There have been numerous business mergers and acquisitions between various firms in the business world. A merger refers to a situation in which two or more different companies come together to form one company, whereas acquisition is whereby one company or business purchases another company or business (Kotler & Caslione 2009). In a merger, both parent companies cease to exist and a new company or business is formed with a different name, brand and operations. In acquisition, the company that has been purchased ceases to exist and the buying company takes over the operations and assets of the other company.
Despite successful mergers and acquisitions over the past few years, most companies have been faced with the problem of building new brands or maintaining their previous brands. This has led to great need to effectively manage product brands as well as organizational brands. Thus, various organizations have been forced to develop and implement new rebranding strategies to enable them remain competitive in the business world. This paper, thus, looks at various ways in which merged and acquired businesses or organizations may maintain strong product and organizational brands through rebranding.
Definition of a Brand. A brand refers to a product or group of products that has distinct features and characteristics that differentiate it from other products in the market. Keller (2008) asserts that the most famous definition of a brand was founded by advertising guru David Ogilvy. Ogilvy states that a brand refers to the total sum of all the tangible and intangible features of a product such as its name, color, packaging, price and quality. A brand usually includes symbols, words and marks that make a distinction between the product or organization and its competitors. Product or corporate brands are usually registered with regulatory authority such as government agencies to prevent other parties from using the same brand. According to Elliott, Percy and Pervan (2011), brands are usually expressed in terms of trademarks, labels and logos. In some cases, organizations may represent their brands using graphical representations. A strong brand must be able to generate adequate awareness and familiarity of the product or organization amongst the consumers as well as creating competitive advantage to the company.
On the other hand, branding refers to the process of establishing and publicizing the identity of a given product or entity. According to Philip Kotler and Keller (2009), branding is a very essential component in marketing because it helps in distinguishing products and companies from their competitors in the consumer market. Branding usually aims at creating awareness and recognition amongst consumers. Branding also helps in building good reputation for the products as well as the organizations. Morgan (2009) defines branding as the process of setting a particular assemblage of perceptions and images that consumer may use to identify a good, service or company. Brands are usually developed through constant advertisements that convey messages about a product to the consumers, building strong relations with consumers and regular interactions with both current and potential customers in order to determine their tastes and preferences. For successful establishment of a brand, the company must promise the consumers exceptional experiences with the products during consumption. This can be achieved through provision of high quality goods and services. Hankinson and Cowking (2009) refer to branding as the act of creating a distinctive and exceptional name or image for goods and services amongst the customers. Branding usually involves advertising to attract new customers as well as retaining the existing ones. Branding also involves promising customers high quality products. It tells the customers what to expect and the experiences that they would get from consuming particular goods or services of a company. In my view, branding involves capturing the minds of the consumers. A good brand should promise consumer high quality goods and services at low costs. The main purpose of branding is to get potential customers choose the goods and services of an organization over products offered by other organizations.
Brand Management. An effective brand management strategy should identify the various wants and needs of customers through market researches and then design and develop products that have capabilities of meeting such needs and wants. Brand management also involves creating clear and open communication channels between the customers and the company. Through sales promotion techniques such as advertising, publicity and direct selling, marketers tend to inform consumers about what the products entails, how and where the products can be found. Branding often helps in building perceived quality and emotional attachment to the products, for example, Nike has created strong perceived quality amongst its customers by associating it products with renowned athletes (McLoughlin & Aaker 2010).
According to Chevalier and Mazzalovo (2010), brand management is a vigorous task that requires well laid down strategies, policies and procedures. Brand management is time consuming and requires the use of lots of resources. For effective brand management, the marketing manager must identify the mission and vision of the company, the various benefits and unique characteristics of the product to build on, the expectations of consumers and the existing reputation of the product or company amongst the consumers. It is important to take into consideration the values and practices of the company and goals and objectives that the company aims at achieving in the future. Brand management also helps in motivating and persuading the consumers to purchase goods and services of the company. It also helps in creating a pool of brand loyal customers. Effective brand management facilitates quicker identification and recognition of a company and its products. It also helps in reducing marketing costs such as advertising costs.
Good brand image also leads to various internal benefits to the company such as attraction and retention of good employees and building of the values and culture of the organization. Davis (2008) defines brand management as the process of applying various marketing strategies to promote a given product or organization. The goals and objectives of the company must be integrated with the needs of the customers. Proper brand management entails researching, redefining and building on unique attributes for the products. Good communication and interaction with customers are also essential for effective brand management. Strong brands usually give quality image to consumers. Brand management aims at conveying messages to the consumers about the products or the organization.
