Cabinet Wardrobe Marketing: Why is the second brand a dead end?
China is an enormous market full of opportunities, especially in emerging industries. The cabinet wardrobe sector is one such industry that has seen rapid growth and holds great potential. It's not a market you can easily enter from the outside, as it's already saturated with strong local players.
At the recent 2010 Changsha Cabinet Annual Meeting, Pan Xiaoyu, CEO of Gold Cabinet, spoke about the idea of creating a second brand. In his interview, he said, “While our gold-plated cabinets are positioned as high-end in the domestic market, our main consumer base is concentrated in first- and second-tier cities with strong purchasing power. However, we see the future trend and feel a sense of responsibility. We want to bring quality cabinet products to more households. To achieve this, we're making adjustments—expanding our product lines to suit the budget of the working class, and even considering launching a second brand to create a fast model. In today’s cabinet industry, everyone is moving toward customization, similar to how hotels have different ratings, from luxury to budget options. Airlines also have low-cost carriers. In the future, the cabinet industry may adopt a ‘quick mode’ to serve more ordinary consumers.â€
Gold Cabinet isn't the only company in China exploring the concept of a second brand. But what are the chances of success for companies like them? This decision is a big strategic move, and getting it wrong could be costly.
The author believes that most Chinese cabinet companies aiming to launch a second brand are likely to fail. Why? First, most don’t have the resources or capability to support two brands. Building a well-known brand requires time, money, and consistent effort. Creating a second brand is even more challenging. Many companies instead choose brand extensions, using the same name across different products, which shows how difficult it is to build a second identity.
Second, there's a conflict between high-end and low-end brands. If a high-end brand like Gold Cabinet tries to launch a lower-cost second brand, it risks internal channel conflicts. Dealers might exploit the high-end brand’s reputation, causing confusion among customers and resentment from existing dealers. This internal struggle can harm both brands and lead to failure.
Third, if a leading brand creates a second high-end brand, it might succeed by competing with itself. For example, Huangming Solar had two sibling brands, Huangming and Yijia, with separate operations and pricing. Consumers didn’t always know they were related, and Yijia never caught up in sales. However, this strategy works best when the first brand is already dominant. For others, launching a second brand is risky and often unsuccessful.
In the cabinet industry, where the first brand is still developing, most companies are still building their brand presence. Launching a second brand requires careful planning. What seems like a tempting opportunity could turn into a dangerous mistake.
For now, many Chinese cabinet brands are still focused on establishing themselves rather than expanding into multiple identities. As the market evolves, the right approach will be crucial for long-term success.
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