Umbrella brand involves using a single brand name for sales of more than one related products. Some companies focus on building one brand that represents the characteristics that it wants to represent. Once the brand is reasonably strong, they launch other products under the same brand name.
Umbrella branding provides for a uniform image for the brand, thus enhancing and strengthening the brand equity through a wide range of products. For instance, take the brand Axe from Unilever. Axe is an umbrella branding for a wide range of deodorants, shampoos, shower gels, styling gels etc.
Some businesses may sell products or services under different brand names, while maintaining some investment into a mother brand or a master brand or umbrella brand. In such forms, the company develops an image or a reputation regarding a particular industry or a particular specialty that makes people trust the name. For example, the likes of Nestle and Unilever always have their names visibly stamped in their adverts and have at least 2-3 seconds of clear screen time in every ad for their products (which have their own brand names, like Maggi, or Dove).
There are a few reasons why one might go for umbrella branding.
If the company already has a product with a very strong brand name, then it can decide to launch a new product in a similar or related sector with the same name.
The advantage would be that it people would already be familiar with the name when the new product is launched. The trust and the reputation of the name would induce people to try the new product. Due to this, the marketing spend required for launching the new product would also be significantly less.
The only con would be the risk of dilution of brand image, in case the new product doesn’t really gain much acceptance in the market and gains bad reviews, the ill effects might rub off on the existing renowned product as well.
What one must never do is to launch an umbrella brand with completely irrelevant segments of products together. For example, you can’t just launch a hair care product and a food product under the same name.
That being said, launching a new brand altogether takes up a lot of resources and the sales volumes don’t always support the investment required. So, many companies take this route to achieve economies of scale and benefit from investments into the brand from previous decades.