Brands & Ownership Changes

It is a sad day when a previously meaningful and vibrant brand is taken over by or combined with a new entity that does not share the brand’s essence, promise, and values. This happens quite often, with mergers and acquisitions, when a company is taken private or public, or with other changes in ownership or leadership. Sometimes it happens when a financial owner (such as a venture capital firm) replaces the previous management team with its own new team. This is particularly true when people who only understand one thing, ROI (or, more specifically, their personal financial gain), replace the leadership team that had the original brand vision. We saw this happen when General Motors took back control of Saturn, tossing out Saturn’s “different kind of company” operating philosophy and forcing it to run like any other GM brand. Likewise, Compaq once owned 20 percent of the personal computer market, but mismanagement of the brand after Hewlett-Packard acquired it eventually resulted in its complete demise. Quaker Oats 1994 acquisition of the Snapple brand led to huge sales decreases, going from $1.2 billion to $500 million in 27 months. Sprint's takeover of Nextel was a disaster. Sprint had catered to the consumer market, while Nextel concentrated on the business market. Soon after the merger, large numbers of Nextel executives and employees left citing cultural differences between the two brands. Sprint was bureaucratic, while Nextel was much more entrepreneurial. The integration never was executed properly. Jaeger lost its way since its takeover in 2012. And recall the impact on Daraprim's reputation when Turing Pharmaceuticals acquired it from Impax Laboratories and Turing's CEO Martin Shkerli (former hedge fund co-founder) raised that lifesaving AIDS medication's price from $13.50 a pill to $750 a pill overnight. Shkerli was later arrested for securities fraud by the FBI. 

Such a change is akin to a person’s spirit exiting his or her body to allow a new spirit to inhabit it. While the newly combined physical/spiritual entity may seem to be the same entity as before, new attitudes and behaviors will eventually betray the new spirit, but not until after the huge reservoir of brand equity is traded for short-term financial gains for the new owners. This is one reason previously strong brands seem to “lose their way.”

Much of this was reprinted from Brand Aid, second edition, available here.

Common Brand Problems

Problem 8. Overextending your brand into different categories and markets so as to completely blur the brand’s meaning and points of distinction

Analysis. You can always make more money in the short term by licensing your brand out for use on a variety of products or by extending your brand into a myriad of new categories. The long-term effect, however, is detrimental. People no longer will be able to tell what your brand stands for. It will lose its meaning and its point of difference. Extend your brand based on a clear understanding of its essence, promise, archetype, and personality. And make sure your consumers “get it.”

Problem 9. Frequently changing your brand’s positioning and message

Analysis. New brand managers and marketing executives often feel as though they need to make a name for themselves to continue the climb up the corporate ladder. Don’t succumb to this temptation by changing the advertising campaign or the brand slogan, especially if the current ones are working well or haven’t been in place long enough for you to assess their effectiveness. Consistent communication over time is what builds a brand. After all, Hallmark has used its “When You Care Enough to Send the Very Best” slogan since 1944; the Marlboro Man has been Marlboro’s icon since 1955; Absolut Vodka has featured its bottle’s shape in consumer communication since 1978. Since 1921, General Mills has used Betty Crocker as its face to the public. Her portrait has changed in subtle ways eight times since then. If you do make changes, make them gradually in an integrated fashion, based on sound consumer research.

Problem 10. Creating brands or subbrands for internal or trade reasons, rather than to address distinct consumer needs

Analysis. There is nothing more inefficient or wasteful than creating a new brand or subbrand for a purpose other than meeting a different consumer need. Brands and subbrands exist to address different consumers and consumer need segments. It is expensive to launch a new brand (and very expensive to maintain multiple brands that meet similar consumer needs; it also adds unnecessary complexity to your organization). Worst of all, it dilutes the position of your original brand. This problem often results from egos and organization structure. People head up divisions or business units that deliver specific products or services. They create a name and identity to put on business cards and to rally their employees around, without considering whether the products or services are similar to products or services other divisions create. (This tendency has resulted in Hewlett-Packard having multiple printer lines: DeskJet, OfficeJet, OfficeJet Pro, LaserJet, DesignJet, DeskWriter, and PhotoSmart. It is unlikely that consumers understand many of these distinctions. They are likely to think of them all as HP printers.)

Sometimes, companies create separate brands or subbrands for trade reasons— for instance, to offer something different for specialty stores vs. mass channels of distribution. (Hallmark created the Expressions from Hallmark brand to offer mass channel stores while specialty stores continued to carry the Hallmark brand. These two brands don’t meet different consumer needs, and I’m not sure consumers perceive differences between the two.) This problem can also result from mergers and acquisitions in which the brands are neither rationalized nor strategically managed after the enterprises are combined.


Three of thirty-five common brand problems excerpted from Brand Aid, second edition, available here.