The Solution to Brand Dilution

How a Company Can Grow Through Acquisition without losing its identity.

In an increasingly competitive global marketplace, many companies are challenged to achieve expeditious growth. With stockholders demanding swift returns on their investment, many aggressive management teams bypass the long, slow path to growth and instead buy a smaller business that already has achieved success in their shared industry.

And, while numerous practical and fiscal benefits are immediately realized through an acquisition, with the new efficiencies come brand identity issues that can confuse – or, worse yet, alienate – stakeholders of the new, combined entity.

For instance: Were the two companies previously fierce competitors? Does one enjoy a sterling reputation, the other less noble? Are their products and services of equal value in the eyes of the marketplace? Will their respective customers embrace the combined entity or view the new offering with suspicion?

In order for both companies to enjoy maximum benefits from a merger, these questions (and many others) must be addressed prior to acquisition. After all, customers are fickle, easily lead astray, and have very short attention spans. Overlooking the role of “brand” in the acquisition process is ill-advised and may result in diluting two brands instead of fortifying one.

Following is a check-list of questions and activities brand managers must consider to ensure the health and well-being of their brands post-merger.
Brands can merge in a multitude of ways: which is right for your situation?

When combining two brands, customarily there are several plausible strategies to consider. They range from building a “house of brands,” as is the case with Proctor & Gamble, to creating a single “branded house,” such as Harvard University. To determine the most appropriate solution for your merger, a brand manager is often required to build a business case for each. Engaging a branding expert who is knowledgeable and conversant in the pros and cons of numerous merger scenarios can expedite the process and result in a game-changing recommendation.

It’s all about the customer: do you know what they think and feel about each brand … and the merger?
It is essential that brand managers understand how the individual brands currently cultivate, nurture and retain customers. The more knowledgeable they are about each company’s respective customers, the better they understand the levers that determine customer choice. The swiftest way to understand the all-important customer is through qualitative research, specifically one-on-one interviews, with each brand’s best customers. Findings and insights revealed during this exercise will inform the selection of a competitively sustainable brand portfolio strategy.

Every company has a competitive set: how will a brand merger impact the combined entity’s positioning?

M & A activity undoubtedly always ripples competitive landscapes. Therefore, it is imperative that brand stewards understand where their brands live in the hearts and minds of their customers today in order to
create a new position for the combined brands tomorrow.

A comprehensive communications analysis of each company is a great place to start. Findings from the analysis should then be compared to their competitor’s public messaging. This exercise will reveal opportunities for the new entity to develop a distinct and truly differentiated market position.

Today is tomorrow’s yesterday: how can both companies best capitalize on their respective heritages?

Strong brands have rich histories comprised of colorful stories. Customers find meaning and relevance in these stories and, often subconsciously, reference them when making a choice. Brand managers must view themselves as storytellers adding new ‘chapters’ to the history of the merged brands with a respectful eye to the past and a hopeful eye to the future.

Get on the inside track: what do employees feel about their existing company, their new colleagues, and the merger itself?

Employees are the ultimate brand ambassadors. They build the products and provide the services their customers choose. Furthermore, employees support customers before, during, and after the buying process. In essence, they create premium-paying, referral-generating consumers for the brand. Such important individuals require the utmost respect. Show it by validating their contribution to your company and then querying their thoughts, feelings and attitudes about the merger.

Ultimately every business is an image business: how can both companies update their look and feel without losing customers? Simply stated: most people recall images more succinctly than they do words. In fact, through repeat exposure, customers commonly develop a relationship with a brand’s name, typography, logo, symbols, characters, font and color palette. Over time, a mere gesture – the Nike “Swoosh” is a great example – can communicate more about a brand than an entire website. Brand managers must honor and respect the relationship customers have with their imagery and very cautiously update or change time-honored symbols. Change should be an evolution and not a revolution. After all, you do not want to be completely unrecognizable to your best customers.

Building the blueprint: we’ve identified the core questions – how do we get to the answers? On second thought – you are not really a brand manager. You are an architect charged with building a new house for your two combined brands. Before breaking ground it is advisable that you utilize a brand blueprint that methodically identifies the appropriate brand strategy, the updated brand positioning and the revitalized symbols and images. This vetted, tested, and approved document will act as a reference tool throughout your building process and inform every proactive brand decision required to make your new entity soar.

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Rob Levinson, together with Joseph Benson and Drew Allison are principals of Brand Blueprint, a Brand Consultancy located in Boston, MA. Their areas of expertise include, respectively, brand strategy, positioning, and creative expression.