Manag., July-2016-Q22
0. Which one of the following is a potential drawback of multibranding?
- Option : A
- Explanation : Multibranding offers a way to establish different features and appeal to different buying motives, by introducing additional brands in the same category. A product category is a grouping of products, often at retail level, which may be substituted for each other (Colgate-Palmolive different brands of toothpaste) or which in some way supplement each other (Colgate-Palmolive pre-rinses and dental loss).
Multibranding also allows a company to command more shell space allows the company to protect its major brand by setting up flanker or fighter brands for example, Seiko uses different brand names for its higher-priced watches (Seiko Lasalle) and lower-priced watches (Pulsar) to protect its mainstream Seiko brand Sometimes a company inherits different brand names in the process of acquiring a competitor, and each brand name has a loyal following. Thus, Electrolux, the Swedish multinational, owns a stable of acquired brand names for its appliance lines– Frigidaire, Kelvinator, Westinghouse and Zanussi. Finally, companies sometimes develop separate brand named for different regions on countries, perhaps to suit different cultures or languages. For example, Procter & Gamble dominates the US laundry detergent market with Tide, which in all its forms captures more than a 30 per cent market share. In Europe, however, P&G leads with its Ariel detergent brand.
A major drawback of multibranding is that each brand might obtain only a small market share, and none may be very profitable. The company could end up spreading its resources over many brands instead of building a few brands to a highly profitable level.
