What are Sub-Brands, Ingredient Brands and Co-Branding?
Many of our clients come to us for help to rationally organize their portfolio and clarify the brand architecture. Oftentimes, the master brand’s value proposition is buried by conflicting messages of products and sub-brands. A company may have acquired some of the sub-brands through a merger or simply created more sub-brands to meet many distinct customers and needs. The relationships can become confusing and ultimately mutually subverting.
Sub-brands can however, help to support new products or services if the parent brand doesn’t have the permission to reach a specific market segment. They help tie the parent brand closer to (or let it gain entry) a specific market and often deliver up an entirely different benefit. A brand like General Electric uses sub-brands in its appliance business to communicate to a different customer segment and fill a specific niche. The rule of thumb is that there has to be a compelling reason to clearly distinguish between products or services sold under a certain brand. Too many sub-brands not only drain the marketing budget, but have the potential to weaken the parent brand by diffusing the central brand identity.
Another kind of sub-brand is the ‘ingredient brand’.
Let’s look at Intel Inside. Intel Inside is a special kind of sub-brand, known as an ingredient brand. Its logo is proudly displayed on other well-known host brands like Sony, HP and Dell. It’s now not only in computers, but Smart TVs and mobile phones (as discussed by Alan Brew in this post). As a B2B brand, Intel was able to generate interest and build equity with the end-user group. This meant that its partners such as HP, Dell and Compaq would benefit greatly by including the Intel Inside logo on their products and in their advertising. The difference between it and a conventional sub-brand is that it is not just nested beneath the master brand of the business that manages it, but extends across the master portfolio boundary and given a presence next to, but beneath, host brands: Pentium is a sub-brand of Intel, but Intel (and Pentium) are ingredient brands of HP, Dell, Sony, etc.
Another example of a power ingredient brand is Boeing’s 787 Dreamliner, a more fuel-efficient and comfortable airplane design. When it was introduced to the market in 2007, many airlines were hungry to place orders, knowing it would elevate their image with passengers. Now, many B2B marketers have this same desire for success for their brand but it’s not so simple. It helps to have dominance in a certain category, much like Intel in the world of microprocessors, being first to market, concluding complex licensing contracts with partners, and ponying up the budget to ensure success. And, of course, the ingredient must be a booster to the functional performance of the host product.
On another level, co-branding is more common.
In co-branding, the players involved hope to combine or exchange what each brand has in its own category. It’s a mutual-benefit scenario. Co-branding also helps certain brands penetrate new markets. Nike and Apple have done this, creating a tiny iPod that enables runners to track their running progress from a sensor within the insole of their shoes. For both brands, the partnership helped expand the customer base, further position each as innovators in their respective industries, and add subtle dimension to each. Another benefit of co-branding is that the companies share the marketing cost versus doing everything on their own.
In some instances, co-branding is a useful rung on the master brand ladder. FedEx Office is a great example. When FedEx acquired printing chain, Kinko’s in 2004, the goal was to create one destination where customers could print, pack and ship items. Since FedEx was only known for shipping, and Kinko’s was known for printing, it made sense to co-brand as FedEx Kinko’s. Eventually, in 2008, FedEx dropped Kinko’s from their name, changing to FedEx Office. Within the four years, FedEx had already attained the equity as a print and ship center. Kinko’s became more like baggage associated more with making copies versus expanded digital printing capabilities. In this event, it was the right move for FedEx to do a slow phased approach in integrating Kinko’s into its brand portfolio. In the end, Fedex has absorbed the new equities of Kinko’s, making the latter’s co-brand presence a redundancy.
To finish off the topic, FedEx is a good example of a brand that does it well. Its brand architecture transitioned from various sub-brands to a clean master brand approach. A simplified brand architecture, with fewer identities is easier to manage and easier for a customer to digest. That said, there are situations when it’s necessary to create a sub-brand or co-brand. Remember, it’s important to put yourself in the shoes of your customer (as Apple literally did with Nike!) to see what fits. Often, less is more.