Maintaining brand identity in the face of acquisition is a test for any business. A brand identity may have taken decades to form, but all of a sudden it is being challenged by new ideas, cultures and agendas.
A Marketing Week article points out that companies must work hard to retain a unique brand identity post-acquisition. But that’s easier said than done, as many high-profile acquisitions have demonstrated.
One such failed merger is that of FMCG leaders Unilever and Kraft Heinz; the former renowned for its commitment to long-term sustainability and brand building; the latter driven by cost-cutting initiatives and streamlined budgeting. The deal is purported to have broken down, with a ‘culture clash’ to blame.
There have undoubtedly been many successful mergers too, including Sainsbury’s £1.4bn acquisition of Argos’ Home Retail Group, Tesco’s £3.7bn acquisition of Booker and Actavis’ acquisition of Alpharma for $810m (I managed the rebranding process here). Though as the article stresses, the key to long-term success lies in brands’ ability to uphold their identity.
From master brand to dual brand
The Marketing Week article shares an example of the merger between UK betting brands Ladbrokes and Coral last year. Rather than adopting a ‘master brand’ strategy, the new company has decided on a ‘dual brand’ approach.
Chief customer officer Kristof Fahy noted that Ladbrokes and Coral are both differentiated brands with rich histories, which “provides the kind of brand equity that some […] competitors will crave.”
Fahy explained that he’s currently exploring ways Ladbrokes and Coral can be used to drive a greater market share. While both brands serve similar audiences, customer segmentation across retail and digital channels proved that they have different strengths.
The aim is to “dial up the best of both brands,” Fahy continued, stressing how important it is not to become introspective and lose sight of the customer.
Snapping up disruptors
Increasingly, big-name brands are acquiring lesser-known, emerging brands; harnessing their unique local market access and integrating them within their companies.
Take Alvogen, as an example. We have acquired local businesses in Korea, Taiwan, Romania and Russia – to name but a few – to expand our commercial footprint. Being acquired by a well-known global brand demands reevaluation. At Alvogen, we are mostly focused on the master brand strategy in our markets, but at the same time, we carefully evaluate the value of the acquired brand. Often that results in a temporary dual-brand strategy to ensure we not only protect the brand value but use the temporary period to position the master brand, which in some cases may not be well known in our new markets.
Being acquired by a market leader needn’t mean the disruptor’s identity has to change, though. For example, last year, London-based gin distillery Sipsmith was acquired by Japan’s Beam Suntory – the third largest spirits firm in the world. To maintain its identity and artisan appeal, its founders will carry on operating the small, 35-person Sipsmith distillery in London.
Merger of equals
Like the Ladbrokes Coral merger, the 2014 Dixons and Carphone Warehouse acquisition was hailed as a “merger of equals,” and this attitude has informed cohesion efforts ever since. Rather than creating one overarching brand, the aim was to “respect the strength and equity of each of [the] brands, as well as understanding a consumer’s reasons for choosing one […] over the other,” stated Georgina Bramall, head of brand and advertising.
Any acquisition can entail numerous aspects, from retaining a unique brand identity or operational independence to devising a long-term transformation strategy. But, whatever the goal of the merger is, it’s essential that the objectives of both brands are met.