We use and rely on different brands or companies for purchasing smartphones and any other consumer electronics. These have brands have sub-brands to efficiently distribute their products and provide better services to consumers and in turn growing visibility.
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So, what is a sub-brand? well, according to the Internet, a sub-brand is a business unit that for the purpose of clarifying a product offer or exploring a market niche, is given a specific identity and its own values that differentiate it from the parent brand in which it is included. Well, if that sounded a bit complex, scroll down to know everything about sub-brands.
What Is A Sub-Brand?
Sub-branding or sub-brand is when the main brand or parent brand creates a subsidiary or secondary brand so as to increase the exposure of the parent brand and increment the net profits. For an instance, Xiaomi has a sub-brands called MiJia that are dedicated for producing home gadgets has helped Xiaomi to raise 20 billion Yuan (roughly US$ 3 Billion) in 2017.
So, Why Companies Produce Sub-Brand?
Almost every company or brand in existence undoubtedly wants to expand and grow itself. A company produces goods, sells them, and earns a profit. That said every company has its own niche or area of expertise. So as to grow a brand a company needs to explore different markets and products, this is why a sub-brand is created.
This sub-brand is under the control of the parent brand and is initially funded by the parent brand. Later a sub-brand grows and nurtures itself and helps the parent brand to gain more profits. This tried and tested business strategy is beneficial for both users and the parent brand.
For a case, OPPO recently created a sub-brand called RealMe. This was dedicated to offering mid-range smartphones through online platforms. The cheaper price point attracted many users and helped OPPO to increment its market share from 5.6% to 5.8%. This new brand will continuously help OPPO to grow in the online market and compete with Xiaomi which has an autonomy over the mid-range smartphone market with a 31.2% market share.
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A user has access to a new class of product and that too from a company he trusts and has earlier used. Consequently, building a sub-brand is a long-term investment for a company that may exponentially increase companies profit.
Advantages And Disadvantages Of Sub-Brand
Every business strategy has two sides a positive one and a negative one. Well, the major focus while establishing a sub-brand is the increment in exposure and profits. That said a sub-brand can also completely ruin the parent brand. So these are some major advantages and disadvantages of sub-brands.
ADVANTAGES
Successful sub-brands can help advertise and increase the exposure for the parent brand. They help establish and increment a brands loyalty and trust. For example, While the premium brand Huawei that creates flagship smartphones didn’t earn much profit in India. However, Honor a sub-brand of Huawei that created mid-range and budget-oriented smartphones in India has for the first time gained a market share of 3.4% in the first quarter of 2018.
DISADVANTAGES
Some major disadvantages of creating sub-brands include the extra investment or the costs to market, promote and maintain the new brand. Sometimes, sub-brands can be unsuccessful. This failure can negatively impact the parent brand and affect loyalty, trust, and business.
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Therefore, the parent brand has to face a severe loss that definitely impacts the reputation. An unforgettable example includes the YU sub-brand of Micromax that initially gained hype and sales but later vanished impacting the parent brand Micromax.
Few Successful Sub-Brands
- Microsoft- Windows, Xbox, Office, Bing, LinkedIn, Skype etc.
- Google- Android, Chrome OS, YouTube, Gmail, Docs etc.
- Apple- iPhone, iTunes, Apple Music, Mac OS, Watch OS etc.
- Samsung- Samsung Electronics, Samsung Engineering, Samsung Life Insurance etc.
- Xiaomi- Redmi, Mijia, Huami, Yeelight, iHealth etc.
These are some of the parent brands that own the most popular sub-brands. Different services and products are also classified as sub-brand in most instances. Many brands like LG, Samsung, Xiaomi even create consumer electronics and electrical appliances. Some of the above-mentioned brands have dozens of sub-brands that act as the major source of revenues for these brands.
Successful Sub-Brands Stats
- Samsung the Korean giant shipped 74.5 million units in 4Q 2017. Well, Samsung finished the year with 317.7 million shipments. This was backed up by the huge number of consumer electronics that Samsung produces. Consequently, Sub-Brands helped increment the revenue.
- Huawei shipped 154.2 million units, up 10.7% from the 139.3 million unit shipped in 2016. This increment in sales within a year arrived due to Honor sub-brand that continued to drive crucial volume in numerous emerging markets.
- Xiaomi managed to double up its share to 7.2% from 3.3% during the fourth quarter last year. This comes as no surprise since the company has continued to focus on growth outside China, with India and Russia being two of its largest markets. Well, what helped Xiaomi was the popular sub-brand Redmi.
As a conclusion, a Sub-Brand helps the parent brand in its growth and helps it gain exposure and explore different niches. Do share your thoughts and opinions in the comments section below.
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