook this as one of the benefits of multi brand strategy.

4. Adaptability to changing market

A multi brand strategy requires cycles of revision to suit the needs of the changing market requirements. As trends evolve, the sub-brands are required to add varieties to their product portfolio. This adaptability helps them stay relevant in the changing market. And for brands, they have multiple brands to cater to this variety of changing needs.

We have seen L’Oréal’s leap from doing animal testing to gradually becoming an animal cruelty-free brand in a market where people are making a conscious shift to clean beauty. The brand did not just renounce animal testing but made the sub-brands promote different practices of sustainable and clean beauty practices.

For example, YSL promoted sustainability with its refillable packaging (to reduce the usage of plastic), Garnier focused on using 100% recycled plastic for its products, and Lancome promoted its products by using ethically sourced rose extracts in its skincare range.

All of these sub-brands practice eco-conscious efforts in different ways maintaining clear market segmentation.

What makes a good multi brand strategy?

Here’s a concise checklist to check the quality of a good multi brand strategy:

Consistent quality.

A clear distinction between brands and their product portfolios.

Targeted marketing strategies.

Market adaptability.

Engagement levels and customer response.

Well-planned allocation of resources across sub brands.

Maintaining these few standards will ensure your multi-brand strategy works in your favor.

Advantages of implementing a multi brand strategy

If you’re confident about your strategy and resources, you can plan ahead and develop products to cater to a larger market segment and push it to them via sub-brands. We’re about to discuss some of the benefits of multi-brand strategy for you to understand why you need it in the first place.

You get access to a massive customer base

Having multiple brands is the easiest way to tap into different segments of a single category of customers. Different brands solve different requirements offering different pricing options with different unique offerings without diluting the core brand identity.

Simple step to retain brand-switching customers

A multi brand strategy helps retain loyal customers as well as brand switchers by offering product diversity in the form of brand variety. In this way, you get to increase sales as a parent brand as customers experience a FOMO of not trying out a specific new product in the market.

For example, L’Oréal makes sure that customers start with a budget product like Garnier hair care range and make a switch to Kérastase for salon quality (budget to luxury) with time. While customers are ‘switching brands’ for better outcomes, they are still staying and exploring within the same ecosystem.

This is how L’Oréal is preventing the loss of customers, offering value, and maximizing retention by practicing multi branding strategy.

Your road to becoming a market leader gets easier

When a parent brand starts a new sub brand, the new brand gets to share the status of the parent brand. As the new sub brand gets to share the resources of the parent brand, it requires fewer resources to build a new brand from scratch. This is especially true when companies rely on outsourcing development to scale efficiently while keeping core operations lean. We recommend brands use AI and predictive analytics to understand the aspects of the parent brand that can be carried over to the sub-brand for the best responses from customers.

Increased market occupancy capturing more attention

As you get to saturate the market with your own sub brands from your parent brand, you offer more choices to your customers, who are ultimately adding to your cumulative profit. This is how you get to occupy a certain percentage of the market and offer people different options. It makes them ultimately buy the products from the collective product portfolio.

This also leads to brand owners gaining deeper knowledge of their strategy. In addition to that, brand owners may get better access to customer data (gathering data from multiple channels) to bring more innovation into every sub brand they own. Brand owners can also see a major reduction in manufacturing and customer acquisition costs as a result of better data insights.

And finally, as you grow like the industry giants, it leaves no market untapped.

Healthy internal competition leads to strategic growth

The data collected by sub brands are often accessible by the parent brand. This leads to sister brands getting access to collective data resources. This collective effort can serve all the brands under the same parent brand.

This, can promote synergy and thus increase internal competition that ultimately sets up the parent company for the win. Take YSL and Lancome, for example. Although both cater to high-end consumers, they grab the market specializing in different products. Luxury skincare enthusiasts may reach out to Lancome, makeup loves will pick YSL products which ultimately makes Loreal successful as a brand.

Increase brand awareness and reputability

Brand visibility is often fuelled by the trust gained by the parent company as a product of the network effect. Sub-brands also get to create a reputation for the other sub-brands, which eventually results in increased brand awareness. When layered reputation-building and strategic consumer perception management come together as a part of the expansion plan, one can successfully create a dominant market presence capitalizing on shared brand equity.

In addition to that, increased market occupancy also acts as a major reason for increased brand awareness.

For example, the recognition of YSL as a luxury fragrance brand can elevate the perception of Lancôme in the market targeting the same price range. When a consumer experiences positive results from using YSL Libre EDP, they’re naturally drawn towards Lancôme’s Idole EDP, expecting similar performance.

