Multi-brand strategy refers to the cross-border e-commerce enterprises operating two or more competing brands at the same time. This strategy was pioneered by Procter & Gamble. Procter & Gamble believes that operating a single brand is not a perfect solution. Because after a brand is established, it is easy to form a fixed impression in the minds of consumers, which is not conducive to the extension of products, especially for companies like Procter & Gamble that span multiple industries and have multiple products.
The best result of the multi-brand strategy should be that the brand of the cross-border e-commerce enterprise gradually squeezes out the market share of the competitor’s brand, or the profit increased by the multi-brand strategy should be greater than the profit loss caused by mutual competition.
Advantages of multi-brand strategy
①Multi-brand helps to cultivate a market. Although a certain brand is the only one at first, once it has worked hard to open up a fertile market, other competitors will flock in. Many market competitors jointly open up a market, which helps the rapid development and maturity of the market. When market differentiation begins to appear, the “advertising war” of many market competitors is often inevitable, and its effect further strengthens the common advantages of the product category. Some markets are vibrant at the beginning, but fail to form a climate in the end. One of the reasons is that there are few participants. The emergence of multiple brands is necessary to support an overall market. Take the personal computer market as an example. If only Apple played a solo role and no other computer manufacturers followed up, it would be impossible to form such a prosperous PC market today.
②Multiple brands give companies the opportunity to cover the market to the maximum extent. No brand can occupy a complete market alone. As the market matures, consumer demand gradually becomes segmented. It is impossible for a brand to keep its basic meaning unchanged and meet several goals at the same time. This is the original intention of some companies to create several brands to cope with market segmentation. At the same time, the rise of retailers’ self-branding has issued a strong challenge to manufacturers, shaking the initiative and dominance of manufacturers in establishing and maintaining brand advantages. Multi-brand strategy helps manufacturers curb middlemen and retailers from controlling a brand and then controlling themselves.
③Multi-brand provides a kind of flexibility, which helps limit competitors’ expansion opportunities and makes competitors feel that existing brands in each market segment are barriers to their entry. Multi-brand is indispensable when defending core brands in price wars. Using those secondary brands as small forces to give competitors who launch price wars a quick flank attack will help make it difficult for the provocateur to take care of both ends. At the same time, the leadership of the core brand can remain intact. The core brand shoulders the heavy responsibility of ensuring that the entire product category wins, and its position must be defended. Otherwise, once its charm declines, it will be difficult to increase the unit profit of the product.
④ Multi-brand is conducive to protecting the core brand. When maintaining the image of the core brand, the existence of multiple brands is even more significant. The core brand cannot blindly take risks in uncertain innovations. In the West, the retail market has a strong interest in brand diversification. Manufacturers use multi-brand strategies to increase their overall market share, thereby increasing their weight in the competition with retailers.
Therefore, multi-brand strategies help to cultivate and cover the market. Reduce marketing costs, limit competitors, and effectively respond to challenges from retailers.