Family branding is when a company placing the same brand name on all products in a product line, enjoys the distinct advantage of instant recognition, benefitting from the “halo effect” of the brand’s established reputation. A new entry using the family brand name gains instant credibility and visibility from the brand’s established reputation. This leveraging effect has led some firms to enter new fields under the same name – brand franchise extension.
The advantages of such an approach are the facilitation of the adoption process and acceptance of new products, since users assume new products have the same quality level as existing ones; a minimal cost of branding to the manufacturer, since name research will not be needed, nor will extensive advertising for brand name awareness and preference be necessary; and user response will tend to be faster, thereby reducing the introduction stage in the product life cycle where profits are negative. In addition, another advantage often obtained is the greater ease in gaining distribution (particularly shelf space) due to its familiar name.
While the reputation of the established brand name can facilitate the introduction of a new product, any problems with the new product can, conversely, affect the saleability of all items bearing the same name. If consistency in new product quality is not maintained, user dissatisfaction may result which may carry over to older, successful brands in the line. Family branding, therefore, places high demands on quality control because every single item is considered representative of the entire line. A lower quality item may hurt sales of the better quality products. Promotion of a better quality product may result in credibility gaps among potential buyers. A new product failure may well tarnish the reputation of sister products carrying the same brand name. One bad egg may well spoil the entire basket. In addition, such a move may be counterproductive if buyers see no meaningful relationship between the old and new business and brand reputation transference is not successful. A company is well advised not to go far afield: Ralston Purina was understandably reluctant to apply its name, associated with pet foods, to a new line of frozen gourmet dinners. Companies can protect themselves by having an assortment of individual brands. Easy introduction and withdrawal can be accomplished without damaging other brand reputations.
Ref: J. Milewicz and P. Herbig, Evaluating the Brand Extension Decision Using a Model of Reputation Building
