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.