Down-Market Branding

While down-market branding is frequently seen as a viable way to reach new audiences and sustain business growth, it also creates worry about its impact on a company’s flagship brand. Will a new entry-level brand create excitement and interest? Or will it diminish hard-won brand equity? Is it a path to an untapped market? Or is it a sign of desperation and/or lack of innovation?

When done haphazardly, a down-market brand strategy can create the problems mentioned above. But when implemented in a manner that incorporates a clear understanding that it involves far more than a shiny new name and logo, it can broaden your customer base and deliver additional opportunities to extend the lifetime value and loyalty of customers.

One of the best examples of building a great down-market brand is seen in how BMW handled the launch of the Mini Cooper in 2000 (BMW had taken over the rights to build the Mini several years earlier). While many folks may not consider Mini to be a down-market brand, therein lies the genius of how BMW positioned and marketed it—and without any collateral impact on its main brand. 

The following are four components of an effective down-market brand strategy. While examples from BMW’s handling of Mini are referenced, these components are easily applicable to other product categories.

1. Separate the newcomer from your flagship brand
When you think of a BMW, you usually think of a luxurious, serious, and high-prestige vehicle packed with the latest automotive technology. When you think of a Mini, you think of none of those qualities—the brand is all about fun and quirkiness at a relatively affordable price. The two marques couldn’t be more different in looks, interior environment, personality, and driving experience. As a result, there’s little chance of any brand perception crossover—positive or negative—between the two. When you establish a clear separation between your products, this “clean slate” enables each brand to more easily create or maintain its own unique positioning.

2. Develop a new value level
The most expensive, optioned-out Mini you can buy today costs around $40,000. That’s about where the lowest-rung BMWs start—most models cost $60,000 to $90,000, with the limited-edition Alpina line coming in at a bit over an eye-watering $140,000. It’s obvious that each presents a completely different tier of value from the other. But both also present compelling reasons for why they deserve their pricing. Mini’s unique styling and compact dimensions don’t have to cost six figures. On the other hand, the 600 horsepower and 3-second 0–60 times of BMW’s top lines probably do. Each brand delivers on a totally different set of value expectations—a critically important part of down-market branding.

3. Go after a different audience

One of the biggest risks of introducing a down-market brand is creating a product or service that appeals to your core customers and presents a pathway for them to spend less money with you. To prevent this, it makes sense to target an audience that has little affinity with or interest in your main brand. Again, BMW made the right move by making Mini appeal to people who care more about expressing their individuality (name another automaker that offers the option of having the UK flag painted on the roof) and sense of fun than an appreciation for German engineering and craftsmanship. In other words, you’ll rarely see anyone cross-shopping Minis and BMWs.

4. Use different marketing channels

When Mini was first launched, it didn’t depend on traditional marketing channels, such as TV or radio, that virtually every other car brand did. Instead, it employed guerilla tactics on a scale never seen before. In urban gathering areas throughout the U.S. and Europe, Mini cars were frequently used as props in playful street corner dioramas, on 3D billboards, and even climbing or dangling from the sides of buildings. Every execution emphasized the impish fun that was part of the Mini brand and often attracted crowds all day long. This non-traditional approach brilliantly caught the attention of young singles and couples that Mini was targeting and showcased how even a simple commute or trip to the grocery store could bring a smile to your face.

While these four principles won’t guarantee down-market brand success, they all contribute to its most important element—well-defined differentiation. It’s always easier to build a link, if needed, between a main brand and its down-market sibling later than it is to reverse an unintended, vague, or confusing connection early on. By building a new brand that fits a fresh set of expectations (and budgets), a highly respected or premium brand can effectively tap into new customer opportunities and expand its market footprint.