On this episode of Dear Strategy, we dive into the practice of offering the same basic product across different brands—some positioned as premium and others not. Is this a good strategy, or could it backfire?
Last year, I needed a new oven. I had a favorite brand in mind based on a past experience, so I visited a local dealer feeling confident in my choice. But that confidence quickly faded when the salesperson informed me that my favorite Brand X had been acquired by Company Y, which also owned Brands A through C. This meant Brand X was no longer the same brand I admired. Further research confirmed that many of the brands owned by this company were practically identical, despite how they were marketed. As a result, I chose a different brand altogether.
Marketing the same product under multiple brands isn’t new. It’s a common practice in many industries, from consumer products to food, appliances, cars, and industrial equipment. The idea is that people have brand loyalties. So, by marketing one product under different labels, a company can broaden its market coverage while cutting product costs. Ideally, this means customers get their favorite brands, companies get more customers, and everyone is happy.
“If a company can market one product under multiple labels, they should be able to increase their market coverage while simultaneously decreasing their product costs.”
But is it really a good strategy? If I have two brands positioned as premium in the market, and the product quality aligns with that positioning, then the strategy should work. However, in my story, discovering my favorite brand shared components with a less favored brand made me look elsewhere. I didn’t trust the reputation of the other brand because it wasn’t positioned at the same level as the brand I loved. This is where the problem lies.
When a company markets the same or similar products under brands positioned differently in the marketplace, consumers may feel deceived. They could end up feeling like they’re overpaying for a low-quality product or missing out on a cheaper option that’s virtually the same. This kind of strategy, driven by operational efficiency, rarely works well as a long-term marketing strategy.
My advice? Make sure your operational strategy aligns with your marketing strategy. Protect premium brands with premium quality products and avoid sharing them with lower-quality brands. If you don’t want customers to know what’s happening behind the scenes, you’re probably doing something wrong. Customers almost always figure it out eventually.