The graph below depicts a forecasted increase in sale volumes that a merger or acquisition may get as a result of proper rebranding and effective brand management.
Strategies for Brand Management. There are various strategies that have been proposed by business professionals to ensure effective management of brands, for example, Shocker, Srivastava and Ruekert (2007) propose that business managers must create emotional connectivity between the customers and the products. Brand management also involves providing a strong identity about a product or company within internal and external environments of business, for example, amongst employees, suppliers, intermediaries and customers. Additionally, strategic brand management would focus on how the particular goods or services may be made favorable to the customers over a long period of time.
Some of the benefits of building strong brands include reduction in business risks such as decline in sales. Through proper brand management, organizations usually enjoy high market shares. Moreover, strong brands are usually able to sustain themselves in the market, hence, the reduction in marketing costs. Brand management also results in increased sales for other products related to the brand or the company, for example, if a customer likes the Coke brand from Coca Cola Company, he or she is more likely to purchase another product of the company, for instance, Fanta.
Brand Management in Mergers and Acquisitions. According to Qian and the National Bureau of Economic Research (2012), strategic brand management involves four major stages, namely building, leveraging, identifying and protecting the brand. During the process of building the brand, marketers identify various characteristics or attributes that would differentiate the products or company from other products of competitors in the market. The marketers create a unique identity for the products or company. The attributes of the product should be built on the desires, perceptions and expectations of the customers. In leveraging the brand, marketers develop and implement various ways in which the organization can reap the best form the brand. Identification of the brands concerns development of a definite meaning of the brand to the consumers. Identification of the brand also involves determining the attitudes of the customers towards the brand. Lastly, marketers protect the brands by developing policies that would prevent dilution of the brands. This is achieved through acquisition of trademarks, copyrights and intellectual property rights to prevent unauthorized duplications of the company’s products.
With reference to mergers and acquisitions, it is important to note that businesses and organizations must develop appropriate strategies to ensure that the brands of the products previously provided to consumers in the market are not affected by the merger or acquisition. In addition, the brand of the company should also remain unaffected. The businesses must develop appropriate rebranding strategies that would ensure that the merging or acquired companies retain their reputations.
The table below shows the various stages of rebranding that may be adopted in mergers and acquisitions.
Challenges in Brand Management. As many mergers and acquisitions struggle to effectively manage their brands in the markets, they also face numerous challenges and problems. Firstly, an organization must ensure that transparency is maintained within its brands, for example, the messages conveyed and promises made through advertisements should be realistic and achievable by the organization. In my opinion, the operations and transactions of the business towards building a strong brand should be transparent and free from corruption or unnecessary illusions. Customers should be promised only what the company can achieve or provide, for example, the organization must be able to meet the standards of quality it promises to its customers.
Secondly, most mergers and acquisitions have also suffered from increased expenses in building strong brands (Bedbury & Fenichell 2009). This has been experienced by organizations or businesses that invest a larger portion of their revenues into promotional activities and advertisements. It is rather arguable if it is important for businesses and organizations to regulate their expenses on advertising and rebranding to ensure that much of the company’s revenues are not spent on advertising, promotional activities and other rebranding activities, thus saving the company of its revenues.
Thirdly, companies are faced with the challenge of building strong relationships with the customers. Most mergers and acquisitions are not able to maintain their brands in the market because of poor relationships with potential customers. Therefore, it is important for businesses to create close interactions and strong relationships with customers to ensure that the needs of the customers are effectively met. Strong relationships with customers can be built through open and clear channels of communication between the customers and the business or the organization. According to Knapp (2010), clear and open channels of communication facilitate an exchange of ideas and information between the concerned parties, hence, improved understanding of each other.
Fourthly, most businesses are faced with the uncertainty of the unforeseen future. The business arena is unpredictable and, hence, businesses and organizations are not certain of what might happen tomorrow. This uncertainty greatly affects their rebranding processes. According to Clow (2012), businesses must keenly observe the various trends in the business world and take note of the various changes that may affect their operations in future. For example, changes in technology have changed the way people use certain goods and services. In response to such trends and changes, the businesses should design, formulate and implement appropriate rebranding strategies to enable them achieve competitive advantage over their competitors.
Fifthly, changes in consumer demands have forced companies to design goods and services that are tailored towards meeting special needs and preferences of the consumers (Shocker, Srivastava & Ruekert 2007). Consumers are also faced with the problem of information overload, which makes it difficult for them to take definite decisions about the types of products to consume. Through mergers and acquisitions, businesses and organizations have been forced to face off pre-established brand portfolios. Mergers and acquisitions also lead to an increased complexity of organization.
