Brands That Go Stealth

LinkedIn Article by Tim Williams 
October 7, 2013

When major brands face a situation where low-cost competitors are stealing share, many smart companies don’t try to fight low-cost competition head on; instead they develop a second brand—a “fighter brand.” This allows the original brand to retain its customer base and its premium price.

To protect the Budweiser beer brand, the lower priced Busch brand was launched. To protect Pampers, P&G launched Luvs. To protect the Pentium chip’s premium price, Intel introduced the lower price, lower performance Celeron chip. 3M protected the flagship Post-It brand with the “fighter” Highland brand.

These fighter brands are pretty closely associated with the parent company. Most beer drinkers know Busch is owned by the same company as Budweiser -- Anheuser-Busch – and they really don’t care.

But another strategy – more interesting because it’s intentionally under the radar – is the concept of “stealth brands.” Harry Potter author J.K. Rowling created a stealth brand for by donning an invisibility cloak for her new crime novel “The Cuckoo’s Calling,” writing under a pseudonym. She knew that the name J.K. Rowling is too closely associated with magic and adventure to be taken seriously for a story based on a supermodel’s suicide.

Large consumer products companies have created “stealth brands” in similar ways and for similar reasons: Kellogg's (owner of Kashi), Clorox (owner of Burt's Bees) and L'Oreal (owner of Kiehl’s). None of these parent companies publicize their ownership interests in these brands, precisely because they understand the principles of branding.

Turning on the cloaking device

This strategy is sometimes practiced even by professional service firms. The holding company Interpublic Group, owner of venerable ad agencies like McCann-Erickson, also owns a major stake in Spot Runner, which is designed to essentially automate many of the activities that a marketer might otherwise pay a higher-priced agency to do. 

Numerous American law firms have set up separate companies – whose workers are based in places like India – to handle what’s known as LPO (legal process outsourcing) work. The same is true for accounting firms, who invest in “stealth” brands of their own to handle routine accounting work like audits and tax preparation. In fact, a surprising percentage of U.S. tax returns are prepared in India, and it’s pretty certain that the clients of U.S. CPA firms don’t know that.

Of course, many start-ups operate in stealth mode precisely because they want to avoid detection by larger enterprises that might want to copy what they’re doing. Even some well-established companies operate this way for the same reason, the most famous and notable being Apple.

Approach with caution

Sophisticated marketers usually make the choice between being a “branded house” (Virgin) or a “house of brands” (Unilever). “Stealth branding” takes this one step further.

But Stealth-like behavior can also be dangerous – especially when it comes to marketing. When what appears to be an authentic viral phenomenon turns out to be the result of paid bloggers, paid product reviews, and paid celebrity Tweeters, brands can take a big credibility hit. The business press is full of examples of brands made some misguided marketing decisions. You can be stealth, but you still have to be authentic.