A corporate umbrella strategy is a strategy that can be employed by a firm with multiple product offerings. There are distinct advantages and disadvantages to this particular strategy. Any manager considering using it should, therefore, be fully familiar with how the strategy works and understand these benefits and drawbacks.
A corporate umbrella strategy is the strategy of arranging several brand names under a single corporate name. This allows products to distinguish themselves with their own brand name, but gives them an association with a large grouping of products and an overarching brand name.
Many large and successful companies employ a corporate umbrella strategy. Unilever, for instance, sells a variety of products under different brand names such as Hellman's mayonnaise, Becel margarine and Dove soap. These products are marketed separately, but also as part of the Unilever brand. General Electric is another company that uses the corporate umbrella strategy effectively. GE operates electrical, financial and aviation businesses with separate brand names that are all linked to the GE brand.
A corporate umbrella strategy allows a firm to create synergies in its branding. If the company can establish a positive reputation for the umbrella brand, then it requires less effort to create brand appeal for the individual brands. When a customer has a positive experience with an individual brand this can also help create a positive image of the umbrella brand in his mind.
The disadvantage of a corporate umbrella strategy is that problems with an individual brand can harm the other brands under the corporate umbrella. If someone is disappointed with the quality of an individual product this disappointment will likely impact her image of the firm as a whole. The corporate umbrella strategy therefore requires a company to be attentive to the quality of all its products.
