Sometimes, you just need a brand to grow.
Tom Dougherty, CEO – Stealing Share
08 March 2010
A better way to grow then just to acquire
It is something a brand strategist might ask, of course, but I’ve often ask myself, “Why?” each time I read about a merger or acquisition, such as today’s news that MetLife acquired Alico from AIG.
There are sound business reasons to acquire companies, merge with others and seek to expand your horizons. In MetLife’s case, the acquisition was about penetrating the Asia market. It might have been seen to Met Life as the most cost-effective way of doing so.
However, when companies are considering expanding into a new market, acquisitions feel a little lazy and impatient. Why not just enter that market with your own brand, and leverage your own equity? Why doesn’t MetLife just move into Asia without the acquisition?
The answer is often that the acquisition represents taking over physical assets, such as office, databases and personnel, as well as an instant client base.
But the trend of acquisitions and mergers, especially those in the shadow of the economic situation (see the banking industry), often ignores the hard work of building a brand that is so emotionally relevant it can pop into a market on its own and have long-term success.
Instead, there are CEOs who look at the need to have a stronger bottom line, so they spend. Then, once the growth has reached a plateau because they do not have a meaningful brand, they go to the next thing they can buy. It’s just not always smart, and is often the least economically feasible way to steal market share.
The way it should be: For those who know microbrews in the U.S., most are strikingly familiar with Fat Tire, the beer brewed by New Belgium Brewing Company in Colorado. We did work for them, and the power of the Fat Tire brand was that it could enter a market anywhere in the country and immediately have 10% market share – and would to grow.
The lesson is that acquisitions and mergers are not always the smartest and most lasting ways to ensure growth. Sometimes, you just need a brand to do it.
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