Disown It or Add Value!

When starting a subsidiary brand, the most controversial part is whether to disown it or add value by labeling it! As in the case of Honda, it decided to disown Lexus and create a separate marketing channel for the product. While in the case of Park Inn by Radisson Blu, Radisson’s name gives value addition to Park Inn. The examples are totally different, the former one is from the manufacturing & retail sector where a mid segment brand markets a premium segment product while the subsequent one is from the hospitality sector where a premium segment brand is marketing its budget segment service.

Now getting to the first one, imagine you step into a Lamborghini or Audi showroom to buy a flashy red sports car, you walk up to the reception and set a look at the logo behind the desk. What if the logo read “by Volkswagen”! Would you still shed two hundred grands to buy the red car, you might but you would definitely have second thoughts about buying a premium segment product from a budget segment manufacturer. And a second thought is more than enough to kill the sale. So when starting a subsidiary brand in a higher segment than your present one, its better to disown it, irrespective of your sector whether manufacturing, retail or service. Just think the vice verse of the subsequent example as in “Radisson Blu by Park Inn”! I don’t think you would be quite pleased to pay $500 for a night’s stay! Or “Parker by Luxor” would you still gift it on special occasions! Now to the second one, the moment you look up the reception counter at Park Inn and read “by Radisson Blu” your mind gets pleased by the thought of getting premium like services at an affordable rate! So the name not only adds value in terms of value addition but also adds up to customer satisfaction and builds up customers by some abstract value addition. So when starting a budget brand its better to suffix your name.

Lets get to the current mobile market, “Motorola a Google Company” the ‘Google’ part gives some value addition and builds up some customer satisfaction as the OS running on Motorola handsets is a Google product. Google could have removed the name but Motorola had a really good brand value and a strong market recognition so it would have been really stupid as all values associated with name would have been wiped. Nokia has a similar case and I guess Microsoft is still stuck in this dilemma, as ‘Nokia’ once upon a time hotshot in the mobile market and Microsoft a hotshot in the computer OS industry; both have similar peak brand values in their respective markets and re-segmenting the values is a hell of job. So it may be easy when starting a new brand but when taking over some company its really complicated and needs a lot of thought before pulling the chords!