Businesses are always looking for new ways to generate extra income and boost their market share. When a brand develops and markets new brands that are slight variations on similar, existing products, the result is a phenomenon known as brand proliferation. Below, we discuss what you need to know about brand proliferation and how it impacts your business.
What is Brand Proliferation?
Brand Proliferation occurs when a large company acquires or absorbs multiple smaller brands in similar market areas. Unilever is a prime example of this phenomenon. The company has, over time, acquired more than twenty-five brands of ice cream, each of which develop, market, and sell their own unique flavors. Large, diversified companies such as Unilever or P&G, having gorged themselves on several new brands and acquisitions, are common examples of brand proliferation.
The driving forces behind brand proliferation are companies that want to break down their offerings into more affordable products by establishing new assets. This allows the company to offer new products and features under more verticals. It can help expand a company’s market share in target industries and establish it in new ones. It can also improve a company’s position in its respective sector by offering a variety of new brands that quickly generate interest within the market. These new brands, acquired or developed by larger corporations or conglomerates, are known as sub-brands. Sub-brands can be very profitable because they afford independence to smaller brands to develop on their own, but with the financial support of a much larger company behind them.
The pitfalls of Brand Proliferation – Brand Cannibalisation
Brand proliferation has its drawbacks, however. Sub brands can accumulate if not managed effectively, resulting in self-serving and independent businesses under the same roof competing against each other and devouring financial resources. Ultimately, this leads to a corporation that is cannibalising itself in the market and suffocating growth.
How to manage brand proliferation
- Understand what your brand is and what it’s not – You must constantly reevaluate who you are as a brand and whether the brands under you need to be acquired or developed internally. Brand managers should utilize effective brand communication within a Masterbrand system, so that customers don’t get confused and market shares don’t fall.
- Know your audience – When you’re trying to expand your company, make sure the brands you own will add value to your current customers’ lives. It’s easy to make brand creation a go-to solution to spark market interest. However, it’s important to strip away unnecessary brand building because it can dilute the effectiveness of your existing brands that people already know and love.
- Ensure your brands have distinct positioning – When you create brands that deliver unique benefits to different segments of markets, you minimise the likeliness of brand cannibalization from occurring.
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Brand proliferation is never a quick fix to boost your existing market offerings, and it can be bad for business when improperly managed. As a business owner, you need to take a step back and consider whether the creation of new brands is compensating for a lack of better tools.
Prevent brand proliferation with Bartercard. By being a member, you can connect with several other member industries that you can barter trade with using a cashless system. You can promote your products, establish your specialisation in a new space, move excess capacity and turn them into extra sales without having to compete against your own. This allows you to spend more time with the brands that truly drive value to your business. Talk to Bartercard today!