Consumers today significantly influence a business’ success because their strong voice, beliefs, and interests in engaging with brands that align with their values shape the market. Brands must focus on maintaining relevance and growth momentum to stay competitive and survive among their competitors.
Exploring ways to improve a business’ market share is critical in identifying its market potential, trends in consumer behavior, market opportunities, and determining competitiveness among its competitors. Brand proliferation is adding several brands in a product line or product category to quickly increase new brands or products to leverage their brand and increase its market share.
Brand proliferation is incited by smaller brands entering markets and the growth in brand and line extensions. The impact of brand proliferation can result in positive or negative outcomes for businesses and consumers.
Increase Market Share:
Expanding a business’ market segmentation and diversifying its products and services helps the business or company increase its market share.
Expanding segmentation strategies enables businesses to improve their engagement with current and potential customers, develop better products, and increase sales.
Moreover, expanding market segmentation allows businesses to explore opportunities to grow the brand, develop various products that satisfy customer needs, and cater to diverse customer base interests.
Product differentiation distinguishes the organization’s product, brand, or service from those offered by competitors. It also enables the product or brand to stand out among customers or the targeted audience. Moreover, it increases sales, brand loyalty, and growth.
Digital marketing and e-commerce lessen most brand proliferation barriers. For instance, it strengthens a more significant brand’s market reach using targeted marketing efforts. Additionally, digital marketing and e-commerce simplify how smaller brands enter the market.
Additionally, brand proliferation can cause cannibalization, a decline of sales and demand of a business’ original products as a result of introducing similar products in the current product line, which can also generate losses in revenue, sales volume, and market share as well as hinder a brand’s growth. Managing the brand with brand proliferation can be challenging because introducing several brands within the same product line with a similar parity can cause the individual brands’ share to decline. For instance, Unilever, a multinational consumer goods company headquartered in London, England, has been driven by its corporate purpose and goal to drive sustained profitable growth.
According to Unilever’s Annual Review 1999 report, Unilever’s purpose entails “…to respond creatively and competitively with branded products and services.” Unilever’s focus was leading brands that will help fulfill Unilever’s business goals in achieving ambitious growth and margin targets. To support their corporate purpose and meet their business goals, Unilever utilized brand proliferation to expand their brand portfolio, which now consisted of 1,600 brands in 1999 after their brand acquisitions. As a result, the brand acquisitions generated over 90% of Unilever’s profits from 400 brands, and approximately 1,200 brands either earned marginal profits or endured losses.
Brand proliferation can prevent an effective and proportional allocation of resources spend marketing spend across the brands. The lack of appropriate resources for a brand can hinder its potential to grow. Furthermore, the brand will lose its competitive edge and relevance among its competition.
Each brand has a unique identity and requires handling unique to the brand. Distinctive and unique brands and brand positioning in which various benefits provided to different market segments reduces cannibalization and restricts competition amongst the brands. Brand managers must assist businesses in keeping abreast of developments that challenge and potentially threaten the brand’s positioning, sustainability in the marketplace and explore creative methods to change branding challenges to opportunities to increase market share.