To brand or not to brand: when should a product have a brand of its own?

The Fairy Tale

The VP of Product goes to the CMO and tells her that the company is developing a new product line that is highly differentiated from other products in the market. So differentiated in fact, that she wants the marketing department to develop a new product brand and be ready to launch it when the product goes into production in six months.

Of course, the CMO is thrilled! Her team would love nothing more than to have another brand they need to build, manage and fund. She snaps her fingers and poof! In an instant, the CFO has doubled her budget, she has hired and trained the additional staff she needs to manage a new brand, she has hired and briefed a brand agency, she has found a brand name that everyone loves and her legal team has assured her is protectable, etc., etc. The brand launches on time to the sound of trumpets, customers can’t get enough and the product sells out at >50% gross margin, and they all live happily ever after.

The Reality

Product branding is complicated, costly, and time consuming, not to mention a risky financial bet. The return on investment, factoring in the marketing budget required to develop, launch and build equity in a product brand, is almost impossible to accurately calculate upfront, particularly for a new, unproven product line. The risk of confusion or competition with the parent brand is high even when the product brand strategy is well defined and cleanly executed. And there is no guarantee that a product brand will help differentiate the product in the market place any better than a strong product naming architecture that in most cases, by leveraging the parent brand, will costs far less to develop, promote and manage. With these concerns in mind, a product brand should be pursued only when it is deemed to be critical to the success of the go-to-market strategy.

In the case of a new product or product line, developing a distinct product brand should be considered when:

1. The product targets a distinct market segment with unique needs, preferences, values, and buying behaviors that differ significantly from the parent brand's target market.

2. Creating a separate brand can give the product line a competitive edge by allowing it to differentiate itself more effectively from competitors and establish its unique value proposition.

3. The product line requires a different distribution strategy compared to the parent brand or it is sold through different channels. In this case, having a separate brand can help facilitate targeted marketing and distribution efforts.

4. The product line is substantially different from the core products offered by the parent brand. In this case, creating a separate brand can help boost the parent brand’s image or prevent dilution of the parent brand's image. This is particularly important if the new product line has a different value proposition, positioning, cost and/or price structure, or quality standard from the parent brand.

5. The new product line is part of a large diverse portfolio of products and services that are already incorporated into a multi-brand architecture that leverages a sub-brand and/or endorsed brand strategy.

In the case of an existing product or product line, developing a distinct product brand should be considered when:

1. The product line has gained significant traction and recognition in the market. In this case, developing the product name as a separate brand may help capitalize on its success and build a stronger identity and "stickiness" around the specific products, particularly when developed as part of a customer or partner co-marketing strategy.

2. The product line has the potential to generate its own brand equity and loyal customer base that is distinct from the parent brand. In this case, separate branding can help nurture and leverage that equity to drive growth and expansion.

Ah, if it were only as easy as the fairy tale!

The reality is that the decision of whether to create a product brand that is separate and distinct from the parent brand requires careful thought and analysis. When defined, developed and executed well, product brands can compliment and enhance the parent brand, and contribute significantly to a company's bottom line. But the opposite is also true. Product brands that are defined, developed and executed poorly can eat up marketing resources, erode customer confidence and negatively impact the parent brand.

So, do your homework and tread carefully. When Beauty turns into a Beast, no one lives happily ever after.