We are frequently called upon to help with brand
architecture issues. When a company
grows through mergers and acquisitions it usually has a large portfolio of brands
at least some of which are redundant. The key question becomes, “Which brands
become rationalized and how should this be managed to minimize negative
consequences while maximizing positive consequences?”
We have also had to help companies make decisions about
brands that have been positioned differently in different regions of a country
or the world. We have one client whose brands span a range from basic to
premium, however in some places one brand is the premium brand, while in other
places it is the basic brand. We have had clients that want to take strong
regional master brands out nationally but repositioned for specific market
segments. How does this affect existing regional customers who view those brands
more broadly?
After a number of acquisitions, some companies hope to offer
identical products under different brand names. Some companies do this by
creating common product lines with common identities across different parent
brands. This can become quite confusing and diluting.
Growing through M&A can also cause channel conflict
issues. Now the wrong brands are in the wrong channels from certain retailers’
perspectives. Particularly powerful retailers have told some clients how they
should position their brands within their stores. However, this is often out of
step with how those manufacturers need to position those brands within their portfolios.
In M&A, the biggest problem is almost always the
presence of too many brands. The system gets too complex. We worked with one
company that had acquired dozens of companies that offered very similar
products in the same categories. When we were retained, all of the acquired
brands were intact. The client had been producing dozens of product catalogs
selling virtually identical products under different brand and product names to
the same customers.
Not only are complex brand architectures difficult and expensive
to manage, but they are also confusing to customers. The trick is to simplify
them in ways that make sense to customers without destroying brand
equity-related value or alienating existing customers. Simplifying brand
architecture after multiple mergers and acquisitions is necessary. It should be
approached with careful analysis and forethought.