According to Glynn and Woodside (2009), most businesses today faced numerous trade-offs between the increasing significance to effectively coordinate branding activities within the organization as well as in the external environment of the company. Due to increased need to effectively coordinate marketing strategies, branding activities and goals and objectives of the organization, marketers are today challenged with pressure from both the executive managers of the organization and the need to meet customers’ needs and wants. The dynamics in tastes and preferences of consumers have made it more difficult for marketers and organizations to adequately respond to demands of consumers.
However, businesses may maintain competitive advantage through improved communication and provision of high quality goods and services. In order to effectively manage these challenges, Bedbury and Fenichell (2009) suggest that businesses and organizations, which have either been merged or acquired, must ensure that experienced brand professionals are deployed to develop and implement brand management policies and strategies. Brand managers must create competitive advantage through constant adaptation to the changes in the consumer market. Business mergers and acquisitions must also be able to curtail production of counterfeit products or duplicates that may reduce the reputation of a product amongst consumers.
Numerous challenges have also been experienced as a result of increased globalization. Due to globalization, most international markets are easily accessible by competitors. The increase in globalization has called for increased need to create strong brands that are identifiable and recognizable by the consumers in both domestic and international markets. Brands must survive in the local markets as well as in the global.
Other external factors that may affect the ability of an organization to effectively manage its brands include technological advancements that have resulted in the inventions and innovations in production of goods and services, increased number of constraints in the marketing environment, increased powers of distributors and time constraints (Lee & Carter 2009). Moreover, market constraints such as government legislations may also negatively affect branding efforts of a business or an organization.
Building strong brands also requires businesses to stay focused on the mission and vision of the company. The business must also produce high quality and innovative products and integrate the needs of customers into the objectives and goals of the organization
Rebranding Architecture. The architecture of the rebranding would entail development of policies to improve brand awareness amongst customers. The major rebranding strategies that may be adopted by the organization include promotional strategies, pricing strategies and distribution strategies. Promotional strategies will aim at increasing awareness about the availability of the product in the market. Promotional strategies also target persuading consumers to purchase the brands of particular products. On the other hand, pricing strategies, such as penetrative pricing, are used to lure customers to make additional purchases of a product. Last but not least, distribution strategies aim at making the product readily available in the market. Examples of distribution strategies include extensive distribution and selective distribution.
Mergers and acquisitions may also adopt strategies such as cost leadership, customer focus and product differentiation in order to increase competitive advantage. Through cost leadership, the business aims at producing goods and services at low costs and hence sells the final products at cheap prices. This helps in attracting more customers because customers usually prefer affordable goods and services. Customer focus implies production of goods and services that are customer centered. According to Wang and Pizam (2011), production of customer focused goods and services entails designing and manufacturing products, based on the needs and desires of the customers.
Furthermore, product differentiation implies production of goods and services that are easy to distinguish from those of competitors. Differentiated products have distinct features and characteristics that make a clear distinction between such goods and those of competitors. Product differentiation usually helps in building strong brands in a highly competitive market. Consumers are also demanding companies to become more socially responsible and ethical in their operations.
The table below shows an analysis of the rebranding environment and the various strategies that may be adopted by the business to facilitate the rebranding process.
Table 2: Analysis of the Rebranding Environment
External Environmental Changes
Rebranding Strategies that can be adopted by the Organization
b) Technological advancement
c) Market/industry constraints
d) Changes in customer needs
a) Organizational culture
b) Production techniques
c) Marketing strategies of the organization
d) Availability of resources
In conclusion, it is arguable whether the rebranding of a business or an organization after a merger or an acquisition entails developing strong relationships with the customers. Good relationship could be created through proper communication between the organization and the customers. It is important to emphasize the value of rebranding in mergers and acquisition. In my view, strong brands would help the organization in ensuring customers complete satisfaction. This occurs for the consumers usually develop various perceptions about the quality of a product based on its brand.Businesses that are able to offer product brands which promise and sustain satisfaction to consumers, thus, enjoy increased consumer preferences.Various attributes of a product, such as physical features like appearance and color, and intangible attributes, such as reliability and product safety, are some of the key elements that a business or organization should focus on when rebranding.
Mergers and acquisitions may also adopt co-branding and joint branding strategies to enable them maintain their previous brands. This is because development of new brands for mergers and acquisitions might be very expensive and involving. Consumers may also not easily accept new brands that they are not familiar with, hence would prefer old brands.
Finally, the rebranding of mergers and acquisitions depends on the ability of the organizations to create strong interactions and relationships with the customers through advertising, promotional and distribution strategies, and effective communication techniques.