Henkel's Case Study

Henkel Group is a family-owned company founded in 1876, and until 1980, it had grown to over 100 operating companies in more than 40 countries. This company has diverse product lines that was sold by eight groups. However, Henkel were facing problems of finding an innovative approach in increasing fragmentation and specialization in those small and deep segmentations. To solve these problems, a proposed strategy aim on umbrella branding and global standardization was built. However, to build the umbrella branding successfully, the strategy should be applied on Pattex but not Pritt.

Umbrella Strategy

Umbrella strategy is the strategy that developing an integrated strategy for the marketing of a variety of products under each of the brand names.

Rewards

• Since umbrella brand identify new brands under existing brand, it would be easy and economical to earn customer awareness, reduce advertising budget and build brand image.

• This strategy would give uniformity to all the brands under the umbrella through one designated approach of advertising, promotion, and packing.

Risks

• Brands under umbrella branding was connected, so, if one brand did not do well then it could affect the overall brands, even damage the company image. Also, negative publicity could affect other brands under umbrella branding.

• Qualities of different brands in umbrella branding will be different, it may be difficult to control.

Pattex Brand

Pattex was launched in 1956 as a contact adhesive for the professional, and it was positioned as the “strength adhesive”. As the leading contact adhesive in West Germany (WG), Pattex held 80% market share in WG in 1980. Also, the brand awareness of Pattex, which was 80%, was topped in WG. Furthermore, over 65% of sales came from outside Germany and the total Pattex sales were DM 66 million worldwide. However, Pattex were facing the product life cycle problem.

Umbrella Strategy

For Pattex, the umbrella strategies are as follows,

• Re-market Stabilit Rasant under the name Pattex Super Glue

Pattex Brand had topped market share and customer awareness, thus, re-market Stabilit Rasant under the name Pattex Super Glue would help Stabilit Rasant to build a good image and customer awareness. Also, CA was a popular market, Stabilit Rasant was not doing well because of its late entry; however, put the name under Pattex would power it up. So, it was a good idea to re-market Stabilit Rasant.

• Develop a Pattex entry into “hot melt” market

The “hot melt” market was emerging and had a technical