Know-How Exchange : Branding

It's not easy, because the reason a customer might purchase the less expensive brand is the perceived higher cost of the high-end brand.

Having a lower-priced alternative under the same roof will only punctuate the price difference and force customers to ask themselves whether the higher-priced brand is worth that price difference. You're going to have to answer that question for them in a convincing way unless you're OK with the likely cannibalization/dilution.

There must be a reason you want to do this, so prepare your sales personnel to deal with the difference head-on. And make sure your pricing at least maintains your own profit margin if not the dollar profit on a kitchen. Also, position the less-expensive brand with a distinctive benefit -- not just price. If you can segment the audience based on needs and benefits, then price will be less of a consideration.

Bringing in the lower end brand likely will dilute the sales of the higher end brand.

Sometimes this may make sense to do. If the higher end brand loses sales due to its price, having a lower price point option to capture these sales will increase sales. You probably will also cannibalize sales of the higher end (lose sales of people who would have bought the higher end product but who because you had a lower price product bought that instead). How this all works out depends on how much added sales you get, how much cannibalization happens, and what the margins are for each product. Without a doubt, it can be hard to do right.

As mgoodman says, if you go this route, make sure you and your team and supporting signage and such all can talk to why one would want the higher end product.

How do car dealers do it? They know the features and exactly how those translate into benefits for customers as the customers inspect what interests them.

You'll dilute your brand. Car dealers do this by separating their product lines into different brands (Lexus vs. Toyota, etc.) and generally have different showrooms.

How do you avoid diluting the brand?

You don't.

You can't.

Not if both operations are under the same roof.

You need to split them up—geographically, image-wise, position-wise, and message-wise.

You probably have to split out three things - the retail brand (the shop). The high range brand. The low-end range brand. So for instance, the retail brand becomes "The Kitchen Collection" - this allows the shop to sell a full range of products in the mind of customers. You then split the designs into high end "Kitchens of Prestige", and your low end becomes "Daisy Kitchens" (or similar).

The retail unit then gets staged into sections. For the high end use better lighting and spots, better appliances, and used a raised area and lots of benefits for the "Kitchens of Prestige" range - signs that show handmade, bespoke design, craftsman jointing, better woods and materials, gourmet cooking - probably to the back of the shop, with elements that ooze a sense of exclusivity, eg as if it's roped off and only for top buyers. Don't try to mix the two as mixing says they are the same.

The lower priced end is then physically slightly lower, lighting would be a bit flatter, and feels more everyday, functional but not glamorous. That creates a visual and mental distinction between the two sections. The physical step down from the raised 'Kitchens of Prestige' to the 'Daisy Kitchens' helps to create a sense of stepping down for those customers really looking for something high end. Conversely, it suggests a step up and aspiration for those starting out looking for something lower priced. It also helps sales staff, because customers will select themselves into the right section allowing to immediately see where the customers' priorities are.

If it were me, and I perceive some great need to start selling less-expensive lower quality things, I would do everything I would think of to separate the two brands and companies.

Different website. Different company name. Different brick-and-mortar location. Different literature.

If this were my store, I would promote the high-end store. From time to time, people will come in and say, gee, I like it but I just can't afford it. So what you can say is, "hey, I know a guy who sells less-expensive options, I think I have his business card here someplace, would you like his contact information?

I might have a total of three companies. One company would be the high-end kitchen company. One company would be the more economical kitchen company. The third company would do deliveries and maintenance, as a subcontractor to the other two, so that you don't have to buy two fleets of trucks.