Multiple Brands instead of Multiple Levels of Service
JacobAldridge: The primary purpose behind different Brands is to serve different markets, which usually involves providing multiple levels of service.To skip from A to C, while trying to capture the same market, is largely a recipe for confusion, and extra unnecessary costs (particularly in marketing / positioning).To complete your example, people who buy a Lexus were about to buy a Mercedes or BMW, not a Toyota.To add another example, people who fly Jetstar (low cost Australian airline fully owned by premium airline Qantas) weren't about to fly Qantas. They were going to holiday within driving distance of home - the new brand opened the bigger business up to a new market.