Challenges of a multi brand strategy

We do recommend the multi brand strategy as a supplement to building and maintaining an overall good reputation because why place all your chips on one bet? But certain challenges can come your way. So, here are some of the most common challenges you’ll have to face:

You may lose focus on your hero products

This is why we recommend multi brand strategy when you are absolutely sure about your resources and capacity. Yes, multiple brands make success inevitable to an extent if you strive to meet your standards.

However, allocating ample resources, creating consistent marketing strategies for hero products, and parallelly investing in bettering the rest of the products can ensure your success.

But on the contrary, without dedicated teams for separate sub brands, it is very difficult to maintain focus on the parent brand or their hero products that essentially bring the most of the traffic. Make sure the objectives do not overlap and dismiss the distinct objectives of the sub-brands. Otherwise, your brand may suffer missed opportunities or at least miss the chances of potential success.

Unilever, the FMCG giant, will consistently invest enough to maintain a creative focus on Dove and Axe, their hero product, even though they carry on with the production and marketing of other brands under them, such as Noxzema or Living Proof.

Added marketing expenses and operational complexity

Having various sub brands or customer-facing brands often adds to the marketing expenses of each. You may use the same manufacturing units, supply chain distribution, etc, but marketing each of these products will require individual effort as well as separate channels of marketing each of these sub brands.

You must have adequate resources to support you in this entirely separate ecommerce marketing strategy. In addition to that, needless to say, diversification also adds to the required effort to manage and streamline the operation.

You may experience brand cannibalization

We have already mentioned how to properly handle strategies to avoid brand cannibalization or dilution of brand identity. When you are managing sub-brands under your brand, cannibalization is always a dangling threat that you’ll have to consciously escape.

Brand cannibalization may target the market shares of sub-brands.

To avoid even the slightest overlap of the products offered by sub-brands, a parent brand has to aim for a specific type of product portfolio. It may contain products belonging to two separate sub brands significantly different from each other with separate USPs.

An overlap may potentially disrupt the brand equity of each customer-facing brand in an established market.

The domino effect

Just similar to how sharing brand equity and reputation can have a positive impact on your sub brand, one bad move or any reputational issue from one sub brand may consequentially affect the entire reputation of the parent brand.

Multi brand management is an indispensable requirement for multi brand strategy, needless to say, it includes proactive monitoring counting each step as it determines the fate of the entire parent brand.

How to manage multiple brands to succeed?

To break it down to you, here are steps that you need to follow to execute a well-planned multi branding strategy.

Define your brands

When you start by outlining your brand agenda, defining clear goals and objectives, marking your targets, and making a list of your ideal customers. You, in a way, solidify your presence by defining your brands which essentially hold you from deviating from your goals.

Especially when you’re handling more than one brand, it is extremely important to outline the specific mission statement for each of its faces so that none of them overlap.

Clear differentiation

Having a clear USP, maintaining a separate brand identity, and a portfolio that mostly caters to audiences who are not a target of your sub brand can impose a clear distinction leading to clear differentiation. Further differentiation can be laid considering factors such as brand positioning, brand persona, product attributes, etc.

Set clear objectives

Maintain separate KPIs for each of the customer-facing brands to make sure each of these channels gets to the desired business goals. These KPIs are mostly quantitative and measured in terms of brand awareness, ROIs, market shares, brand equity, and overall financial performance. In the longer run, it will prevent mighty competitors from taking over your brand positioning.

Conduct market research

Irrespective of your brand strategy the focus is on a singular brand or multi-band, in-depth market research is crucial for defining the qualitative and quantitative aspects of growth that will ultimately determine the brands’ fate.

The market research constitutes competitor analysis, trend research, focus group studies, and growth forecasting. The only way to find gaps in the market and cater to untapped subcategories is successful market research. Additionally, it gathers insights for product development, product improvement, and strategic pricing.

Create websites and sub domains

Creating a separate brand presence for all your sub-brands will require you to launch a subcategory of official websites or separate landing pages altogether. There you’ll be able to showcase the products, introduce new features, and offer customer services.

Connect sub brands

For a multi brand strategy, you need to somewhere connect the sub brands to a parent brand to maximize the strength of your existing brand and channel it to other segments, speed up the market entry process, and reduce the cost for it.

Conduct cross-promotion

You might have come across Meta suggesting you connect your Facebook profile to your Instagram. Well, multi brand strategy follows the same pattern.

Brands with separate USPs often try to selectively cross-promote products that might increase the overall conversion rate but still not interfere with and cannibalize each other’s products.

