Should the value range carry the premium name?
Compare portfolio roles with substitution and fixed cost visible.
The question
Harbor Brands considers a lower-price tea range for the next full year. Luma is its existing premium brand. It can use the Luma name or a separate value brand, Dayleaf. Both options forecast 1,500 range units in that year. Unit contribution is after variable costs; each displaced Luma unit loses £5 contribution. All numbers are invented forecasts, not measured demand.
| Range unit contribution (£) | Existing Luma units displaced | Fixed pack cost (£) | |
|---|---|---|---|
| Luma extension | 4 | 600 | 0 |
| Separate Dayleaf brand | 3 | 150 | 1000 |
Each option forecasts the same 1,500 new-range units. Subtract displaced contribution and the stated fixed pack cost once.
Luma must retain its premium role. Dayleaf would need its own clear promise and recognition. The financial comparison alone cannot prove whether consumers understand those roles.
“Choose your next action and explain the evidence behind it.”
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A strong answer, step by step
Open each step in turn. This is one strong answer, not the only one.
Step 1: Define each brand’s job
What would you do here? Open the move you’d make.
Define the premium and value roles first.
The strong move. Brand architecture should clarify the choice people face.
Rename the range only to tidy the organisation chart.
Tempting, but it misses something. An internal naming structure does not show what consumers understand or choose.
See how a strong candidate says it
“A Luma extension borrows the premium name for a lower price. Dayleaf separates the value promise but needs its own recognition. I would test whether people can explain the difference before making a permanent choice.”
Why it works: Brand architecture should clarify the choice people face.
Step 2: Count substitution and cost
What would you do here? Open the move you’d make.
Compare net contribution and the premium promise.
The strong move. The higher unit contribution also displaces more existing business.
Choose the extension by comparing £4 with £3.
Tempting, but it misses something. The unit-only comparison omits displaced Luma contribution and fixed pack cost.
See how a strong candidate says it
“The extension contributes 1,500×£4 − 600×£5 = £3,000. Dayleaf contributes 1,500×£3 − 150×£5 − £1,000 = £2,750. The £250 forecast difference does not establish that the premium-name risk is worth taking.”
Why it works: The higher unit contribution also displaces more existing business.
Step 3: Update the comparison
A verified pack reuse plan reduces Dayleaf’s one-year fixed pack cost from £1,000 to £500. All unit contributions, volumes and displacement forecasts stay unchanged.
What would you do here? Open the move you’d make.
Test the separate brand with clear portfolio roles.
The strong move. The changed cost reverses the forecast ranking, not the uncertainty in demand.
Keep Dayleaf at £2,750 because that was the first estimate.
Tempting, but it misses something. Its fixed cost fell by £500, so the same forecast now yields £3,250.
See how a strong candidate says it
“With a £500 fixed pack cost, Dayleaf contributes £3,250: £250 above the extension. I would now propose a bounded Dayleaf test while keeping the switching assumptions visible.”
Why it works: The changed cost reverses the forecast ranking, not the uncertainty in demand.
Step 4: Test the architecture
What would you do here? Open the move you’d make.
Test role clarity and switching before a permanent rollout.
The strong move. A naming choice needs consumer evidence as well as a forecast.
Treat the £250 advantage as a guaranteed return.
Tempting, but it misses something. All volumes and switching rates are forecasts; no test has established that return.
See how a strong candidate says it
“I would check whether buyers see Dayleaf as value and Luma as premium, then measure switching between them. If the separate name remains confusing or costly to establish, I would revisit the structure.”
Why it works: A naming choice needs consumer evidence as well as a forecast.
The answer, in short
- Decision
- Propose a bounded Dayleaf test under the revised cost.
- Because
- Its forecast contribution is now higher, and it can preserve a separate value promise.
- What would change it
- Measured switching, recognition cost or confusion could change the preferred architecture.
Common traps
- Comparing only unit contribution.
- Calling a forecast a measured return.
Check your answer
- I defined the two brand roles.
- I subtracted displaced contribution.
- I applied the fixed cost once.
- I kept forecast uncertainty visible.
Last reviewed Nov 10, 2026