Cabinet Wardrobe Marketing: Why is the second brand a dead end?
It's hard to deny that China represents a massive opportunity for emerging industries, especially in sectors like custom wardrobes. The cabinet wardrobe market in China is rapidly growing and has become a promising industry, making it an attractive space for new entrants. However, entering this market isn't without risks, and the competition is fierce.
During the recent 2010 Changsha Cabinet Annual Meeting, Pan Xiaoyu, CEO of Gold Cabinet, shared his vision on building a second brand. He said, “Although our gold-plated cabinets are positioned as high-end in the domestic market, we mainly target first- and second-tier cities with strong purchasing power. But looking ahead, we feel a sense of responsibility to bring quality products to more households. To achieve this, we're adjusting our strategy. On one hand, we're expanding our product line to better suit the spending power of the working class. On the other hand, we're considering launching a second brand—perhaps a fast model—to cater to more cost-conscious consumers.â€
This idea of creating a second brand is not unique to Gold Cabinet. Many Chinese companies are exploring similar strategies, but the success rate remains uncertain. Launching a second brand is a big strategic move, and getting it wrong can be costly.
In the author’s view, most Chinese cabinet companies lack the resources and capability to successfully build a second brand. Creating a well-known brand takes time, money, and effort. Building two brands is even more challenging. Most companies prefer brand extensions instead, using their existing brand name across different product lines. This approach is easier, but it also highlights the difficulty of establishing a truly independent second brand.
Another issue is the conflict between high-end and low-end brands. If a company wants to launch a second, lower-cost brand, it may face internal channel conflicts. For example, if the original brand has dealers, the new brand could compete with them directly, leading to dissatisfaction among existing partners. This could harm the overall business rather than help it.
However, some leading brands have managed to succeed by creating a second high-end brand. For instance, Huangming Solar created Yijia as a sibling brand, which operates independently and even commands a higher price. In such cases, the two brands coexist without direct competition, and customers are often unaware of the relationship. This kind of strategy works best when the original brand is already a market leader.
In summary, building a second brand is a risky decision. Unless a company has the strength and clear strategy, it's unlikely to succeed. For many Chinese cabinet companies, the dream of a second brand might be more of a temptation than a realistic plan. It's important to proceed carefully, as the wrong move could lead to serious consequences.
Ultimately, the wardrobe industry in China is still evolving, and the choice to create a second brand must be made with caution. What seems like a golden opportunity could quickly turn into a trap if not handled properly.
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