Customer feedback for product development

When you share the resources and prestige of a parent brand, if your products do not perform well for one sub brand, as we mentioned, chances are there it will start affecting your sales for other sub brands as well. To mitigate this risk we recommend constant vigil over customer feedback. It can be gathered via social service, social media sentiment analysis, customer reviews, and such.

Implement risk management

Multi brand strategy deals with several risks and challenges, as we mentioned in our previous segments. Consider it as a high-risk, high-reward strategy. This brings us to highlighting the importance of risk management.

Reputational risk, operational and regulatory risk are all a part of multi brand strategy. Analyzing data to get to the issues and applying the best strategies, such as implementing a robust enterprise risk management framework, will not only eliminate the risks but also improve portfolio diversity, increase the efficiency of the supply chain, and more.

Trends in multi brand strategy

The dominance of ecommerce makes multi brand strategy of winning moves for most of the businesses. Take a look at what ways a multi brand strategy has become a trend these days.

Popularity of D2C among sellers

The rise of D2C brands has made the process of launching a brand and reaching customers easier than ever. Taking advantage of this, one can maintain more than one brand, effortlessly.

This is because brand owners can now outsource the entire responsibility of manufacturing and packaging to shipping.

The brand gets to curate the entire marketing strategy, and customer acquisition, maintain communication between customers and the brand, and manage its overall presence in the process. As D2C brands establish direct connections with customers, it gets easier for them to collect customer data without any intermediary’s involvement helping the brand to store it and use it for launching further sub brands.

On-demand production making multi-branding strategy management easier

Finding a manufacturer has never been easier. China acts as a manufacturer to empower businesses globally which has led to quick inventory restocking and businesses accepting more orders.

The buffer time between picking an emerging trend and turning it into a full-fledged product and stocking an inventory of it can take less than a month. Thanks to the efficient manufacturing, workforce, and connectivity to warehouses.

The changing trends are pretty frequent. The speed at which a store starts offering the latest trends will give you a better understanding of the swiftness of the process. On-demand production reduces waste and significantly decreases the carbon footprint of the brands leveraging it. While multiple sub brands are expected to increase waste, on-demand production balances the demand-supply scales.

While previously we could see brands bringing in seasonal collections, the dominance of the micro trends has taken over, making these brands launch new collections as frequently as bi-monthly.

We can often see established brands launching sub brands that focus on micro trends.

Efficient logistics as a cornerstone for multifaceted brand development

On-demand production is made accessible due to the advancement in logistics. Ecommerce is advancing primarily due to the robustness of connectivity, distribution chains and warehouses strategically built at certain locations.

This facilitates an easy flow of inventory that leads businesses not to hold stocks. Instead, the importance of steady distribution is realized even more when brands practice multi branding strategy and the brand owners experience how efficiently they can handle multiple customer-facing channels.

Omnichannel experience

Omnichannel presence is one of the most important aspects of the current ecommerce trends. A marketing funnel for a particular sub brand consists of various touchpoints that can potentially target more customers leading to a higher number of conversions. By leveraging tools like omnichannel customer service software, businesses can ensure seamless interactions across platforms. When multiple brands under your parent brand target the same category of customers across several platforms, the probability of successful sales subsequently increases.

Constant innovation to reach optimum potential

Multiple brands offer a parent brand to diversify and embrace innovation in a variety of ways.

For example, to join the AI revolution, L’Oréal acquired an AI-driven company called ModiFace, to enable virtual try-on features for brands like Lancôme, Maybelline, and L’Oréal Paris. It allows customers to try and predict the results before they physically use the products in real-time.

Final thoughts

A multi brand strategy empowers growing businesses to take over the market and create opportunities for potential sales— almost creating a web of sub-brands spreading across the market and spreading across for visibility via various touchpoints. Thus brand exposure becomes inevitable when buyers are bombarded with options and eventually give in to consumerism.

While brands end up facing several challenges in establishing a multifaceted presence, the benefits make it more lucrative, even more so when teamed with the latest trends bringing operational efficiency. It ultimately outweighs the potential risks making businesses of various sizes try to implement and leverage from it.

We understand you may face multiple challenges while managing a multi-brand presence. Here, a PPC ad agency comes into play. Reputable PPC marketing agencies such as SellerApp can help you make data-driven decisions making sure you achieve maximum visibility even in competitive marketplaces such as Amazon and Walmart. Managing multiple customer-faced brands may seem daunting, but with the help of a seasoned agency, one can make a smart decision to ensure visibility and hit the target market shares.

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