Managing the brands in a merger

How to manage brand mergers successfully

brand mergersBrand mergers are part of today’s business dynamics. Regulating the market space today forces organizations to constantly move towards economies of scope and economies of scale.

We can’t open the Wall Street Journal, Business Week, Economist or any other business publication without seeing a whole host of brand mergers. Companies merging, getting bought, or being taken over by another. There are many examples like Facebook buying WhatsApp. The Comcast brand merges with the Time Warner brand. The US Airways and American Airlines brands, etc.

Nearly without exception, executives say the same thing regarding these kinds of activities. “This endeavor will increase our ability to meet the needs of our current and prospective customers. By enhancing our ability to deliver a more diverse portfolio of products and services at the best possible price.”

Brand mergers can become a problem

The major problem with this kind of approach is that it stops the power of brand equities, positioning, and meaning. And to such a degree on both sides of the equation. A perfect recent example of this is the failed merger between Chrysler and Daimler.

Chrysler did not enter this merger from a strong brand position (not unlike any of the other domestic manufacturers). The new DaimlerChrysler was never able to synthesize the two brands into a single cohesive brand. One that added value from the perspective of the customer.

brand mergersThe value in brand mergers that was present in Chrysler in 1998 to the tune of $36 billion. It dropped to $7.4 billion only 10 years later. The failure of DaimlerChrysler was that Daimler believed that Chrysler and Daimler could be run as separate entities.

The promised “increased ability to meet the needs of our customers” was never realized. Daimler spent too much time and resources protecting the Mercedes brand (what Daimler believed was its core business) and not developing a strategic brand plan to combine the strong points of each brand into a single brand.

There were few brand commonalities that could be employed to help bring the two brands together. In the end, the merger was in name only.

A success in purpose

brand mergersBrand mergers do not always fail in combining separate brands. Although rare, some organizations have been successful in capitalizing on the individual brand’s successes and merging those successes into a single brand. A great illustration of this is with FedEx and Kinko’s.

At first glance, it may seem unlikely for a company like FedEx to be interested in Kinko’s. That is, of course, until an examination of each brand is done.

FedEx is not in the next day delivery business. At its core, FedEx is in the peace of mind business. Peace of mind that your package will get where it is supposed to go when it is supposed to be there. Kinko’s, likewise, is in the peace of mind business. Being open 24 hours with a bevy of business and printing services available, Kinko’s offers its customers peace of mind by being there when they are needed most.

FedEx was incredibly smart not to confuse their business processes (next day delivery) with the purpose (peace of mind) of brand.

Rather than look for opportunities in alignment with their processes, they explored opportunities in alignments with their purpose. Now Kinko’s is known as FedEx Office, which makes perfect brand sense.

Don’t lose your brand in mergers

Because it has become so commonplace and accepted (which is totally wrong), many organizations attempt to brand based on a perceived efficacious advantage over a competitor. That is, they try to brand based on their process.

However, the idea of aligning a brand with anything can be scary and daunting to many organizations. It can be difficult because it takes great-prolonged commitment. A clear focus, the ability to look at your organization, market space, and customer set dispassionately are the keys to success. It is scary because change in and of itself is often frightening. Organizations are hesitant to change what they believe is working for them, even if performance is not meeting expectations.

You don’t always have to change

Luckily, aligning your brand with your business purpose does not necessarily mean that you have to change what you are currently doing. Remember FedEx?

Their business has really always been about peace of mind. In this business, peace of mind is the highest emotional ground that can be claimed in the package delivery business. This gives the entire organization a rallying cry that synthesizes the process of the business with the beliefs of the target market. It also provides focus for every single business decision that is made within the organization.

brand mergersIn the case of Kinko’s, the executives at FedEx may have said: “Because we are in the business of providing peace of mind to our customers in everything we do, we are purchasing Kinko’s. Kinko’s, like us, is in the peace of mind business.”

All the difference in the world

While that statement is not completely unlike what’s usually trotted our after a merger, it clearly states the reason why the merger is a true benefit to consumers.

In branding, focus and clarity are your strongest allies. 

Brand, properly executed, should be at the core of the entire organization. It should be the beginning and end of any decision that is made in an organization.

Because, as your products and services come and go, your brand remains constant.

(Read more about name changes in rebranding.)

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