The Lean Towards the Luxury Sub-Brand

The Sub-Brand. The lean towards a sub-brand is nothing new in the automotive industry.  More so and for some time, sub-brands are further divided into even more sub-brands.  BMW Group consists of the BMW, Rolls Royce, Mini, and Motorrad sub brands.  Mercedes Benz has the AMG and SMART brands.  Chrysler is now a part of Fiat. The list continues and as automobile manufacturers continue to amalgamate and buy stock in their competitors and want to ensure their own principal product is not diminished we’ll see the trend towards the sub-brand continue to grow. 

Image Courtesy Jalopnik

Image Courtesy Jalopnik

And this isn’t a bad thing.  Even when brands like Saturn, Eagle, and for some time, SAAB fail.

So what are the upsides to the sub-brand?  Certainly there is considerable cost (which may or may not be shared amongst all principal shareholders) and the risk of failure is substantial (Fisker anyone?) but the possibility of success is just as great.  Evolution into other markets, introducing new buyers to a brand name, furthering a parent brand’s growth, and the focus on something different (could there be a bigger contrast between a Mercedes Benz and a SMART car?) all allow a parent brand to further mature in the open marketplace.

I am enamored with most sub-brand’s ability to focus efforts in another arena to potentially tackle problems that may not affect the parent brand’s market.  The SMART, for example, allowed Diamler to focus on city centric driving habits.  As a metropolitan urban dweller I use the SMART on a near daily basis instead of my normal driver because parking and navigating inner-city traffic are both eased substantially with the SMART’s shortened wheelbase.  It has become a clear-cut solution to a burgeoning problem.

But there are problems with the sub-brand.  I honestly believe that Lincoln’s Black Label trim package will fail to capture the luxury buyer that Lincoln so desperately needs (and wants) while Cadillac’s V-Sport line may perform for a short amount of time but will plateau once buyers shift back to the aggressive forward thinking we’ve come to expect from European brands (Cadillac admits their competition is BMW, Audi and Benz…. All of whom spend substantial sums of money to ensure that Cadillac is never their equal). 

Why the problems?  Firstly, a sub-brand needs to be borne of a brand that is in and of itself a success, a pinnacle in the industry.  Lincoln has continued to show us that they’re not entirely willing to evolve with the industry and beyond the insane success of the Town Car, they’ve not provided the market with a blow-out hit.  It is simply a case of too-little too-late (though maybe not).  Now if they came out with another version of the ’67 Continental with suicide doors I believe that my thinking might change.  Then again, we hear this same feeling repeated over and over again in automotive media. . 

Secondly, a sub-brand needs to be either a) solving a known problem or b) providing something so radically different that the market didn’t know they wanted it.  A luxury brand creating another luxury brand just doesn’t always cut it.  Mercedes learned this when the Maybach brand was eventually absorbed into the Mercedes line up.  Aside from the Landaulet, the Maybach was not radically different from what was already being produced by Mercedes Benz and buyers could easily get a Bentley or Rolls Royce for the same price.  And with historic provenance to boot.  Lincoln is following the same pattern with the Black Label (and in all honesty, the Black Label should be Lincoln’s starter trim package, not it’s highest end). BMW’s I series? This is a different ball game all together.  BMW is creating something radically different from not only their entire line up but also from what is considered the normal electric vehicle.  It’s not a Leaf.  It’s not a Volt.  The i8 is a spectacle that blends a sustainable power train AND sport driving at the same time.  Mind blowing.

So – why the sub-brand?  In the past few years, DCoopMedia has had the privilege of working with and supporting a number of brands with their own successful sub-brands.  Notably we’ve had the distinct pleasure of being part of the vast network of designers and media outlets who’ve been tasked with promoting Brizo, Delta’s higher end faucetry line. Basically Brizo is to Delta as Genesis to Hyundai.  It’s a higher end interpretation of their budget friendly product offering.  Constructed of higher quality components and an eye to design, Brizo has its own design team, its own development team, and aside from being manufactured in Delta’s plant in the mid-west, shares little in common with the giant.  Brizo is a successful sub-brand because it affords higher end products to a mass of people that wouldn’t necessarily have considered a higher end product. It works, designers love it.  It has truly enabled Delta to break into an upper budget market without alienating their otherwise mass market clientele.

Will consumers embrace sub-brands  Most certainly, but only if they’re given a reason.  The decision to buy a MINI is certainly influenced in one way or another knowing it’s from the BMW family.  The consumer is familiar with the quality, with the build, with the customer service of a BMW product and takes that with them as part of the buying experience. 

I mentioned earlier that it also introduces new buyers to a brand family.  DCoopMedia follows the luxury market almost exclusively and have found that luxury brands on a large scale (think Louis Vuitton and LVMH) are creating lower priced SKUs in order to entice new buyers who have less buying power.  I wrote a piece breaking down rarity and exclusivity in luxury brands (see it here) and one look at sub-brands are evidence of just how quickly it’s become a method of getting consumers to cut their teeth on a brand hopefully get them addicted (we call this retaining customers).  So long as a consumer is pleased with a brand, the potential for them to move up the chain so to speak is so much greater.  Sub-Brands within luxury labels or luxury sub-brands within mass labels creates a chain of buying that is essential to the survival of the luxury brand.    

 ##

 Brandon Smith, LEED AP is an interior designer turned Founder and Principal Editor of DCoopMedia, a San Diego based luxury media firm centered around the best of structural, automotive, nautical and aeronautical interior design. Brandon is also the Luxury Travel Editor of CarpePoints.com and a Design Expert at Demand Design. DCoopMedia can be found on Twitter @dcoopsd , via the blog D’Scoop or the recently launched Twitter chat #DesignLux, Thursdays at 4pm ET.

Brandon Smith