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The brand you own might not be the brand you think you own. Your Volvo is really a Ford. Budweiser beer is now a Belgian-Brazilian drink produced by a company called InBev, and Ben & Jerry’s Ice Cream is owned by Unilever. In other cases, the offspring of a merger are perfectly obvious. Witness PriceWaterhouseCoopers, Disney-Pixar or GlaxoSmithCline.

The why behind these brand strategies – some being swallowed up, others remaining front and center – starts with behind-the-scenes analysis and consideration of brand identities, equity, customer preferences and culture. The result is a careful, and hopefully successful evolutionary plan for brand strategy. But the pitfalls can be many, and when not done right, focusing entirely on tangible assets, the stage is set for failure.

What Can Go Wrong?

A report by McKinsey puts the number of merger failures as high as 20%, with an even higher proportion (65–70%) considered to have failed to enhance shareholder value. Most importantly, the study cites a reason:  A missing brand and customer focus which took a backseat to financial and legal matters.

Combining brands may or may not make sense given the relative awareness and profile of each brand. The somewhat infamous merger of Daimler & Chrysler essentially failed to consider this. The inconsistency between the two brands, and what they stood for, added to merger difficulties. The incompatible images of the two brands might have benefitted from maintaining their separate identities.

When researchers at MIT looked at more than 200 mergers and acquisitions completed since 1995, they found the typical M&A scenario was one drenched in due-diligence, but focused on tangible assets like property, plant & equipment, and working capital. Typically, brand strategy received serious attention only after a deal was approved. Re-branding became a cleanup task once marketing managers finally asked: “How are we now going to make this deal work?”.

Of course, many executives and marketing managers do realize the importance of dealing with corporate branding issues, early on. Whether the target brand disappears, or both companies’ brands survive with a profile (like Nike and Reebok quietly existing as part of the Adidas family), researchers at MIT concluded that:

“The selection of a new corporate brand should be an important matter of strategic intent, ensuring that the merger

is signaling the right message to the right audiences.”


Without Research, You Will be Guessing About Consumer Mindset

Merging brands isn’t done simply with the introduction of new branding elements. The real value of a merger or acquisition, over the long-haul, comes from enhancing the relationship your brand has with your consumer. That relationship has already been shaped by your customer’s perceptions and experiences which form brand equity. The smart marketer will use customer and market information to answer questions like these:

  • Who is our customer now? How does one brand map to the other?
  • Where are the synergies between the two brands?
  • How does each create value for consumers?
  • Could one brand negatively affect others in the portfolio, or the company as a whole?
  • What are the perceptions about the merger? Is there consumer concern? Was there press already?
  • Is there an unfamiliar, newly-created consumer group?

 

What you learn about your market and consumer brand strategy (merge or absorb) sets the stage for a full strategy and its communications. 

It Doesn’t Happen Overnight

Building your original brand took time. This is the time to build the new version; this too, will take time. Your plan should have steps and phases laying out exactly the role each brand will play over (sorry to say it) a fairly lengthy timeframe, likely 12-24 months. If possible, incorporate brand strategy early into merger planning. This will tie the brand strategy to the business strategy.

You’ll need to track how it’s going over time. Clear metrics to assess brand objectives are the key here.  But markets evolve, so take a long-term view. Branding the M&A is crucial, but so is evaluating the brand strategy at regular intervals.

Now You Get To Name It

You’ll notice this is not the first step. Your market and customer research will tell you which brand name is most appropriate and meaningful, and what should stay or go. Typically, the approach looks like one of these:

  • Transitioning to an acquiring company’s brand name.
  • Retaining original brand names.
  • Dual-Branding – where the two brand names are combined.

The Merger of Price Waterhouse and Coopers & Lybrand created PriceWaterhouseCoopers, and later to a shortened version, PwC . While PricewaterhouseCoopers remains the full legal name of the global organization, the new name and logo were designed to be “easier to use and better suited to digital and online use.” And the name was easier to apply to non-English speaking countries. The goal: strengthening and modernizing how the name represented a worldwide network to clients. Eventually, even DaimlerChrysler maintained customer-facing brands (Mercedes-Benz, Chrysler, Jeep and Dodge) as separate entities to appeal to different segments.

Tell Your Story – Eliminate the Confusion

You’ll need to tell the story. And unifying the message of two former brands is not easy. All too often, post-merger messages focus on how great the merger is for the company (particularly investors), but say only vague things to consumers who want specifics. Meaningful and relevant messages, designed to avoid brand confusion are best. And what worked in the past (with positioning and messages) might not resonate with the audiences you’ve inherited.

Initially, emphasize the internal audience – your employees. They are ultimately the best brand ambassadors and their enthusiasm, if harnessed, can ensure information about your brand extends outwards.

There are some important audiences to connect with including prospects, existing customers, vendors, and referral sources. The reach of communications and the revisions required will extend to websites, press releases, customer communications (product/service profiles, announcement letters), partner communications, and social media.

As for tools, it’s crucial for any marketing manager to think carefully about how to communicate in a believable way.  A whiteboard video is an efficient, effective way to share information with a personal touch using visuals.

Final Considerations

Mergers, and the brand stories around them, are not always successful ones. If you find yourself and your company in merger territory, you’ll want to tread carefully. Failing to carefully study and then plan your way, risks your brand’s reputation, or that of the brand you’ve just spent months (maybe even years!) acquiring. Ideally, you’ll establish a plan that ensures survival of valuable brands and realizes the aims that your merger intended.

Don’t overlook the many layers of building a unified presence and messaging across channels, internally and externally. A partner with experience in helping brands travel the merger or acquisition road can smooth the transition. ProformaSI can help.

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Sources:

http://iveybusinessjournal.com/topics/strategy/merging-brands-designing-the-post-ma-portfolio-2#.U1GG_VeTJqA

http://hbr.org/2013/09/first-make-it-work-then-rebrand-it/ar/1             

http://sloanreview.mit.edu/article/speaking-in-tongues/

http://knowledge.insead.edu/strategy/want-a-successful-merger-877

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